Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.21.2
Debt
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Debt

Note 5 – Debt

 

The following represents a summary of the Company’s notes payable – SBA government, loans payable – related parties, notes payable and convertible notes, key terms, and outstanding balances at June 30, 2021 and December 31, 2020, respectively:

 

Notes Payable – SBA government

 

(1) Paycheck Protection Program - PPP Loan

 

Pertaining to the Company’s eighteen (18) month loan and in accordance with the Paycheck Protection Program (“PPP”) and Conditional Loan Forgiveness, the promissory note evidencing the loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company.

 

Under the terms of the PPP loan program, all or a portion of this Loan may be forgiven upon request from Borrower to Lender, provided the Loan proceeds are used in accordance with the terms of the Coronavirus Aid, Relief and Economic Security Act (the “Act” or “CARES”), Borrower is not in default under the Loan or any of the Loan Documents, and Borrower has provided documentation to Lender supporting such request for forgiveness that includes verifiable information on Borrower’s use of the Loan proceeds, to Lender’s satisfaction, in its sole and absolute discretion.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

(2) Economic Injury Disaster Loan (“EIDL”)

 

This program was made available to eligible borrowers in light of the impact of the COVID-19 pandemic and the negative economic impact on the Company’s business. Proceeds from the EIDL are to be used for working capital purposes.

 

Installment payments, including principal and interest, are due monthly (beginning twelve (12) months from the date of the promissory note) in amounts ranging from $109 - $751/month. The balance of principal and interest is payable over the next thirty (30) years from the date of the promissory note. There are no penalties for prepayment. Based upon guidance issued by the SBA on June 19, 2020, the EIDL Loan is not required to be refinanced by the PPP loan.

 

    PPP   EIDL   EIDL   EIDL
Terms   SBA   SBA   SBA   SBA
                 
Issuance dates of SBA loans   April 2020   May 2020   July 2020   March 2021
Term   18 months   30 Years   30 Years   30 Years
Maturity date   October 2021   May 2050   July 2050   March 2026
Interest rate   1%   3.75%   3.75%   3.75%
Collateral   Unsecured   Unsecured   Unsecured   Unsecured
Conversion price   N/A   N/A   N/A   N/A

 

                            Total  
                               
Principal   $ 498,082     $ 150,000     $ 486,600     $ 518,167     $ 1,652,849  
                                         
Balance - December 31, 2019     -       -       -       -       -  
Gross proceeds     498,082       150,000       486,600       -       1,134,682  
Balance - December 31, 2020     498,082       150,000       486,600       -       1,134,682  
Gross proceeds     -       -       -       518,167       518,167  
Deconsolidation of subsidiary (“TW”)     -       -       (150,000 )*     -       (150,000 )
Balance - June 30, 2021   $ 498,082     $ 150,000     $ 336,600     $ 518,167     $ 1,502,849  

 

*In connection with the deconsolidation of TW, $150,000 was assumed by the buyer.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Notes Payable – Related Parties

 

      1       2  
      Note Payable       Note Payable  
Terms     Related Party       Related Party  
                 
Issuance dates of notes     Various       May 2020/January 2021  
Maturity date     December 27, 2021/August 15, 2022 and due on demand       March 2021 and due on demand  
Interest rate     6% - 15%       15%
Collateral     Unsecured       Unsecured  
Conversion price     N/A       N/A  

 

                      Total  
                         
Principal   $ 5,401,940     $ 210,500     $ 5,612,440  
                         
Balance - December 31, 2019     2,205,440       -       2,205,440  
Gross proceeds     1,136,500       147,500       1,284,000  
Balance - December 31, 2020     3,341,940       147,500       3,489,440  
Gross proceeds     2,060,000       63,000       2,123,000  
Repayments     -       (63,000 )     (63,000 )
Balance - June 30, 2021   $ 5,401,940     $ 147,500     $ 5,549,440  

 

1 Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). These balances consist of various loans at varying interest rates. Advances received in 2019 and prior have maturity dates, whereas advances received after 2019 are due on demand.

2 Activity is with the Company’s President, Chief Operating Officer and Board Director (Anthony Nuzzo). In 2021, the Company received advances of $63,000 in the quarter ended March 31, 2021, which were repaid in the quarter ended March 31, 2021 (this related to the January 2021 note). The remaining outstanding amount of $147,500 is due on demand.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Notes Payable

 

Terms   Note     Note     Note  
                   
Issuance dates of notes     2016       2016       November 4, 2019  
Term     1 year       1 year       1 year  
Maturity date     2016       2017       November 3, 2020  
Interest rate     5%     10%     18%
Collateral     Unsecured       Unsecured       Unsecured  
Conversion price     N/A       N/A       N/A  

 

                      Total     In-Default  
                               
Principal   $ 485,000     $ 27,500     $ 250,000     $ 762,500          
                                         
Balance - December 31, 2019     485,000       27,500       223,672       736,172     $ 512,500  
Amortization of debt discount     -       -       26,328       26,328          
Repayments     (485,000 )     (27,500 )     -       (512,500 )        
Balance - December 31, 2020     -       -       250,000       250,000       250,000  
Repayments     -       -       (250,000 )     (250,000 )        
Balance - June 30, 2021   $ -     $ -     $ -     $ -     $ -  

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Convertible Notes Payable – Net

 

Terms   Notes Payable   Notes Payable   Note Payable   Note Payable   Note Payable   Note Payable   Note Payable   Note Payable   Note Payable   Note Payable
                                         
Issuance dates of notes   2019 and Prior   February 2020   February 2020   March 2020   March 2020   May 2020   July 2020   December 2020   January 2021   March 2021
Maturity date   2020   February 2021   April 2021   February 2021   March 2021   February 2021   April 2021   September 2021   May 2021   March 2022
Interest rate   14%   14%   14%   14%   14%   10%   10%   10%   12%   5%
Collateral   Unsecured   Unsecured   Unsecured   Unsecured   Unsecured   Unsecured   Unsecured   Unsecured   Unsecured   Unsecured
Conversion price   A   A   A   A   A   A   B   B   B   C

 

                                                                Total  
                                                                   
Principal   $ -     $ 756,000     $ 216,000     $ 378,000     $ 162,000     $ 400,000     $ 270,000     $ 165,000     $ 250,000     $ 2,300,000     $ 4,897,000  
                                                                                         
Balance - December 31, 2019   $ 4,436,684     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ 4,436,684  
Gross proceeds     -       756,000       216,000       378,000       162,000       400,000       270,000       165,000       -       -       2,347,000  
Debt discount     -       (756,000 )     (216,000 )     (378,000 )     (162,000 )     (400,000 )     (270,000 )     (165,000 )     -       -       (2,347,000 )
Amortization of debt discount     161,217       682,369       194,716       330,982       129,157       320,000       161,606       10,389       -       -       1,990,436  
Repayments - cash     (438,698 )     (94,447 )     -       -       (35,614 )     -       -       -       -       -       (568,759 )
Repayments - common stock     (4,159,203 )     (107,297 )     -       -       (75,691 )     -       -       -       -       -       (4,342,191 )
Balance - December 31, 2020     -       480,625       194,716       330,982       17,852       320,000       161,606       10,389       -       -       1,516,170  
Gross proceeds     -       -       -       -       -       -       -       -       250,000       2,300,000       2,550,000  
Debt discount     -       -       -       -       -       -       -       -       (160,829 )     (2,300,000 )     (2,460,829 )
Amortization of debt discount     -       73,631       21,284       47,018       32,843       80,000       108,394       108,996       160,829       718,356       1,351,351  
Repayments - cash     -       (264,204 )     (216,000 )     (52,943 )     (52,642 )     (400,000 )     (101,951 )     -       (250,000 )     -       (1,337,740 )
Repayments - common stock     -       (290,052 )     -       (325,057 )     (75,000 )             (168,049 )             -       -       (858,158 )
Reclassified to receivable     -       -       -       -       76,947 D     -       -       -       -       -       76,947  
Balance - June 30, 2021   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ 119,385     $ -     $ 718,356     $ 837,741  

 

A – Convertible at 65% multiplied by the lowest one (1) day volume weighted average price (“VWAP”) of the Company’s common stock during the ten (10) trading days prior to conversion.

 

B – Convertible at 70% multiplied by the lowest one (1) day volume weighted average price (“VWAP”) of the Company’s common stock during the ten (10) trading days prior to conversion.

 

C – Convertible at 75% multiplied by the lowest one (1) day volume weighted average price (“VWAP”) of the Company’s common stock during the ten (10) trading days prior to conversion.

 

D - During 2021, the Company overpaid a note holder when settling the outstanding balance. This overpayment had been recorded as a receivable and was repaid in full in April 2021.

 

 

SURGEPAYS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

Line of Credit

 

The Company had a $1,000,000 line of credit with a bank, bearing interest at 6%, which was due in April 2021. The line of credit was secured by all of the Company’s assets and was personally guaranteed by the owner of the majority of the Company’s voting shares. The balance at June 30, 2021 and December 31, 2020 was $0 and $912,870. In connection with the deconsolidation of TW in May 2021, the buyer assumed the line of credit.