Quarterly report pursuant to Section 13 or 15(d)

ADVANCE OF FUTURE RECEIPTS

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ADVANCE OF FUTURE RECEIPTS
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
ADVANCE OF FUTURE RECEIPTS

6. ADVANCE OF FUTURE RECEIPTS

 

The Company has the following advances on future receipts as of June 30, 2021:

 

Note   Issuance Date   Maturity Date   Interest Rate     Original Borrowing     Balance at June 30, 2021     Balance at December 31, 2020  
                                 
Note 1   June 30, 2020   February 25, 2021     28 %   $ 506,000     $ -     $ 89,000  
Note 2   June 30, 2020   February 25, 2021     28 %     506,000       -       88,000  
Note 3   January 13, 2021   September 10, 2021     28 %     844,000       213,000       -  
Note 4   January 13, 2021   September 10, 2021     28 %     844,000       213,000       -  
Note 5   January 22, 2021   July 1, 2021     28 %     2,040,000       -       -  
Note 6   February 18, 2021 March 3, 2021   August 3, 2021August 15, 2021     3 %     1,696,000       440,000       -  
Note 7   June 30, 2021   December 31, 2021     7 %     1,210,000       1,210,000          
Note 8   June 30, 2021   March 1, 2022     28 %     2,720,000       2,720,000       -  
Total                   $ 10,366,000       4,796,000       177,000  
Debt discount                             (1,013,000 )     (67,000 )
Net                           $ 3,783,000     $ 110,000  

 

Note 1 and 2

 

On June 30, 2020, the Company received two secured advances from an unaffiliated third party totaling $728,000 for the purchase of future receipts/revenues of $1,012,000. Pursuant to the terms of the agreement the unaffiliated third-party will auto withdraw an aggregate of $6,000 from the Company’s operating account each banking day. The term of the agreement extends until the advances are paid in full. The notes did not bear any interest, however, the average interest was imputed at a rate of 28% based on the face value of the note and the proceeds received. As a result, the Company recorded a liability of $1,012,000 to account for the future receipts sold and a debt discount of $284,000 to account for the difference between the future receipts sold and the cash received. The debt discount is being amortized over the term of the agreement.

 

During the six months ended June 30, 2021, the Company paid the entire balance due of $177,000 and amortized the remaining debt discount of $67,000.

 

 

Note 3 and 4

 

On January 13, 2021, the Company received two secured advances from the same unaffiliated third party (see Note 1 and 2) totaling $1,213,000 for the purchase of future receipts/revenues of $1,688,000. Pursuant to the terms of the agreement the unaffiliated third-party will auto withdraw an aggregate of $11,000 from the Company’s operating account each banking day. The term of the agreement extends until the advances are paid in full. The notes did not bear any interest, however, the average interest was imputed at a rate of 28% based on the face value of the note and proceeds received. The Company may pay off either note for $744,000 if paid within 30 days of funding; for $775,000 if paid between 31 and 60 days of funding; or for $806,000 if paid within 61 to 90 days of funding. These advances are secured by the Company’s tangible and intangible assets. As a result, the Company recorded a liability of $1,688,000 to account for the future receipts sold and a debt discount of $475,000 to account for the difference between the future receipts sold and the cash received. The debt discount is being amortized over the term of the agreement.

 

During the six months ended June 30, 2021, the Company paid $1,262,000 of the balance outstanding and amortized $329,000 of the debt discount. As of June 30, 2021 outstanding balance of the notes amounted to $426,000 and the unamortized balance of the debt discount was $147,000.

 

Note 5

 

On January 22, 2021, the Company received a secured advance from an unaffiliated third party totaling $1,440,000 for the purchase of future receipts/revenues of $2,040,000. Pursuant to the terms of the agreement the unaffiliated third-party will auto withdraw an aggregate of $13,000 from the Company’s operating account each banking day. The term of the agreement extends until the advances are paid in full. The notes did not bear any interest, however, the interest was imputed at a rate of 29% based on the face value of the note and the proceeds received. The Company may pay off the note for $1,725,000 if paid within 30 days of funding; for $1,860,000 if paid between 31 and 60 days of funding; or for $484,000 if paid within 61 to 90 days of funding. These advances are secured by the Company’s tangible and intangible assets. As a result, the Company recorded a liability of $2,040,000 to account for the future receipts sold and a debt discount of $600,000 to account for the difference between the future receipts sold and the cash received. The debt discount is being amortized over the term of the agreement.

 

During the six months ended June 30, 2021, the Company paid the entire balance of $2,040,000 and amortized $600,000 of the debt discount.

 

Note 6

 

In February and March of 2021, the Company received secured advances from an unaffiliated third party totaling $1,637,000 for the purchase of future receipts/revenues of $1,696,000. Pursuant to the terms of the agreement the unaffiliated third-party will auto withdraw an average of $283,000 from the Company’s operating account each month. The term of the agreement extends until the advances are paid in full. The notes did not bear any interest, however, the interest was imputed at a rate of 3% based on the face value of the notes and the proceeds received. As a result, the Company recorded a liability of $1,696,000 to account for the future receipts sold and a debt discount of $59,000 to account for the difference between the future receipts sold and the cash received. The debt discount is being amortized over the term of the agreement.

 

During the six months ended June 30, 2021, the Company paid $1,256,000 and amortized $45,000 of the debt discount. As of June 30, 2021, the outstanding balance on the note amounted to $440,000 and the unamortized balance of the debt discount was $14,000.

 

Note 7

 

On June 30, 2021, the Company received secured advances from an unaffiliated third party totaling $1,210,000 for the purchase of future receipts/revenues of $1,303,000. Pursuant to the terms of the agreement the unaffiliated third-party will auto withdraw an average of $197,000 from the Company’s operating account each month. The term of the agreement extends until the advances are paid in full. The notes did not bear any interest, however, the interest was imputed at a rate of 7% based on the face value of the notes and the proceeds received. As a result, the Company recorded a liability of $1,210,000 to account for the future receipts sold and a debt discount of $92,000 to account for the difference between the future receipts sold and the cash received. The debt discount is being amortized over the term of the agreement.

 

As of June 30, 2021, the outstanding balance of the note amounted to $1,210,000 and the unamortized balance of the debt discount was $92,000.

 

Note 8

 

On June 30, 2021, the Company received secured advances from an unaffiliated third party totaling $1,960,000 for the purchase of future receipts/revenues of 2,720,000. Pursuant to the terms of the agreement the unaffiliated third-party will auto withdraw an aggregate of $15,200 from the Company’s operating account each banking day. The term of the agreement extends until the advances are paid in full. The notes did not bear any interest, however, the interest was imputed at a rate of 28% based on the face value of the note and the proceeds received. The Company may pay off the note for $2,200,000 if paid within 45 days of funding and for $2,380,000 if paid between 46 and 60 days of funding. These advances are secured by the Company’s tangible and intangible assets. As a result, the Company recorded a liability of $2,720,000 to account for the future receipts sold and a debt discount of $760,000 to account for the difference between the future receipts sold and the cash received. The debt discount is being amortized over the term of the agreement.

 

As of June 30, 2021, the outstanding balance of the note amounted to $2,720,000 and the unamortized balance of the debt discount was $760,000.