NOTE 8          DEBT OBLIGATIONS

Debt at June 30, 2024 and  December 31, 2023 consisted of the following:

GHF, Inc. Unsecured Promissory Note

On December 15, 2021, the Company entered into a long-term promissory note (the “GHF 2021 Note”) with GHF, Inc. (“GHF”), with a principal amount of $5,000,000, of which $4,550,000 was funded and $450,000 was an original issue discount (“OID”) with the principal due on December 15, 2024, and interest payable monthly at a rate of 6% annually. On August 22, 2022, in connection with the GHF 2021 Note, the Company issued warrants to GHF which allowed them to purchase 200,000 shares of the Company’s common stock at $1.00 per share (the “First GHF Warrants”). The First GHF Warrants were exercisable on or prior to August 22, 2024. On December 15, 2022, in connection with the GHF 2021 Note, the Company issued additional warrants to GHF which allowed them to purchase 1,000,000 shares of the Company’s common stock, of which 500,000 were exercisable at $0.4555 (the “Second GHF Warrants”) and the remaining 500,000 were exercisable at $2.5217 (the “Third GHF Warrants” and collectively with the First GHF Warrants and the Second GHF Warrants, the “GHF Warrants”). The Second GHF Warrants and the Third GHF Warrants were exercisable on or prior to December 15, 2024. On April 22, 2024, the Company and GHF amended the GHF 2021 Note (the “Amended GHF 2021 Note”) to extend the maturity from December 15, 2024 to April 15, 2026 and increase the interest rate from 6% to 12% per annum. The Company determined that the Amended GHF 2021 Note resulted in a debt modification and recorded in the second quarter of 2024 a loss on debt extinguishment of $331,891 in our condensed consolidated statement of operations. Prepayment is allowed in full or in part at any time without premium or penalty. The loan is secured by all non-mining related assets of the Company, Silver Springs land and water rights, excluding the Lucerne and Dayton properties. The Company is required to prepay the GHF 2021 Note with any net cash proceeds received in the sale of any collateral. During the three-months ended June 30, 2024 and 2023, the Company recognized interest expense of $133,884 and $158,447, respectively, including OID amortization of $21,755 and $94,273, respectively, in connection with the GHF 2021 Note. During the six-months ended June 30, 2024 and 2023, the Company recognized interest expense of $292,331 and $315,152, respectively, including OID amortization of $116,028 and $187,510, respectively, in connection with the GHF 2021 Note. On April 22, 2024, the Company and GHF also amended the GHF Warrants, whereby (i) the exercise price of the First GHF Warrants and the Third GHF Warrants was reduced to $0.4555, and (ii) the maturity of the GHF Warrants was extended to December 31, 2025. The incremental fair value resulting of the amendments to the GHF Warrants was $85,331 and was recognized as part of the loss on debt extinguishment (see Note 10, Equity).

Alvin Fund Note

On October 25, 2022, the Company entered into a short-term promissory note (the “Alvin Fund 2022 Note”) with Alvin Fund LLC (“Alvin Fund”) with a principal amount of $2,000,000. In consideration for entering into the Alvin Fund 2022 Note, the Company issued to Alvin Fund common shares of the Company at a fair value of $250,000, which was recognized as a discount on the Alvin Fund 2022 Note. The maturity date pursuant to the Alvin Fund 2022 Note was originally October 25, 2023. On September 30, 2023, the Company and Alvin Fund amended the Alvin Fund 2022 Note to extend the maturity date to January 31, 2026, at an interest rate of 16%. Interest was payable monthly at a rate of 9% annually. On April 22, 2024, the Company and Alvin Fund amended the Alvin Fund 2022 Note (the “Amended Alvin Fund 2022 Note”) to extend the maturity from January 31, 2026 to April 15, 2026. Prepayment is allowed in full or in part at any time without premium or penalty. The Alvin Fund 2022 Note is secured by all the property commonly referred to as the Dayton properties. During the three-months ended June 30, 2024 and 2023, the Company recognized interest expense of $79,781 and $107,206, respectively, including OID amortization of $0 and $62,329, respectively, in connection with the Alvin Fund 2022 Note. During the six-months ended June 30, 2024 and 2023, the Company recognized interest expense of $159,562 and $213,234, respectively, including OID amortization of $0 and $123,973, respectively, in connection with the Alvin Fund 2022 Note. 

On November 12, 2023, the Company entered into a short-term promissory note (the “Alvin Fund 2023 Note”) with Alvin Fund with a principal amount of $2.1 million which includes $100,000 OID. The full principal was due on February 12, 2025. Interest was payable monthly at a rate of 8% annually. On November 12, 2023, in connection with the Alvin Fund 2022 Note, the Company issued warrants to Alvin Fund which allowed them to purchase 1,000,000 shares of the Company’s common stock at $0.70 per share (the “Alvin Fund Warrants”). The Alvin Fund Warrants were exercisable on or prior to November 12, 2025. On April 22, 2024, the Company and Alvin Fund amended the Alvin Fund 2023 Note (the “Amended Alvin Fund 2023 Note”) to extend the maturity from February 12, 2025 to April 15, 2026 and increase the interest rate from 8% to 12% per annum. The Company determined that the Amended Alvin Fund 2023 Note resulted in a debt modification and recorded in the second quarter of 2024 a loss on debt extinguishment of $189,731 in our condensed consolidated statement of operations. Prepayment is allowed in full or in part at any time without premium or penalty. The Alvin Fund 2023 Note is secured by the Company's non-mining assets. During the three-months ended June 30, 2024 and 2023, the Company recognized interest expense of $69,100 and $0, respectively, including OID amortization of $11,796 and $0, respectively, in connection with the Alvin Fund 2023 Note. During the six-months ended June 30, 2024 and 2023, the Company recognized interest expense of $162,102 and $0, respectively, including OID amortization of $62,913 and $0, respectively, in connection with the Alvin Fund 2023 Note. On April 22, 2024, the Company and Alvin Fund also amended the Alvin Fund Warrants, whereby the exercise price was reduced to $0.4555 and the maturity was extended to December 31, 2025. The incremental fair value resulting of the amendment to the Alvin Fund Warrants was $22,900 and was recognized as part of the loss on debt extinguishment (see Note 10, Equity). 

Kips Bay Select LP Unsecured Convertible Note

On December 27, 2023, the Company entered into a securities purchase agreement for an unsecured convertible promissory note (the "Kips Bay Note") with Kips Bay Select LP ("Kips Bay") with a principal amount of $5,263,157, of which $263,157 was an OID. The full principal is due on March 27, 2025. Interest is payable monthly at a rate of 8% annually. The Company received $3.0 million on December 27, 2023 and received the remaining $2.0 million on January 27, 2024.

The Kips Bay Note required the Company to pay a loan commitment fee of $250,000 in the form of shares of its common stock. As of December 31, 2023, the Company recorded a stock payable of $150,000 as a non-current other liability on the consolidated balance sheet. The amount was recognized as additional discount on the note. On January 11, 2024, the Company issued 308,931 restricted shares of its common stock equal to 3% of the principal amount of the Kips Bay Note, or $157,895 at $0.511 per share. On January 16, 2024, the Company issued an additional 180,210 registered shares of its common stock equal in value to 1.75% of the additional $2.0 million in principal amount of the Kips Bay Note, or $92,105, also at $0.511 per share.

The Kips Bay Note contains conversion terms that are based on percentages of trading price and volumes over defined measurement periods. The terms require the conversion option to be bifurcated as a derivative.  As of June 30, 2024, and December 31, 2023, the Company has a derivative liability balance of $470,000 and $1,360,000, respectively, associated with this conversion option and reflected in our condensed consolidated balance sheet. During the three-months ended June 30, 2024 and 2023, the Company recognized interest expense of $383,091 and $0, respectively, which includes OID amortization of $312,493 and $0, respectively, in connection with the Kips Bay Note. During the six-months ended June 30, 2024 and 2023, the Company recognized interest expense of $825,709 and $0, respectively, which includes OID amortization of $664,459 and $0, respectively, in connection with the Kips Bay Note. As of June 30, 2024, the Company delivered 14,521,500 shares of common stock with a fair value of $4,301,634 at an average conversion price per share of $0.30 upon the conversion of a principal balance of $3,363,152 and accrued interest of $166,707.

Aqua Metals Inc. Note

On December 19, 2023, Comstock Inc., LINICO and Aqua Metals Inc. (“AQMS”) entered into a stock redemption agreement in which the Company agreed to purchase and AQMS agreed to sell their shares in LINICO for $600,000. The consideration is payable in twelve installments of $50,000 with the first installment due on January 31, 2024, and the next eleven installments due on the last day of the next succeeding eleven months. Since the payments are not interest bearing, the Company calculated the implied interest of $33,673 on the future cash payments using an interest rate of 9.76% which was recorded as a discount on the agreement and will be recognized over the payment term. During the three-months ended June 30, 2024 and 2023, the Company recognized interest expense of $9,737 and $0, respectively, in connection with the AQMS notes payable. During the six-months ended June 30, 2024 and 2023, the Company recognized interest expense of $23,124 and $0, respectively, in connection with the AQMS notes payable.

Ionic Ventures LLC Unsecured Convertible Note

On December 16, 2022, the Company entered into a securities purchase agreement for an unsecured convertible promissory note (“Ionic Note”) with Ionic Ventures, LLC (“Ionic”) with a principal amount of $3,150,000, of which $2,975,000 was funded and $175,000 was an OID. The full principal was due on March 16, 2024. Interest was payable monthly at a rate of 8% annually. The Ionic Note contains conversion terms that are based on percentages of trading price and volumes over defined measurement periods. The Ionic Note requires the conversion option to be bifurcated as a derivative.

As of June 30, 2023, the Company delivered 6,490,661 shares of common stock with a fair value of $3,452,848 at an average alternate conversion price per share of $0.53 with a principal balance of $2,400,000 and accrued interest of $58,707. Total carrying value of the converted debt was $996,254 which was reversed upon conversion. During the three-months ended June 30, 2023, the Company recorded a gain on conversion of debt of $32,800. During the six-months ended June 30, 2023, the Company recorded a loss on conversion of debt of $237,656. The conversion terms require a measurement period of five days within which the number of shares initially converted are adjusted for changes in trading volume during the period. Under this provision, on April 6, 2023, Ionic returned 327,549 excess shares of the Company's common stock issued upon earlier conversions. During the three-months ended June 30, 2024 and 2023, the Company recognized interest expense of $0 and $93,571, respectively, which includes OID amortization of $0 and $70,093, respectively, in connection with the Ionic Note. During the six-months ended June 30, 2024 and 2023, the Company recognized interest expense of $0 and $250,304, respectively, which includes OID amortization of $0 and $167,582, respectively, in connection with the Ionic Note. The Ionic Note was fully converted in 2023.