| Schedule of Notes Payable - Related Party |
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|
June 30, 2019 |
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December 31, 2018 |
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| 13.25% unsecured note payable due May 5, 2017 (1) |
|
$ |
1,250,000 |
|
|
$ |
1,250,000 |
|
| 10% unsecured note payable due December 31, 2018 (2) |
|
|
6,000,000 |
|
|
|
6,000,000 |
|
| Less: unamortized discount of imputed interest of 4% (2) |
|
|
- |
|
|
|
- |
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| Total debt |
|
|
7,250,000 |
|
|
|
7,250,000 |
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| Less: current maturities |
|
|
7,250,000 |
|
|
|
7,250,000 |
|
| Long-term debt, net of current maturities |
|
$ |
- |
|
|
$ |
- |
|
| (1) |
Effective
January 5, 2017, Foothills borrowed $1,250,000 from Berwin Trading Limited that, due to its 20% beneficial ownership in the
Company, is a related party. This note called for interest at 9% per annum; but because it was not paid when due interest
was to have accrued at a default rate of 11% from the due date of the note. The Company used net proceeds of this loan to
satisfy certain obligations under a Purchase and Sale Agreement with Total Belief Limited, dated December 30, 2016, for general
working capital and to support certain target drilling activities. |
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On
May 4, 2017, the Company and Berwin agreed to extend the maturity date of the debenture to June 20, 2017, in return for an
annual interest rate increase from 9% to 13.5% per annum for the life of the debenture. On November 3, 2017, Berwin agreed
to defer repayment of this note to a later date and acknowledged that the Company is not in default regarding this Debenture.
As partial consideration for the deferment, the Company issued Berwin 100,000 shares of its restricted common stock, valued
at $48,000. The issuance of the shares in exchange for the maturity extension was treated as a modification of existing debt
pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”).
On February 28, 2018, Berwin and the Company agreed to extend the maturity date of the debenture to June 30, 2018, and as
consideration for the extension, the Company agreed to compensate Berwin with 250,000 shares of restricted common stock valued
at $58,375. The issuance of the shares in exchange for the maturity extension was treated as a modification of existing debt
pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”).
In addition, the parties agreed that if payment of said principal and interest due and payable is made late, then a penalty
payment of $125,000 shall become due and payable to Berwin by the Company. On June 30, 2018, we recorded $125,000 penalty
as additional interest payable. The penalty payment was treated as a modification of existing debt pursuant to the guidance
of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). The Company and Berwin
are in ongoing discussions to extend the term of this Note and the Company believes it will either extend, rework or repay
the obligation to the satisfaction of Berwin. On July 29, 2018, Berwin agreed to defer repayment of this note to a later date
and acknowledged that the Company is not in default regarding this Debenture, and as consideration for the extension, the
Company agreed to compensate Berwin with 100,000 shares of restricted common stock valued at $12,000. The issuance of the
shares in exchange for the maturity extension was treated as a modification of existing debt pursuant to the guidance of ASC
470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). |
| (2) |
On
December 30, 2016, in connection with the TBL acquisition, Foothills entered into a promissory note in the amount of $6,000,000.
This note bears no interest during its term. The Company calculated and recorded $342,804 of imputed interest as debt discount.
Starting from July 1, 2018, the note bears 10% annual interest. |
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