Convertible debentures -net of discounts

12 Months Ended

Dec. 31, 2021

Note 10 – Convertible debentures -net of discounts

During the year ended December 31, 2021, the Company [partially] funded operations with borrowing on new convertible promissory notes. This table presents the positions on the notes as of December 31, 2021, and 2020.

Holder	Date of Loan		Loan amount		OID and discounts and fees		Interest rate			Balance December 31, 2021			Balance December 31, 2020
Power Up Lending Group, Ltd		3-29-21	$	80,000		7,500		12	%	$	0		$	0
Power Up Lending Group, Ltd		5-25-21		53,625		4,875		10	%		0			0
Power Up Lending Group Ltd		10-06-21		50,000	$	3,750		8	%		53,750			0
6^th Street Lending LLC		11-10-21		35,000		3,750		12	%		38,750			0
6^th Street Lending LLC		12-17-21		40,000		3,750		12	%		43,750			0
Oasis Capital		07-19-21		118,000		10,000		8	%		7,653			153,817
Derivative liability		12-31-21									99,034			0
Total convertible debt			$	376,625	$	33,625					242,937			153,817
Less Original issue discounts											(9,127	)		0
Balances at 12-31-21 and 2020										$	233,810		$	153,817

On March 29, 2021, the Board of Directors of the Company deem it in the best interests of the Company to enter into the Securities Purchase Agreement dated March 29, 2021 (the “Agreement”) with Power Up Lending Group Ltd. (“PowerUp”), in connection with the issuance of: (i) a promissory note of the Company, in the aggregate principal amount of $80,000.00 (including $7,500.00 of Original Issue Discount) (the “Note”), (ii) Three Hundred Seventy Three Thousand Three Hundred Thirty Three (373,333) restricted common shares of the Company (“Commitment Shares”) to be delivered to PowerUp in book entry with the Company’s transfer agent prior to the Closing Date, (iii) Seventy Hundred Forty Six Thousand Six Hundred Sixty Seven (746,667) restricted common shares of the Company (“Security Shares” and together with the Note and the Commitment Shares, collectively, the “Securities”) to be delivered to PowerUp in book entry with the Company’s transfer agent prior to the Closing Date; and in connection therewith to enter into an irrevocable letter agreement with Vstock Transfer LLC, the Company’s transfer agent, with respect to the reserve of shares of common stock of the Company to be issued upon any conversion of the Note (only upon default); the issuance of such shares of common stock in connection with a conversion of the Note (the “Letter Agreement”). The Conversion terms of this note allow for a 25% discount to market based upon the price on the day before the announced date of conversion. The proceeds of this note were specifically slated for payment of the settlement of the Knight Capital Merchant Loan for $22,000 and the final payment of the Pearl Capital merchant note for $36,998. These discounted payoffs of these notes saved the company $26,446 plus future interest. During 2021 the Company paid $26,880 in payments on this note and PowerUp converted the balance of $62,720 into 3,318,505 shares of stock. The balance of this note on December 31, 2021, is $0.

On May 25, 2021, the Board of Directors of the Company deem it in the best interests of the Company to enter into the Securities Purchase Agreement (the “Agreement”) with Power Up Lending Group Ltd. (“PowerUp”), in connection with the issuance of: (i) a promissory note of the Company, in the aggregate principal amount of $53,625 (including $4,875 of Original Issue Discount and $3,750 for legal expenses.) (the “Note”), (ii)1,340,625 restricted common shares of the Company (“Commitment Shares”) to be delivered to PowerUp in book entry with the Company’s transfer agent prior to the Closing Date, to be issued upon any conversion of the Note (only upon default); the issuance of such shares of common stock in connection with a conversion of the Note (the “Letter Agreement. The Conversion terms of this note allow for a 25% discount to market based upon the price on the day before the announced date of conversion”. During 2021 the Company paid $11,798 in payments on this note and PowerUp converted the balance of $58,785 into 11,080,577 shares of stock. The balance of this note on December 31, 2021, is $0.

On September 30, 2021, the Board of Directors of the Company deem it in the best interests of the Company to enter into the Securities Purchase Agreement (the “Agreement”) with Power Up Lending Group Ltd. (“PowerUp”), in connection with the issuance of: (i) a promissory note of the Company, in the aggregate principal amount of $53,750 (including $3,750 for legal expenses.) (the “Note”), (ii) restricted common shares of the Company (“Commitment Shares”) to be delivered to PowerUp in book entry with the Company’s transfer agent prior to the Closing Date, to be issued upon any conversion of the Note (only upon default); the issuance of such shares of common stock in connection with a conversion of the Note (the “Letter Agreement”). The Conversion terms of this note allow for a 42% discount to market based upon the lowest trading price during the 20 day period before the announced date of conversion. The balance of this note on December 31, 2021, is $53,750.

On November 10, 2021, the Board of Directors of the Company deem it in the best interests of the Company to enter into the Securities Purchase Agreement (the “Agreement”) with 6^th Street Lending LLC, of Alexandria Virginia, in connection with the issuance of a promissory note of the Company, in the aggregate principal amount of $38,750 (including $3,750 for legal expenses.) (the “Note”), bearing interest at the rate of 12% per annum and convertible into common stock at the rate of 58% of the lowest market price in the 20-trading day period prior to the conversion date. The balance of this note on December 31, 2021, is $38,750.

On December 17, 2021, the Board of Directors of the Company deem it in the best interests of the Company to enter into the Securities Purchase Agreement (the “Agreement”) with 6^th Street Lending LLC, of Alexandria Virginia, in connection with the issuance of a promissory note of the Company, in the aggregate principal amount of $43,750 (including $3,750 for legal expenses.) (the “Note”), bearing interest at the rate of 12% per annum and convertible into common stock at the rate of 58% of the lowest market price in the 20-trading day period prior to the conversion date. The balance of this note on December 31, 2021, is $43,750.

The Company issued to Power Up Lending Group, Inc. a $96,300 Convertible Promissory Note dated May 13, 2019, which contains an original issue discount of $10,000 (OID) and expenses of $3,300 [“Note”]. The Note is convertible into Company common stock beginning six months after the date of the Note with a stated discount rate of 19% as set forth in the Note. There is no trigger of derivative liability from conversion features until six months after initial borrowing date. Without the OID, the effective discount would have been 35%. The net proceeds from this Note were used for working capital. $92,000 of this note was converted in 2019 and 2020. The balance of $4,300 was converted during the year ended December 31, 2020.

The Company issued to Power Up a $68,000 Convertible Promissory Note dated August 14, 2019 [“Note”] which contains an original issue discount of $10,000.00 (OID) and expenses of $3,000.00 [“Note”]. The Note is convertible into Company common stock beginning six months after the date of the Note with an effective discount rate of approximately 19% upon conversion. There is no trigger of derivative liability from conversion features until six months after initial borrowing date. Without the OID, the effective discount rate would be 35% as set forth in the Note. The net proceeds from the Note, was used for working capital. $68,000 of this note was converted during the year ended December 31, 2020.

The Company issued to Power Up a $76,000 Convertible Promissory Note dated September 11, 2019 [“Note”] which contains an original issue discount of $10,000.00 (OID) and expenses of $3,000.00 [“Note”]. The Note is convertible into Company common stock beginning six months after the date of the Note with an effective discount rate of approximately 19 % upon conversion. There is no trigger of derivative liability from conversion features until six months after initial borrowing date. Without the OID, the effective discount rate would be 35% as set forth in the Note. The net proceeds from the Note, was used for working capital. $18,550 of this note was fully converted during the year ended December 31, 2020.

As of September 1, 2018, the Company entered into an Equity Purchase Agreement with Oasis Capital, LLC, a Puerto Rico limited liability company (“Investor”) pursuant to which Investor agreed to purchase up to $5,000,000 of the Company’s common stock at a price equal to 85% of the market price at the time of purchase (“Put Shares”). The Company agreed to file a new registration statement to register for resale the Put Shares. The Registration Statement must be effective with the SEC before Investor is obligated to purchase any Put Shares. In addition, the Company [i] issued to Investor a one year $150,000 note which is convertible at a fixed price of $.01 per share as a commitment fee for its purchase of Put Shares and [ii] delivered to Investor a Registration Rights Agreement pursuant to which the Company agreed to register all Put Shares acquired under the Equity Purchase Agreement. This note was paid with the first conversion of shares in 2021 and the 12-31-20 balance of $3,264. The balance of this note is $0 on December 31, 2021.

As of January 21, 2020 (“Effective Date”), the Company issued to Oasis a $208,000 Promissory Note, net of a prorated original issue discount of $16,000 (“1/21/20 Note”). The Company received $34,000 (“First Tranche”) with four additional Tranches through December 31, 2020, totaling $85,000. There were three Tranches for the period of January 1, 2021, to February 19, 2021, totaling $70,000. Each Tranche matured nine months from the effective date of each such payment. The Company issued Warrants with each Tranche totaling 5,000,000 shares for which Oasis claims additional penalty shares and the Company disagrees. Each Warrant expires five years from the date of issuance and is exercisable at a conversion price of 120% of the closing price on the trading day prior to the funding date of the respective Tranche. The Company also agreed to issue to Oasis 5,000,000 shares of common stock as an incentive/commitment fee in connection with the transactions. The Company valued these shares at $14,500. The 1/21/20 Note is convertible into common stock at a 35% discount to market. The balance of the Note on December 31, 2021, is $35,505.

On July 19, 2021 The Company entered into a “Senior Secured Convertible Promissory Note” agreement with Oasis Capital, LLC in the amount of $118,000 that bears interest at 8% per annum. The first nine months of the interest was guaranteed. The note was secured with a securities purchase agreement that contained a $10,000 Original Issue Discount (OID) and an $8,000 transaction fee. The note was to be paid to ABCO (Borrower) in tranches as requested by the borrower. The first tranche paid was $20,000 and the note then accrued the $8,000 fee and prorated segment of $2,000 of the OID. The second tranche was for $25,000 and the prorated OID was $2,500. The company accrued interest of $1,090 on these two loans. As of December 31, 2021 the Company owed $50,590 on this note. The note also entitled Oasis to a warrant to acquire 7,379,612 shares of common stock.. With the two tranches of borrowing, Oasis has earned 1,718,861 warrants. The balance on this note at December 31, 2021 is $58,590.

On July 19, 2021, the Company entered into an Equity Purchase Agreement (“EPA”) with Oasis Capital, LLC, a Puerto Rico limited liability company (“Investor”) pursuant to which Investor agreed to purchase up to $2,500,000 of the Company’s common stock at a price equal to 80% of the lowest traded price of the common stock during the five trading days immediately preceding the applicable purchase (“Put Shares”). In addition, the Company entered into a Registration Rights Agreement (“RRA”) with Investor pursuant to which the Company agreed to register all Put Shares acquired under the Equity Purchase Agreement. The Company agreed to file a new registration statement on or before August 18, 2021, to register for resale of the Put Shares. The Registration Statement must be effective with the SEC before Investor is obligated to purchase any Put Shares. The parties subsequently agreed that the requirement to file the Registration Statement would terminate the agreement, so the Company elected to terminate both the EPA and RRA.

During 2021 Oasis converted $282,241 of debt consisting of payments of principal, interest and penalties and received 39,931,068 shares of common stock. In addition, Oasis received 5,545,039 shares of common stock upon exercise of warrants during 2021. On January 3, 2022, Oasis received an additional 5,206,350 common stock shares upon exercise of warrants.

The shareholders on January 11, 2021, authorized an increase in the Authorized Common Shares to 2,000,000,000 from 29,411,765. Our board of directors believes that it is desirable to have additional authorized shares of common stock available for possible future financings, acquisition transactions, joint ventures and other general corporate purposes. Our board of directors believes that having such additional authorized shares of common stock available for issuance in the future will give us greater flexibility and may allow such shares to be issued without the expense and delay of a special shareholders’ meeting unless such approval is expressly required by applicable law. Although such issuance of additional shares with respect to future financings and acquisitions would dilute existing shareholders, management believes that such transactions would increase the overall value of the Company to its shareholders.

Effective March 3, 2021, the Company issued an aggregate of 5,000,000 restricted common shares for services rendered, of which 500,000 were awarded to Wayne Marx, an officer and Director, 3,5000,000 shares to an LLC controlled by David Shorey, President, CEO and CFO, and 1,000,000 shares to an outside consultant.

Derivative Instruments

The Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging Activities require that instruments with embedded derivative features be valued at their market values. The Black Scholes model was used to value the derivative liability for the fiscal year ending December 31, 2021, and December 31, 2020. The initial valuation of the derivative liability on the non-converted common shares totaled $0 on December 31, 2021. This value includes the fair value of the shares that may be issued according to the contracts of the holders and valued according to our common share price at the time of acquisition.

The Company complies with the provisions of FASB ASC No. 820, Fair Value Measurements and Disclosures (“ASC 820”), in measuring fair value and in disclosing fair value measurements at the measurement date. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. FASB ASC No. 820-10-35, Fair Value Measurements and Disclosures- Subsequent Measurement (“ASC 820-10-35”), clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10-35-3 also requires that a fair value measurement reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Assumptions include the risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model.

The following table shows the change in the fair value of the derivative liabilities on all outstanding convertible debt on December 31, 2021, and on December 31, 2020:

Description	December 31, 2021			December 31, 2020
Purchase price of the convertible debenture - net of discount	$	0		$	0
Valuation reduction during the period
Balance of derivative liability net of discount on the notes (See Consolidated Balance sheet liabilities)	$	0		$	0

Derivative calculations and presentations on the Statement of Operations
Loss on note issuance	$	-		$	-
Change in Derivative (Gain) Loss		(12,792	)		(13,629	)
Derivative Finance fees		(93,706	)		(3,209	)
Gain (loss) on extinguishment of debt derivatives only		-			0
Derivative expense charged to operations in 2020 and 2019 (See Consolidated Statement of Operations)	$	(106,498	)	$	(16,838	)

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

ABCO Energy, Inc. 10-K/A