Loans Payable | 7. Loans Payable As of March 31, 2023 and December 31, 2022, the Company had outstanding the following loans payable: March 31, December 31, 2023 2022 Unsecured promissory note, Keith Hayter, 15% interest, matures August 31, 2023 $ 210,837 $ - Promissory note, Jeffrey Gardner, 12% interest, unsecured, matures April 15, 2023, net of debt discount of $5,000 325,000 - Future receivables financing agreement with Cedar Advance LLC, non-interest bearing, matures July 28, 2023, net of debt discount of $150,560 362,981 - Future receivables financing agreement with Pawn Funding, non-interest bearing, matures August 4, 2023, net of debt discount of $147,420 396,330 - Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand 217,400 217,400 Promissory note issued to Cornerstone National Bank & Trust, 4.5% interest, unsecured, matures on October 9, 2024 - 245,765 Future receivables financing agreement with Cedar Advance LLC, non-interest bearing, matures August 17, 2023, net of debt discount of $329,419 - 825,656 Future receivables financing agreement with Pawn Funding, non-interest bearing, matures August 17, 2023, net of debt discount of $329,419 - 825,656 Total $ 1,512,548 $ 2,114,477 Less: Current portion of loans payable, net of debt discount (1,512,548 ) (1,928,964 ) Loans payable, net of current portion $ - $ 185,513 Unsecured promissory note, Keith Hayter, 15% interest, matures August 31, 2023 On January 1, 2023, Keith Hayter, formerly a related party, exchanged a convertible promissory note for an unsecured promissory note with no conversion feature. The principal amount of the new note is $235,837, which was the outstanding principal and accrued interest of the exchanged note as of that date. Interest accrues at 15% per annum. All principal and accrued but unpaid interest under the note is due on August 31, 2023. During the three months ended March 31, 2023, the Company made cash payments for principal of $25,000. As of March 31, 2023, the Company owed $210,837 pursuant to this agreement. Promissory note, Jeffrey Gardner, 12% interest, unsecured, matures April 15, 2023 On January 16, 2023, the Company issued a $330,000 promissory note to Jeffrey Gardner. The note matures on April 15, 2023 and bears interest at a rate of 12% per annum. The Company received cash proceeds of $300,000 and recorded a debt discount of $30,000. As of March 31, 2023, the Company owed $330,000 pursuant to this agreement. On April 14, 2023, the Company paid the outstanding principal balance (refer to Note 19, Subsequent Events, for additional detail). Loan with Cedar Advance LLC (2023) On February 9, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Cedar Advance LLC. Under the Financing Agreement, the Financing Parties sold to Cedar Advance future receivables in an aggregate amount equal to $725,000 for a purchase price of $500,000. The Company received cash of $475,000 and recorded a debt discount of $250,000. Pursuant to the terms of the Financing Agreement, the Company agreed to pay Cedar Advance $30,208 each week based upon an anticipated 25% of its future receivables until such time as $725,000 has been paid, a period Cedar Advance and the Financing Parties estimate to be approximately six months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions. During the three months ended March 31, 2023, the Company paid $211,458 of the original balance under the agreement. As of March 31, 2023, the Company owed $513,542 pursuant to this agreement and will record accretion equal to the debt discount of $150,560 over the remaining term of the note. Loan with Pawn Funding (2023) On February 16, 2023, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Pawn Funding. Under the Financing Agreement, the Financing Parties sold to Pawn Funding future receivables in an aggregate amount equal to $725,000 for a purchase price of $500,000. The Company received cash of $475,000 and recorded a debt discount of $250,000. Pursuant to the terms of the Financing Agreement, the Company agreed to pay Pawn Funding $15,104 each week based upon an anticipated 25% of its future receivables until such time as $362,500 has been paid, a period Pawn Funding and the Financing Parties estimate to be approximately six months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions. During the three months ended March 31, 2023, the Company paid $181,250 of the original balance under the agreement. As of March 31, 2023, the Company owed $543,750 pursuant to this agreement and will record accretion equal to the debt discount of $147,420 over the remaining term of the note. Promissory note issued to InterCloud Systems, Inc., non-interest bearing, unsecured and due on demand On June 15, 2021, in connection with the 2021 merger transaction, the Company assumed High Wire’s promissory note issued to InterCloud Systems, Inc. The note was originally issued on February 27, 2018 in the principal amount of $500,000. As of June 15, 2021, $217,400 remained outstanding. The note is non-interest bearing and is due on demand. As of March 31, 2023, the Company owed $217,400 pursuant to this agreement. Promissory note issued to Cornerstone National Bank & Trust, 4.5% interest, matures October 9, 2024 On October 21, 2019, the Company issued a promissory note to Cornerstone National Bank & Trust with an original principal amount of $420,000. The note bears interest at a rate of 4.5% per annum and the maturity date is October 9, 2024. The Company is to make monthly payments of principal and interest of $5,851, with a final balloon payment of $139,033 due on October 9, 2024. During the year ended December 31, 2021, the Company made cash payments for principal of $54,770. During the year ended December 31, 2022, the Company made cash payments for principal of $58,422. During the three months ended March 31, 2023, the remaining principal balance of $245,765 was paid using proceeds from factor financing. As a result of these payments, the amount owed at March 31, 2023 was $0. Loan with Cedar Advance LLC (2022) On November 9, 2022, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Cedar Advance LLC. Under the Financing Agreement, the Financing Parties sold to Cedar Advance future receivables in an aggregate amount equal to $1,399,900 for a purchase price of $1,000,000. The Company received cash of $960,000 and recorded a debt discount of $439,900. Pursuant to the terms of the Financing Agreement, the Company agreed to pay Cedar Advance $34,975 each week based upon an anticipated 25% of its future receivables until such time as $1,399,900 has been paid, a period Cedar Advance and the Financing Parties estimate to be approximately nine months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions. The effective interest rate is 78%. During the year ended December 31, 2022, the Company paid $244,825 of the original balance under the agreement. During the period of January 1, 2023 and March 6, 2023, the Company paid $314,775 of the original balance under the agreement. As a result of these payments, the Company owed $840,330 as of March 6, 2023. On March 6, 2023, in connection with the divestiture of the ADEX Entities, the buyer assumed this note (refer to Note 3, Disposal of Subsidiary, for additional detail). Loan with Pawn Funding (2022) On November 9, 2022, the Company, together with its subsidiaries (collectively with the Company, the “Financing Parties”), entered into an Agreement of Sale of Future Receipts (the “Financing Agreement”) with Pawn Funding. Under the Financing Agreement, the Financing Parties sold to Pawn Funding future receivables in an aggregate amount equal to $1,399,900 for a purchase price of $1,000,000. The Company received cash of $960,000 and recorded a debt discount of $439,900. Pursuant to the terms of the Financing Agreement, the Company agreed to pay Pawn Funding $34,975 each week based upon an anticipated 25% of its future receivables until such time as $1,399,900 has been paid, a period Pawn Funding and the Financing Parties estimate to be approximately nine months. The Financing Agreement also contains customary affirmative and negative covenants, representations and warranties, and default and termination provisions. The effective interest rate is 78%. During the year ended December 31, 2022, the Company paid $244,825 of the original balance under the agreement. During the period of January 1, 2023 and March 6, 2023, the Company paid $314,775 of the original balance under the agreement. As a result of these payments, the Company owed $840,330 as of March 6, 2023. On March 6, 2023, in connection with the divestiture of the ADEX Entities, the buyer assumed this note (refer to Note 3, Disposal of Subsidiary, for additional detail). |