Cardiff Lexington Corp
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001683168-24-003207
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001683168-24-005634
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 68 previous paragraphs and 78 current paragraphs.
41 unchanged; 21 reworded; 12 added; 5 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 7 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Comparison of Six Months Ended June 30, 2024 and 2023
Current report
Revenue. Our total revenue decreased by $1,077,975, or 17.76%, to $4,992,930 for the six months ended June 30, 2024 from $6,070,905 for the six months ended June 30, 2023. The decrease in revenue is primarily attributable to the mix of services provided during the first half of the year with less higher revenue surgical procedures performed and an increase in the lower revenue pain management treatments being performed for approximately the same number of patient visits in the current six month period as compared to the same six month period in the prior year.
Current report
Cost of sales. Our total cost of sales decreased by $296,820, or 14.56%, to $1,741,164 for the six months ended June 30, 2024 from $2,037,984 for the six months ended June 30, 2023. This decrease is mainly attributable to decreases in salaries and wages, surgical contracted services and laboratory fees.
Current report
Gross profit. As a result of the foregoing, our total gross profit decreased by $781,155, or 19.37%, to $3,251,766 for the six months ended June 30, 2024 from $4,032,921 for the six months ended June 30, 2023. Our total gross margin (as a percent of revenue) decreased from 66.43% for the six months ended June 30, 2023 to 65.13% for the six months ended June 30, 2024.
Current report
Selling, general and administrative expenses. Our selling, general and administrative expenses increased by $1,410,230, or 92.90%, to $2,928,163 for the six months ended June 30, 2024 from $1,517,933 for the six months ended June 30, 2023. As a percentage of revenue, our selling, general and administrative expenses were 58.65% and 25.00% for the six months ended June 30, 2024 and 2023, respectively. Increases were primarily attributable to increases in bad debt expense of $1,242,017, salaries and wages expense of $504,350 and stock compensation expense of $93,600, offset by decreases in professional fees of $21,826 and management fees of $45,000. As a result of our efforts to accelerate cash collections throughout 2024, we have experienced lower than normal settlements of our accounts receivable resulting in the increase in bad debt expense in the three months ended June 30, 2024. This may continue as we continue to pay down the liability associated with the third-party factoring of accounts receivable from previous years.
Current report
Net income (loss). As a result of the cumulative effect of the factors described above, our net loss for the six months ended June 30, 2024 was $457,551, as compared to net income of $800,087 for the six months ended June 30, 2023, a decrease of $1,257,638.
Current report
Prior to April 2023, we factored (sold) the vast majority of our accounts receivable to third party(s) to generate working capital to fund ongoing business operations and growth, which led to a significant increase in accounts receivable. We have a 99% collection rate based on net settlements recorded to our accounts receivable and revenue. Our accounts receivable balance each reporting period does not include accounts receivables that were factored (sold). Further, accounts receivable and revenue are recorded at what we anticipate will ultimately be collected, which historically is 99% of the net recognized upon billing to our patients of gross amounts for services. In the past, for those receivables that were factored, and we were advanced 46% of the accounts receivable balance and recorded 54% to finance charge. We last factored our accounts receivable in the first quarter of fiscal 2023. Collection rates are estimated considering our 48-month historical collections with primary emphasis to the most current prior 12-month trailing payment and collection percentage rates. As a result of our efforts to accelerate cash collections throughout 2024, in order to paydown the liability associated with the third-party factoring from previous years, we have experienced lower than normal collection rates on our accounts receivable. We acquired Nova in May 2021. Nova was founded in January 2019. As of December 31, 2023, we based our 48-month historical collections analysis on a look back period from December 31, 2023 to 48 months, part of which was a period of time we did not yet own Nova. We use the loss rate method to measure expected credit losses, and in addition we qualitatively evaluate on an ongoing basis various factors, which include market conditions in which we operate, and the status of claims being settled. We have established billing rates, which are not the same as actual amounts recovered. These rates generally do not reflect what is ultimately paid by the customer, insurance carriers, law firms and other payors, which is typically received eighteen to twenty-four months later, and are not reported in the consolidated financial statements at those established billing rates. Our customers, the patients, typically pay amounts based on established charges per procedure with guidance from the annually updated Current Procedural Terminology, or CPT, guidelines (a code set maintained by the American Medical Association through the CPT Editorial Panel), that designates relative value units and a suggested range of charges for each procedure which is then assigned a CPT code. This fee is discounted to reflect the percentage paid to us “using a modifier” recognized by each insurance carrier for services, less deductible, co-pay, and contractual adjustments which are deducted from the calculated fee. The net revenue is recorded at the time the services are rendered. Collection of that revenue typically occurs eighteen to twenty-four months later and…
Excerpt shortened here; the source contains the full paragraph.
Current report
For the six months ended June 30, 2023, we factored a total of $544,196 of our accounts receivable in exchange for cash of $253,750. We ceased factoring of accounts receivable in the first quarter of 2023. The most recent average collection time for accounts receivable was approximately 470 days from the initial date of service. Typically, a patient will have a series of dates of service over an average of 12 to 16 months.
Current report
On June 11, 2024, we entered into a settlement agreement and release of claims with the holder certain notes. Pursuant to the settlement agreement and release of claims, the holder agreed to cancel such notes in exchange for the fixed amount settlement promissory note in the principal amount of $535,000 described below. Additionally, during the six months ended June 30, 2024, we exchanged certain notes for the issuance of 938,908 shares of series Y senior convertible preferred stock to the noteholder.
Current report
Promissory Note – Settlement Agreement
Current report
On June 11, 2024, we entered into a settlement agreement and release of claims with the holder of 165 shares of series R convertible preferred stock and certain convertible promissory notes. Pursuant to the settlement agreement and release of claims, the holder agreed to cancel its shares of series R convertible preferred stock and convertible promissory notes in exchange for a new fixed amount settlement promissory note in the principal amount of $535,000. This transaction was accounted for as a debt extinguishment and a gain on settlement of $78,834 was recorded to the unaudited consolidated statement of operations for the quarter ended June 30, 2024, in accordance with FASB Topic 470Borrower’s Accounting for Debt Modifications.
Current report
The note does not bear interest and requires fixed payments as follows: (i) if we raise at least $5 million but less than $6 million in our planned underwritten public offering, or the Offering, then we must pay $250,000 on the closing date of the Offering, with payments of $125,000, $125,000 and $35,000 to follow on the 90 th, 180 th, and 240 th days following the closing of the Offering, respectively; (ii) if we raise at least $6 million but less than $7 million in the Offering, then we must pay $390,000 on the closing date of the Offering and $145,000 on the 90 th day following the closing of the Offering; and (iii) if we raise at least $7 million in the Offering, then we must repay the entire principal amount on the closing date of the Offering. If the Offering is not completed by August 15, 2024, then we are required to pay $25,000 on such date and to continue making payments of $25,000 on each monthly anniversary thereof until the entire principal amount is repaid in full. If the Offering is completed after August 15, 2024, then we are required to make payments as described in the schedule above. Notwithstanding the foregoing, if we abandon the Offering and conduct a new public offering thereafter, then we are required to make a payment of $100,000 on the closing date of such other public offering, a second payment of $100,000 on the 90 th day following the closing of such offering and $35,000 each month thereafter until the entire principal amount is repaid in full. If any portion of the principal amount remains unpaid on the second (2 nd) anniversary of the date of the note, it shall become immediately due and payable on such date. We may prepay the entire principal amount at any time without penalty. The note is unsecured and contains customary events of default for a loan of this type. Upon an event of default, interest would automatically begin to accrue at a simple interest rate of ten percent per annum.
Removed paragraphs (5)
Previous report
The following is a schedule of convertible notes payable outstanding as of March 31, 2024:
Previous report
*Note 29-2.*On May 10, 2019, we issued a convertible promissory note in the principal amount of $150,000. On November 8, 2019, this note (Note 29) was purchased by and assigned to an unrelated party. The amount assigned was the existing principal amount of $150,000 and accrued interest of $5,918, which was issued as Note 29-1, plus a new convertible promissory note in the principal amount of $62,367, which was issued as Note 29-2. Note 29-2 is currently in default and accrues interest at a default interest rate of 24% per annum.
Previous report
Notes 37-1, 37-2 and 37-3. On September 3, 2020, we issued a convertible promissory note in the principal amount of $200,000, with original issue discount of $50,000, which could be drawn in several tranches. On September 3, 2020, we executed the first tranche in the principal amount of $67,000, less original issue discount of $17,000, which matured on June 30, 2021 (Note 37-1). On November 2, 2020, we executed the second tranche in the principal amount of $66,500, less original issue discount of $16,500, which matured on August 31, 2021 (Note 37-2). On December 29, 2020, we executed the third tranche in the principal amount of $66,500, less original issue discount of $16,500, which matured on September 30, 2021 (Note 37-3). Notes 37-1, 37-2 and 27-3 are currently in default and accrue interest at a default interest rate of 18% per annum.
Previous report
*Notes 40-1, 40-2, 40-3, 40-4, 40-5, 40-6, 40-7, 40-8, 40-9 and 40-10.*On September 22, 2022, we issued a convertible promissory note in the principal amount of $2,600,000 in exchange for total of $4,791,099 of defaulted promissory notes balances (Note 40-1). On November 4, 2022, we executed a second tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-2). On November 28, 2022, we executed the third tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-3). On December 21, 2022, we executed a fourth tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-4). On January 24, 2023, we executed a fifth tranche under this note in the principal amount of $90,166, less an original issue discount and fee of $25,166 (Note 40-5). On March 21, 2023, we executed a sixth tranche under this note in the principal amount of $136,666, less an original issue discount and fee of $39,166 (Note 40-6). On June 5, 2023, we executed a seventh tranche under this note in the principal amount of $136,667, less original issue discount and fee of $39,167 (Note 40-7). On June 13, 2023, we executed an eighth tranche under this note in the principal amount of $21,167, less original issue discount and fee of $5,167 (Note 40-8). On July 19, 2023, we executed a ninth tranche under this note in the principal amount of $35,500, less an original issue discount and fee of $8,875 (Note 40-9). On July 24, 2023, we executed a tenth tranche under this note in the principal amount of $14,000, less an original issue discount and fee of $3,500 (Note 40-10). On December 1, 2023, we executed amendment on Notes series 40 consolidated senior secured convertible promissory note to extend the expired tranche note 40-1 through 40-5 due date to September 20, 2024. All of the Note 40 tranches mature in one year from the note issuance date and accrue interest at a rate of 10% per annum.
Previous report
We have obtained short-term advances from the Chairman of the Board that are non-interest bearing and due on demand. As of March 31, 2024, we owed the Chairman $45,844.
Reworded paragraphs (21)
Previous wording
Revenue. For the three months ended March 31, 2024 and 2023, all of our revenue was generated by our healthcare segment, which generates revenue through a full range of diagnostic and surgical services. Our total revenue slightly decreased by $44,433, or 1.64%, to $2,661,966 for the three months ended March 31, 2024 from $2,706,399 for the three months ended March 31, 2023.
Current wording
Revenue. For the three months ended June 30, 2024, and 2023, all of our revenue was generated by our healthcare segment, which generates revenue through a full range of diagnostic and surgical services. Our total revenue decreased by $1,033,542, or 30.72%, to $2,330,964 for the three months ended June 30, 2024 from $3,364,506 for the three months ended June 30, 2023. The decrease in revenue is primarily attributable to the mix of services provided during the quarter with less higher revenue surgical procedures performed and an increase in the lower revenue pain management treatments being performed for approximately the same number of patient visits in the current three month period as compared to the same three month period in the prior year.
Previous wording
Cost of sales. Consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies. Our total cost of sales decreased by $8,141, or 0.85%, to $948,154 for the three months ended March 31, 2024 from $956,295 for the three months ended March 31, 2023. Such decrease was primarily due to a decrease insurgical contracted services and laboratory fees.
Current wording
Cost of sales. Our cost of sales consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies. Our total cost of sales decreased by $288,679, or 26.69%, to $793,010 for the three months ended June 30, 2024 from $1,081,689 for the three months ended June 30, 2023. This decrease is mainly attributable to decreases in salaries and wages, surgical contracted services and laboratory fees.
Previous wording
Gross profit. As a result of the foregoing, our total gross profit slightly decreased by $36,292, or 2.07%, to $1,713,812 for the three months ended March 31, 2024 from $1,750,104 for the three months ended March 31, 2023. Our total gross margin (percent of revenue) decreased from 64.67% for the three months ended March 31, 2023 to 64.38% for the three months ended March 31, 2024.
Current wording
Gross profit. As a result of the foregoing, our total gross profit decreased by $744,863, or 32.63%, to $1,537,954 for the three months ended June 30, 2024 from $2,282,817 for the three months ended June 30, 2023. Our total gross margin (as a percent of revenue) decreased from 67.85% for the three months ended June 30, 2023 to 65.98% for the three months ended June 30, 2024.
Previous wording
Depreciation expense. Our depreciation expense was $3,365, or 0.13% of revenue, for the three months ended March 31, 2024, as compared to $4,635, or 0.17% of revenue, for the three months ended March 31, 2023. The decrease in depreciation expense was due to certain assets becoming fully depreciated.
Current wording
Depreciation expense. Our depreciation expense was $3,366, or 0.14% of revenue, for the three months ended June 30, 2024, as compared to $3,365, or 0.10% of revenue, for the three months ended June 30, 2023.
Previous wording
Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel expenses, including employee salaries, bonuses plus related payroll taxes and stock compensation expense, advertising expenses, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our selling, general and administrative expenses increased by $203,309, or 20.58%, to $1,191,230 for the three months ended March 31, 2024 from $987,921 for the three months ended March 31, 2023. As a percentage of revenue, our selling, general and administrative expenses were 44.75% and 36.50% for the three months ended March 31, 2024 and 2023, respectively. Increases were primarily attributable to increased bad debt expense of $69,834 and increased salaries and wages of $193,135.
Current wording
Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel expenses, including employee salaries, bonuses plus related payroll taxes and stock compensation expense, advertising expenses, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our selling, general and administrative expenses increased by $1,206,920, or 227.72%, to $1,736,933 for the three months ended June 30, 2024 from $530,013 for the three months ended June 30, 2023. As a percentage of revenue, our selling, general and administrative expenses were 74.52% and 15.75% for the three months ended June 30, 2024 and 2023, respectively. Increases were primarily attributable to increases in salaries and wages expense of $311,215, bad debt expense of $902,183, rent expense of $44,363, board fee expense of $30,919, general and administrative expenses of $19,646 and professional fees of $28,605 offset by a decrease in management fees of $150,000. As a result of our efforts to accelerate cash collections throughout 2024, we have experienced lower than normal settlements of our accounts receivable resulting in the increase in bad debt expense in the three months ended June 30, 2024. This may continue as we continue to pay down the liability associated with the third-party factoring of accounts receivable from previous years.
Previous wording
Total other expense. We had $390,784 in total other expense, net, for the three months ended March 31, 2024, as compared to other expense, net, of $728,049 for the three months ended March 31, 2023. Other expense, net, for the three months ended March 31, 2024 consisted of interest expense of $376,269, amortization of debt discounts of $13,515 and penalties and fees of $1,000. Other expense, net, for the three months ended March 31, 2023 consisted of interest expense of $693,661, amortization of debt discounts of $17,983 and financing penalties and fees of $17,000, offset by a gain on debt refinance of forgiveness of $390 and other income of $205.
Current wording
Total other income (expense). We had $27,898 in total other income, net, for the three months ended June 30, 2024, as compared to total other expense, net, of $889,551 for the three months ended June 30, 2023. Other income, net, for the three months ended June 30, 2024 consisted of gain on debt refinance and forgiveness of $78,834 and other income of $2,047, offset by interest expense of $41,347, amortization of debt discounts of $11,306 and penalties and fees of $330. Other expense, net, for the three months ended June 30, 2023 consisted of interest expense of $843,918, amortization of debt discounts of $30,633 and financing penalties and fees of $15,000. The interest income for the three months ended June 30, 2024 was mainly a result of the write-off of accrued interest as part of the settlement agreement described below.
Previous wording
Net loss. As a result of the cumulative effect of the factors described above, our net loss was $283,104 for the three months ended March 31, 2024, as compared to $15,991 for the three months ended March 31, 2023, an increase of $267,113.
Current wording
Net income (loss). As a result of the cumulative effect of the factors described above, our net loss was $174,447 for the three months ended June 30, 2024, as compared to net income of $816,078 for the three months ended June 30, 2023, a decrease of $990,525.
Previous wording
Share based compensation expense. Our share-based compensation expense was $300,225, or 11.28% of revenue, for the three months ended March 31, 2024, as compared to $0 for the three months ended March 31, 2023. The increase was due to stock issuances to an investor relation services to outside consultant, stock issued to board members and stock issued as compensation for new employment bonuses to management.
Current wording
Share based compensation expense. Our share-based compensation expense $300,225, or 6.01% of revenue, for the six months ended June 30, 2024, as compared to $0 for the six months ended June 30, 2023. The increase is due to stock issuances for investor relation services, stock issued to board members and stock issued as compensation for new employment bonuses to management.
Previous wording
Discontinued operations. For thethree months ended March 31, 2024 and 2023, we recorded a loss from discontinued operations of $111,312 and $45,490, respectively.
Current wording
Discontinued operations. For the six months ended June 30, 2024 and 2023, we recorded a loss from discontinued operations of $111,312 and $89,300, respectively.
Previous wording
As of March 31, 2024, we had $1,253,552 in cash. To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from stockholders and third-party and related party debt.
Current wording
As of June 30, 2024, we had $3,196,795 in cash. To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from stockholders and third-party and related party debt.
Previous wording
The following table provides detailed information about our net cash flow for the three months ended March 31, 2024 and 2023.
Current wording
The following table provides detailed information about our net cash flow for the six months ended June 30, 2024 and 2023.
Previous wording
Our net cash used in operating activities from continuing operations was $1,187,816 for the three months ended March 31, 2024, as compared to $160,989 for the three months ended March 31, 2023. For the three months ended March 31, 2024, our net loss of $283,104, an decrease in accounts receivable of $1,684,510 and an decrease in accrued officer’s compensation of $410,000, offset by increase in share based compensation of $788,600 and increase in bad debt of $339,834, were the primary drivers of our net cash used in operating activities. For the three months ended March 31, 2023, our net loss of $15,991 and an increase in accounts receivable of $1,111,317, offset by an increase in accounts payable and accrued expenses of $270,710, bad debt of $270,000, an increase in accrued officer’s compensation of $154,000, and an increase in accrued interest of $122,508, were the primary drivers for the cash used in operations.
Current wording
Our net cash used in operating activities from continuing operations was $1,980,727 for the six months ended June 30, 2024, as compared to $260,466 for the six months ended June 30, 2023. The primary drivers of our net cash used in operating activities for the six months ended June 30, 2024 are our net loss of $457,551, decreases of $2,755,040 in accounts receivable, $367,400 in accounts payable and other accrued expenses and $380,001 in accrued officer’s compensation, offset by $1,242,017 in bad debt expense and share based compensation of $788,600. For the six months ended June 30, 2023, our net income of $800,087, an increase in accounts payable and accrued expenses of $738,353, an increase in accrued officer’s compensation of $334,000, bad debt expense of $270,000 and an increase in accrued interest of $248,137, offset by a decrease in accounts receivable of $2,859,607, were the primary drivers for the cash used in operations.
Previous wording
We had no investing activities for the three months ended March 31, 2024 and 2023.
Current wording
We had no investing activities for the six months ended June 30, 2024 and 2023.
Previous wording
Our net cash provided by financing activities was 1,463,113 for the three months ended March 31, 2024, as compared to $239,250 for the three months ended March 31, 2023. Net cash provided by financing activities for the three months ended March 31, 2024 consisted of the proceeds of $1,463,273 from line of credit, offset by the repayment of a loan of $160. Net cash provided by financing activities for the three months ended March 31, 2023 consisted of the proceeds of $240,000 from convertible notes, offset by the repayment of a loan of $750.
Current wording
Our net cash provided by financing activities was $4,199,267 for the six months ended June 30, 2024, as compared to $360,470 for the six months ended June 30, 2023. Net cash provided by financing activities for the six months ended June 30, 2024 consisted of the proceeds of $4,522,695 from line of credit, offset by the payment of $120,997 to a director, $100,079 paid on convertible notes payable, $100,000 in dividend payments and $2,352 in payments on the SBA loan described below. Net cash provided by financing activities for the six months ended June 30, 2023 consisted of proceeds from convertible notes payable of $355,500 and proceeds from line of credit of $35,131, offset by repayments of line of credit of $30,161.
Previous wording
As of March 31, 2024, we had convertible debt outstanding net of amortized debt discount of $3,820,545. During the three months ended March 31, 2024, we did not receive any proceeds from convertible notes and repaid $50,000 of accrued interest to a convertible noteholder.
Current wording
As of June 30, 2024, we had convertible debt outstanding net of amortized debt discount of $110,000. During the six months ended June 30, 2024, we made $100,080 in principal payments and paid the total outstanding accrued interest on these notes in the amount of $22,279. We also paid $100,000 of accrued interest to a convertible noteholder.
Previous wording
Note 10, 10-1, 10-2 and 10-3. On January 24, 2017, we issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on January 24, 2018. Note 10 is currently in default and accrues interest at a default interest rate of 20% per annum. On February 10, 2023, we executed a second tranche under this note in the principal amount of $50,000 (Note 10-1). On March 30, 2023, we executed a third tranche under this note in the principal amount of $25,000 (Note 10-2). On August 11, 2023, we executed a fourth tranche under this note in the principal amount of $25,000 (Note 10-3). Notes 10-1 and 10-2 are currently in default and accrue interest at a default interest rate of 20% per annum. Note 10-3 accrues interest at a rate of 15% per annum.
Current wording
On January 24, 2017, we issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on January 24, 2018. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On March 30, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On August 11, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note accrues interest at a rate of 15% per annum.
Previous wording
*Note 41.*On August 25, 2023, we issued a twelve-month convertible promissory note in the principal amount of $5,000 to our Chief Executive Officer for our operating expenses. The rate of interest is 10% per annum.
Current wording
On August 25, 2023, we issued a twelve-month convertible promissory note in the principal amount of $5,000 to our chief executive officer for our operating expenses. The rate of interest is 10% per annum.
Previous wording
On June 2, 2020, we obtained a loan from the Small Business Administration of $150,000 at an interest rate of 3.75% with a maturity date of June 2, 2050. The principal balance and accrued interest at March 31, 2024 was $149,494 and $0, respectively.
Current wording
On June 2, 2020, we obtained a loan from the Small Business Administration of $150,000 at an interest rate of 3.75% with a maturity date of June 2, 2050. The principal balance and accrued interest at June 30, 2024 was $147,301 and $0, respectively.
Previous wording
On March 12, 2009, we issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at March 31, 2024 and the accrued interest was $7,876. We assigned all of our receivables from consumer activations of the rewards program as collateral on this debenture.
Current wording
On March 12, 2009, we issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at June 30, 2024 and the accrued interest was $8,205. We assigned all of our receivables from consumer activations of the rewards program as collateral on this debenture.
Previous wording
On September 29, 2023, our company and Nova entered into a two-year revolving purchase and security agreement with DML HC Series, LLC to sell, with recourse, Nova’s accounts receivables for a revolving financing up to a maximum advance amount of $4.5 million. As of March 31, 2024, we had $3,583,373 outstanding balance against the revolving receivable line of credit. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September 29, 2025.
Current wording
On September 29, 2023, our company and Nova entered into a two-year revolving purchase and security agreement with DML HC Series, LLC, or DML, to sell, with recourse, Nova’s accounts receivables for a revolving financing up to a maximum advance amount of $4.5 million. A review is performed on a quarterly basis to assess the adequacy of the maximum amount. If mutually agreed upon by us and DML, the maximum amount may be increased. On April 24, 2024, we entered into amendment No. 1 with DML which increased the maximum advance amount to $8,000,000 and defined the discount fee equal to 2.25% per purchase and claims balance forward on new purchases with a minimum fee to now be $10,000. On June 11, 2024, we entered into amendment No. 2 with DML which further increased the maximum advance amount to $11,000,000. As of June 30, 2024, we had an outstanding balance of $6,675,746 against the revolving receivable line of credit. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September 29, 2025.
Previous wording
In connection with the acquisition of Edge View on July 16, 2014, we assumed amounts due to previous owners who are current managers of Edge View. These amounts are due on demand and do not bear interest. The balance of these amounts are $4,979 as of March 31, 2024.
Current wording
In connection with the acquisition of Edge View on July 16, 2014, we assumed amounts due to previous owners who are current managers of Edge View. These amounts are due on demand and do not bear interest. The balance of these amounts is $4,979 as of June 30, 2024.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Discontinued operations. For the three months ended June 30, 2024 and 2023, we recorded a loss from discontinued operations of $0 and $43,810, respectively.
Current report — wording carried from elsewhere
The following table sets forth key components of our results of operations during the six months ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenue.
Current report — wording carried from elsewhere
Depreciation expense. Our depreciation expense was $6,731, or 0.13% of revenue, for the six months ended June 30, 2024, as compared to $8,000, or 0.13% of revenue, for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Total other expense. We had $362,886 in total other expense, net, for the six months ended June 30, 2024, as compared to total other expense, net, of $1,617,601 for the six months ended June 30, 2023. Other expense, net, for the six months ended June 30, 2024 consisted of interest expense of $417,616, amortization of debt discounts of $24,821 and penalties and fees of $1,330, offset by other income of $78,834 for the gain on debt refinance and forgiveness and other income of $2,047. Other expense, net, for the six months ended June 30, 2023 consisted of interest expense of $1,537,579, amortization of debt discounts of $48,616 and financing penalties and fees of $32,000, offset by a gain on debt refinance and forgiveness of $390 and other income of $204. The decrease is primarily attributable to the decrease in interest expense due to the settlement agreement described below.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Note 9. On September 12, 2016, we issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on September 12, 2017. Note 9 is currently in default and accrues at a default interest rate of 20% per annum.