Quarterly report pursuant to Section 13 or 15(d)

Note 10 ??? Debt Obligations

v3.22.2.2
Note 10 – Debt Obligations
3 Months Ended
Jul. 31, 2022
Debt Disclosure [Abstract]  
Note 10 – Debt Obligations

Note 10 – Debt Obligations

 

  A. Decathlon Capital

In August 2021, Teal restructured its loan agreement with Decathlon Capital. The principal amount of $1,670,294 bears interest at 10% and is payable in monthly installments of $49,275 through its December 31, 2024 maturity date. The balance outstanding at July 31, 2022 totaled $1,256,632.

  

  B. Pelion Note

In May 2021, Teal entered into a note agreement totaling $350,000 which is payable upon demand. The note bears interest at the applicable Federal Rate as of the date of the Note which was 0.13% on the date of issuance. Accrued interest totaled $537 at July 31, 2022.

 

  C. Vendor Settlement

In May 2020, Teal entered into a settlement agreement with a vendor that had been providing contract manufacturing services. At August 31, 2021, the Company assumed the outstanding balance of $387,500 which is payable in monthly installments of $37,500 with a final payment of $12,500 that was paid in July 2022.

 

  D. SBA Loan

On February 11, 2021, Teal received a Small Business Administration Paycheck Protection Program (“SBA PPP”) loan in the amount of $300,910. The loan was unsecured, non-recourse, and accrued interest at one percent annually. The loan was used to fund qualifying payroll, rent and utilities, and in February 2022, the principal balance of $300,910 and accrued interest of $3,001 were forgiven.

 

  E. Shopify Capital

Shopify Capital is an affiliate of Shopify, Inc. which provides sales software and services to the Company.  The Company processes customer transactions ordered on the e-commerce site for Rotor Riot through Shopify.  Shopify Capital has entered into multiple agreements with the Company in which it has "purchased receivables" at a discount.  Shopify retains a portion of the Company's daily receipts until the purchased receivables have been paid.  The Company recognizes the discount as a transaction fee, in full, in the month in which the agreement is executed.  Agreements with activity during the two years ended July 31, 2022 included:

 

 Date of Transaction    Purchased Receivables   Payment to Company   Transaction Fees    Withholding Rate    Fully Repaid In
May 2020     $158,200   $140,000   $18,200   17%   October 2020
September 2020   $209,050   $185,000   $24,050   17%   May 2021
April 2021   $236,500   $215,000   $21,500   17%   January 2022

   

  F. Corporate Equity

Beginning in October 2021, and amended in January 2022, Teal financed a total of $120,000 of leasehold improvements with Corporate Equity. The loan bears interest at 8.25% annually and requires monthly payments of $3,595 through December 2024. The balance outstanding at July 31, 2022 and April 30, 2022 totaled $93,864 and $102,599 respectively.

 

  G. Revenue Financing Arrangement

In April 2021, Teal entered into an agreement under which it sold future customer payments, at a discount, to Forward Financing. At August 31, 2021, the Company assumed the outstanding balance of $38,758. Repayment of the remaining balance was completed in January 2022.

 

  H. Ascentium Capital

In September 2021, Teal entered into a financing agreement with Ascentium Capital to fund the purchase of a fixed asset totaling $24,383. Monthly payments of $656 are payable through October 2024. The balance outstanding at July 31, 2022 totaled $17,317.

 

  I. PayPal

PayPal is an electronic commerce company that facilitates payments between parties through online funds transfers. The Company processes certain customer payments ordered on its e-commerce site through PayPal. The Company has entered into multiple agreements under which PayPal provides an advance on customer payments, and then retains a portion of customer payments until the advance is repaid.  PayPal charges a fee which the Company recognizes in full upon entering an agreement.  A November 2019 agreement under which PayPal advanced $100,000 and charged a transaction fee of $6,900 was completed in January 2021.  A January 2021 agreement under which PayPal advanced $75,444 and charged a transaction fee of $2,444 was completed in August 2021. 

 

  J. Summary

Outstanding principal payments on debt obligations are due as follows:

 

Fiscal 2023   $ 744,108  
Fiscal 2024     572,139  
Fiscal 2025     401,568  
Total   $ 1,717,815  
Short term – through July 31, 2023   $ 882,096  
Long term – thereafter   $ 835,719