| DEBT AGREEMENTS |
NOTE 5 – DEBT AGREEMENTS
Working Capital Funding Loans
The Company finances short term working capital requirements in between
capital raises by entering into secured borrowing agreements for which future receivables are pledged to repay these short-term obligations.
Funding is generally nonrecourse one-time fixed amount financing arrangements and contain a performance and personal guarantee by the
CEO and COO. Repayments are made generally on a weekly basis out of available daily deposits until the financing has been repaid in full.
Future sales of revenues are not within the scope of ASC 860 (Transfers and Servicing of Financial Assets), as such these arrangements
are accounted for under ASC 470 (Debt) as short term secured credit facilities. Accordingly, these secured borrowings are reported as
short term financing on the balance sheet. Upon receipt of financing proceeds the Company recognizes a liability equal to the net proceeds
received. Interest expense is recognized when payments are made under this arrangement. Interest is computed using the percentage purchased
factor times the payment made under the agreement. Working capital funding loans consisted of the following:
| Schedule of working capital funding loans | |
| | | |
| | |
| | |
DECEMBER 31, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| NewCo Capital Group Future Revenue Purchase Agreement dated March 3, 2023 (1) | |
$ | 40,630 | | |
$ | 64,130 | |
| Parkside Funding Group LLC Revenue Purchase Agreement dated August 3, 2023 (2) | |
| 49,284 | | |
| 54,804 | |
| Funding Futures Revenue Purchase Agreement dated February 27, 2024 (3) | |
| 25,982 | | |
| - | |
| ClearThink Capital LLC (4) | |
| 50,000 | | |
| - | |
| Total working capital funding loans | |
$ | 165,896 | | |
$ | 118,934 | |
| (1) |
On March 2, 2023, the
Company entered into a future revenue purchase agreement and received proceeds of $120,000 (net of underwriting and original fees of $7,200)
for which $169,200 will be repaid in 36 weekly installments of $4,700, with a minimum payment of 10% of banking deposits. This working
capital loan is secured by substantially all of the Company’s assets and a personal guarantee by the Company’s CEO and COO.
The percentage purchased factor representing interest expense under this arrangement was approximately 29.1% (including underwriting fees,
origination fees and financing spread). In the event of default, the Company may be required to pay additional fees of 30% of the unpaid
balance to cover legal fees required by the third party to pursue collection in the event of default. During the year ended December 31,
2024, the Company resumed making weekly payments. |
| (2) |
On August 3, 2023, the
Company entered into a future revenue purchase agreement and received proceeds of $57,000 (net of $3,000 in underwriting fees) for which
$84,000 will be repaid in weekly installments of $3,231 with a minimum payment of 22% of banking deposits. This working capital loan is
secured by substantially all of the Company’s assets and a personal guarantee by the Company’s CEO and COO. The percentage
purchased factor representing interest expense under this arrangement was approximately 32.1% (including underwriting fees, origination
fees and financing spread). In the event of default, the Company may be required to pay a fixed default penalty of $2,500 and additional
fees of 33% of the unpaid balance to cover legal fees required to pursue collection in the event of default. As of December 31, 2023,
the required payments were not made, and the Company was in default. On August 23, 2023, the Company entered into a Settlement Agreement
and General Release with the lender to settle unpaid advances. During the year ended December 31, 2024, the Company resumed making weekly
payments. |
| (3) |
On February 27, 2024,
the Company entered into a future revenue purchase agreement and received proceeds of $18,000 (net of $2,000 in underwriting fees) for
which $29,980 will be repaid in daily installments of $428, with a minimum payment of 9% of banking deposits. This working capital loan
is secured by substantially all of the Company’s assets and a personal guarantee by the Company’s CEO. The percentage purchased
factor representing interest expense under this arrangement was approximately 66.1% (including underwriting fees, origination fees and
financing spread). In the event of default, the Company may be required to pay a fixed default penalty of $2,500 or up to 25% of the unpaid
balance to cover legal fees required to pursue collection in the event of default. |
| (4) |
As more fully described
in Note 9, Strata Purchase Agreement, the Company borrowed $50,000 to cover operating expenses associated with the audit of the financial
statements. All amounts borrowed are expected to be settled as part of the Strata Purchase Agreement. |
|