Quarterly report pursuant to Section 13 or 15(d)

Note 12 - Notes Payable

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Note 12 - Notes Payable
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

NOTE 12 – NOTES PAYABLE

 

Notes payable consisted of the following:

 

   

(in thousands)

  
   

June 30,

    

December 31,

  
   

2024

    

2023

  

Promissory note dated July 27, 2021, issued to Arthur Chan, which matures July 26, 2024, and bears interest at a rate of 8.0% per annum.

   $ 2,500     $ 2,500  

Unsecured promissory note dated December 28, 2022 due to a related party. The interest rate on the note is 1.0% and matures on December 28, 2027.

     154       154  

Promissory note dated October 1, 2021, issued to Matthew Guild as part of the SilverStreak Solutions acquisition. The interest rate on the note was 10.0%. The note matures in March 2028.

     261       264  

Promissory note dated October 1, 2021, issued to Sterling Harlan as part of the SilverStreak Solutions acquisition. The interest rate on the note was 10.0%. The note matures in March 2028.

     1,044       1,058  

Secured promissory notes dated March 6, 2023 issued to People's California, LLC, which matures in March 2028 and bears interest at a rate of 10.0% per annum on the first $3.00 million due in December 2023, and 5.0% per annum on the remaining balance through September 2023 and 10.0% per annum thereafter. Payment of the remaining balance is due in March 2028.

     —       22,200  

Promissory note dated May 1, 2019, assumed by the Company on July 1, 2021 in connection with the purchase of real property, from a related party. The note matures on May 15, 2039 and bears interest at a rate of 9.9% per annum.

     2,773       2,813  

Promissory notes dated May 1, 2024 issued to the shareholders of CPG, at a nominal interest rate.

     761       —  

Convertible promissory notes dated May 1, 2024 issued to the shareholders of Safe Accessible Solutions, Inc., which mature through May 1, 2028 and bear interest at a rate of 7.0% per annum.

     983       —  

Convertible promissory notes dated May 1, 2024 issued to the shareholders of Coastal Pine Holdings, Inc., which mature through November 1, 2027 and bear interest at a rate of 7.0% per annum.

     869       —  

Notes payable issued in January 2023, assumed by the Company on May 1, 2024 in connection with the acquisition of CPG, which mature on June 1, 2025 and bear interest at a rate of 10.0% per annum.

     133       —  

Notes Payable - Promissory Notes

     9,478       28,989  

Vehicle Loans

     —       7  

Less: Short-Term Debt

     (3,723 )     (22,593 )

Plus (Less): Debt Premium (Discount), Net

     (117 )     82  

Net Long-Term Debt

   $ 5,638     $ 6,485  

 

Promissory Note Related to People's California, LLC

 

On March 6, 2023, the Company entered into a binding settlement term sheet (as amended on May 17, 2023, the “Settlement Term Sheet”) to resolve certain litigation matters with People’s California, LLC. On July 10, 2023, the Company received a notice from People's California, LLC in respect of the Settlement Term Sheet wherein People’s California, LLC notified the Company that it had failed to make a principal repayment of $2.20 million on July 6, 2023 and a monthly interest payment of $25,000 for the month of June 2023. As a result, the promissory notes held by People's California, LLC became callable by the creditor. Accordingly, the Company classified the long-term debt as current notes payable in the consolidated balance sheets as of June 30, 2024 and December 31, 2023.

 

Pursuant to the Settlement Term Sheet, on June 10, 2024, Unrivaled Brands, Inc. entered into a Membership Interest Purchase Agreement to sell its controlling membership interest in People's First Choice, LLC. Of the total consideration of $24.84 million, cash consideration of $9.00 million (the "Cash Consideration") was paid from the sale in the form of $8.00 million in cash due at closing and $1.00 million in a secured promissory note to be paid over 12 months. The Cash Consideration was paid to People’s in settlement of the debt pursuant to the Settlement Term Sheet. As a result of the sale and pursuant to the terms of the Settlement Term Sheet, after the Cash Consideration, the remaining debt to People’s is settled, subject to any deficiencies as defined therein. Accordingly, the Company recognized a gain on extinguishment of debt of $15.18 million for the three and six months ended June 30, 2024. Refer to "Note 19 – Discontinued Operations" for further information on the disposition.

 

Convertible Promissory Notes Related to Acquisition of Coastal Pines Group

 

On May 1, 2024, the Company issued secured promissory notes to the shareholders of Safe Accessible Solutions, Inc. and Coastal Pine Holdings, Inc. in the aggregate principal amount of $1,000,071 and $940,974, respectively, to be paid in monthly installments of approximately $29,493 per month over 40 months and $27,836 per month over 42 months, respectively. The promissory notes bear interest at a rate of 7.0% and  may be converted into common stock of the Company at the transaction valuation, on terms to be agreed upon.