Note 16. Subsequent Events

On April 17, 2020 the company entered into an unsecured note with US Century Bank for $344,762 related to the CARES act Payroll Protection Program. This note is fully guaranteed by the SBA and may be forgivable provided that certain criteria are met. The interest rate on the loan is 1%, and has a 2 year maturity. The Company is required to make payments on the remaining principal of the note net of any loan forgiveness beginning November 17, 2020.

On May 7, 2020 the Company entered into the eighth amendment to the Ares Loan and Security agreement. This amendment acknowledged the execution of the Payroll Protection Program loan as well provided a Reservation of Rights related to a default of the minimum EBITDA covenant. This amendment also established a default advance rate of an additional 3%.

On March 26, 2019, the Company issued a four-month promissory note in the principal amount of $1,000,000 (the “Kenar Note”) to Kenar Overseas Corp., a company registered in Panama (the “Lender”) the term of which was previously extended to March 31, 2020 after which time, on May 21, 2020, the Kenar Note was amended to (i) set the maturity date at March 31, 2021 (unless extended to September 30, 2021 at the Lender’s sole option), (ii) provide that the Company use one-third of any capital raise from the sale of its equity to reduce the outstanding principal under the Kenar Note, (iii) set the interest rate at 18% per annum, payable monthly commencing October 1, 2020, and (iv) to reduce the number of pledged shares by Mr. Keeler to 4,000,000. As consideration therefor, the Company has agreed to issue 1,021,266 shares of its Common Stock to Kenar.

On April 1, 2020, the Company issued a six-month promissory note in the principal amount of $100,000 to Lobo Holdings, LLC., a stockholder in the Company. The note bears interest at the rate of 10% per annum. The note may be prepaid in whole or in part without penalty. This note paid in full the $100,000 outstanding note dated August 2, 2019.

A Series A Preferred Stock dividend of common stock was authorized to the shareholders per the preferred shares designation on March 31, 2020. The dividend resulted in an issuance of 14,130 shares of stock with a value of $28,260.

On January 23, 2020 the Company issued 127,700 shares of stock for professional fees, and 30,321 shares of common stock for legal fees.