Note Payable - Related Party | NOTE 5: NOTE PAYABLE – RELATED PARTY On October 3, 2019, the Company entered into a loan agreement with a related party entity controlled by the former shareholder of Slinger Bag Canada for borrowings of $500,000 bearing interest at 12% per annum. All principal and accrued interest were due on demand under the original agreement. On December 13, 2019, the Company entered into an Amended and Restated Loan Agreement making all principal and accrued interest and was due on July 15, 2020, later extended to September 1, 2021. On December 3, 2019, the Company entered into a loan agreement with the same related party for borrowings of $500,000 bearing interest at 12% per annum. All principal and accrued interest were due on demand under the original agreement. On December 13, 2019, the Company entered into an Amended and Restated Loan Agreement increasing the interest rate earned from 12% to 24% per annum and making all principal and accrued interest due on July 15, 2020 and was then extended to September 1, 2021. On December 11, 2019, the Company entered into a loan agreement with the same related party for borrowings of $700,000 bearing interest at 24% per annum. All principal and accrued interest were due on July 15, 2020 and was then extended to September 1, 2021. On January 6, 2019, the Company entered into a loan agreement with the same related party for borrowings of $200,000 bearing interest at 24% per annum. All principal and accrued interest were due on January 8, 2021 and was then extended to September 1, 2021. On March 1, 2020, the Company entered into a loan agreement with the same related party for borrowings of $200,000 bearing interest at 24% per annum. All outstanding borrowings and accrued interest under all agreements were due on January 8, 2021 and was then extended to September 1, 2021. On May 12, 2020, the Company borrowed an additional $1,000,000 from the same related party, and on July 3, 2020 the Company borrowed an additional $500,000 from the same related party. The borrowings bear interest at a rate of 24% per annum and were due on January 8, 2021 and was then extended to September 1, 2021. On July 8, 2020, the Company entered into a Purchase Order Financing Agreement (“PO Financing Agreement”) whereby $1,900,000 of the total $3,600,000 in outstanding debt due to the related party as of the date of the agreement has been labeled as inventory financing (“PO Financing Amount”). The PO Financing Amount, along with any accrued interest, is due in full no later than nine months from the effective date of the PO Financing Agreement, or January 8, 2021 and was then extended to September 1, 2021. The outstanding balance of the PO Financing Amount bears interest at a rate of 2% per month. The Company has agreed to repay the PO Financing Amount together with any accrued, but unpaid, interest thereon out proceeds from the sale of its products, licensing activities, revenue to be generated from operations and/or amounts received by the Company from investors, lenders, financiers, financing sources or other persons before making payments of any other nature (including dividends and distributions) except for payments required to finance the Company’s operations. On August 10, 2020, the Company borrowed an additional $250,000 from its existing related party lender subject to the PO Financing Agreement. On September 7, 2020, the outstanding debt from the existing related party lender was amended to reduce the interest rate to 9.5% per annum on all outstanding loans. As consideration for agreeing to reduce the interest rate, the Company issued the related party warrants to purchase 2,500,000 shares of the Company’s common stock at an exercise of $0.001 per share. The warrants vest immediately and have a contractual life of 10 years. The amendment of the outstanding debt was treated as an extinguishment of the debt, and therefore the value of the warrants issued to the lender amounting to $1,999,487 were expensed as loss on extinguishment during the nine months ended January 31, 2021. On September 8, 2020, the related party lender agreed to extend the due date of all outstanding loans to September 1, 2021. On September 15, 2020, the Company borrowed an additional $250,000 existing related party lender. The borrowings bear interest at 9.5% per annum and are due in full on September 15, 2021. In connection with the loan, the Company issued warrants to the related party lender to purchase 125,000 shares of the Company’s common stock at $0.001 per share. The warrants vest immediately and have a contractual life of 10 years. The note was discounted by $70,130 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized through the maturity date, which amounted to $8,838 and $17,676 for the three and nine months ended January 31, 2021. As of January 31, 2021, the remaining discount was $52,454. On November 24, 2020, the Company borrowed $300,000 from its related party debt holder. The borrowings bear interest at 9.5% per annum and are due in full on November 24, 2021. In connection with the loan, the Company issued warrants to the related party lender to purchase 125,000 shares of the Company’s common stock at $0.001 per share. The warrants vest immediately and have a contractual life of 10 years. This note was discounted by $124,931 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized through the maturity date, which amounted to $23,275 for the three and nine months ended January 31, 2021. As of January 31, 2021, the remaining discount was $101,656. On December 3, 2020, Montsaic entered into an Assignment and Conveyance Agreement with 2490585 Ontario Inc., the Company’s existing related party lender. In connection with the agreement, Montsaic sold its full right, title and interest in its outstanding notes payable amounting to $1,820,000 to 2490585 Ontario, Inc., along with the 1,216,560 shares of common stock previously issued to Montsaic in connection with the debt agreement and the rights to receive the remaining 6,921,299 shares issuable. Subsequent to this point in time, the outstanding debt of $1,820,000 and all accrued interest is payable to 2490585 Ontario, Inc., and future interest will accrue at a rate of 9.5% per annum consistent with the rate being charged on their other outstanding debt. The scheduled maturity date of the debt remains unchanged and is due June 1, 2021. Total outstanding borrowings from this related party as of January 31, 2021 amounted to $6,220,000. The outstanding amount is net of total discounts of $154,110 for a net book value of $6,065,890 as of January 31, 2021. Interest expense to this related party for three and nine months ended January 31, 2021 amounted to $137,480 and $454,029, respectively. Interest expense to this related party for the three and nine months ended January 31, 2020 amounted to $7,500 and $12,500, respectively. Accrued interest due to this related party as of January 31, 2021 and April 30, 2020 amounted to $592,997 and $138,967, respectively. |