| Notes Payable | NOTE
5 NOTES PAYABLE As
of the dates presented, the long-term loan balances were as follows:
Interest Rate Due Date December
31, 2015 June
30, 2015
Loan Principle and Interest - Land Bank See below See below $ 6,778,061 $ 8,401,900
Notes Payable other third party 6% July 1, 2016 6,900,000 6,500,000
Less: Discount (343,485 ) (375,687 )
13,334,576 14,526,213
Less: Current Portion (13,334,576 ) (14,526,213 )
Long Term Debt, Net of Discount $ $ Notes
Payable third party Between
November 25, 2013 and June 4, 2015, the Company issued a total of $6,500,000 in notes payable to a third party, the proceeds from
which were used for working capital purposes. In July 2015, the Company issued a note payable for $400,000 to the third party
in exchange for cash of $384,170 and payment of expenses on behalf of the Company of $15,830. The note bears interest at 6% per
annum and was originally due February 1, 2016. Collectively,
these notes total $6,900,000 and $6,500,000 as of December 31, 2015 and June 30, 2015, respectively, and were due and payable
twelve months after issuance. The Company subsequently renegotiated the due date on each of these notes to July 1, 2016. The Company
is not required to make monthly payments on any of these notes. As of December 31, 2015 and June 30, 2015, the Company recorded
accrued interest pertaining to the outstanding notes payable in the amounts of $492,250 and $288,612, respectively. Land
and Agriculture Bank of South Africa In
June 2012, the Company, through the majority-owned subsidiaries of Dunn Roman Holdings, Inc., executed final loan documents on
a 100 million Rand (approx. $6.5 million USD at current rates) financing with the Land and Agriculture Bank of South Africa (Land
Bank). The total loan is comprised of multiple agreements totaling, between Green Gold Biotechnologies (Pty) Ltd. and Breakwood
Trading 22(Pty) Ltd., 100 million rand (approx. $6.5 million USD at current exchange rates). The loans all bear interest at the
rate of prime plus 0.5% per annum and are all due in seven years. In addition, the loans have a 25-month holiday
in which no payments or interest are due until 25 months after the first draw down of funds. The loans are collateralized by the
assets and operations, including the Senteeko lease, agriculture production and receivables of Dunn Roman Holdings, which is the
African operating arm of Plandaí. In addition, Dunn Roman Holdings was required to grant a 15% profit share agreement to
the Land Bank which extends through the duration of the loan agreements (7 years unless pre-paid). The profit share agreement
extends only to profits generated by Dunn Roman Holdings exclusive of operations of Plandaí and outside of South Africa.
By way of loan covenants, the borrowing entities are required to maintain a debt to equity ratio of 1.5:1, interest coverage ratio
of 1.5:1, and security coverage ratio of 1:1, none of which are currently in compliance. However, the Company consistently notified
the Bank of this situation and has requested written documentation as to the Banks intention. The Bank has provided documentation
extending the holiday at least through December 2016. As of and through the date of this report, the Land Bank has
not provided any notice of default or requested compliance with the terms of the loans. During
the year ended June 30, 2012, the Company issued 1,500,000 shares of restricted common stock to three Dunn Roman shareholders
in exchange for their shares of Dunn Roman Holdings which had been previously issued. The acquired Dunn Roman shares were then
provided to third parties in order to comply with the BEE provisions associated with the loan from the Land Bank of South Africa,
which required that 15% of Dunn Roman be owned by non-white South Africans. The Company has therefore determined to treat the
value of the shares issued to acquire the Dunn Roman stock ($585,000, based on the value of shares on the date of issuance) as
a cost of securing the financing and recorded as a loan discount which is amortized over the life of the loan (7 years). During
the three and six months ended December 31, 2015 the Company amortized $16,101 and $32,202, respectively, leaving a debt discount
balance of $343,485 at December 31, 2015. As
of December 31, 2015, a total of $6,778,061, which includes capitalized accrued interest, was owed to the Land Bank.
The proceeds were used to purchase fixed assets that are employed in South Africa to produce the Companys
botanical extracts, fund the rehabilitation of the Senteeko Tea Estate, including the repair of roads, bridges, and onsite
management and farm worker housing, and the pruning, weeding and fertilizing of the plantation. As the 25-month holiday in
which no payments or interest are due expired in July of 2014, the Company is required to make monthly payments of
approximately 2,250,000 South African Rand (approximately $145,000 US Dollars). During the six months ended December 30,
2015, the Company paid approximately $162,329 and accrued $382,115 in capitalized interest. Commencing August 2015, the
Company ceased making payments to the Land Bank and has been in discussions to renegotiate the payment terms of the
obligation. The Land Bank has been cooperative in this effort and has not expressed any intention to foreclose or accelerate
the debt balances. Inasmuch as the Company is out of compliance with certain loan covenants including the non-payment of
scheduled monthly amounts due under the various leases, the Company has elected to classify the entire balance owed to the
Land Bank as current in the accompanying balance sheet as of December 31 and June 30, 2015. Future
maturities of long-term debt are as follows:
2016 $ 8,640,000
2017 1,740,000
2018 1,740,000
2019 1,214,576
13,334,576 |
