Annual report pursuant to Section 13 and 15(d)

NOTES PAYABLE, NON-CURRENT

v3.22.1
NOTES PAYABLE, NON-CURRENT
12 Months Ended
Dec. 31, 2021
Notes Payable Non-current  
NOTES PAYABLE, NON-CURRENT

 

11. NOTES PAYABLE, NON-CURRENT

 

The Company has the following outstanding notes payable as of December 31, 2021 and 2020:

 

Note   Issuance Date   Maturity Date   Interest
Rate
    Balance at
December 31, 2021
    Balance at
December 31, 2020
 
Note A   April 17, 2020   April 17, 2022     1.00 %   $ -     $ 1,218,000  
Note B   May 15, 2020   May 15, 2050     3.75 %     150,000       150,000  
Note C   May 1, 2020   May 1, 2022     3.75 %     -       90,000  
Total notes payable, non-current                   $ 150,000     $ 1,458,000  

 

  (A)

On April 17, 2020, the Company received loan proceeds in the amount of $1,218,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest were forgivable after December 31, 2020, as long as the borrower used the loan proceeds for qualifying expenses, including payroll, benefits, rent and utilities, and maintains its payroll levels. Management believes the entire loan amount has been used for qualifying expenses.

 

The PPP loan was payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. As of December 31, 2020, the outstanding balance of the PPP loan was $1,218,000.

 

On January 4, 2021 the entire PPP loan and accrued interest, totaling $1,226,000, was forgiven and accounted for as a gain on debt extinguishment.

     
  (B)

On May 15, 2020, the Company executed an unsecured loan with the U.S. Small Business Administration (“SBA”) under the Economic Injury Disaster Loan program in the amount of $150,000. The loan is secured by all tangible and intangible assets of the Company and payable over 30 years at an interest rate of 3.75% per annum. Installment payments, including principal and interest, begin on May 15, 2022.

 

As part of the loan, the Company also received an advance of $10,000 from the SBA. While the SBA refers to this program as an advance, it was written into law as a grant. This means that the amount given through this program does not need to be repaid. As a result, the Company accounted for this $10,000 as part of “Other Income” in fiscal 2020.

     
  (C)

As a result of the acquisition of SoloFire in September 2020, the Company assumed SoloFire’s PPP loan of $90,000 it obtained in May 2020 under the same PPP (see discussion “A”).

 

On May 17, 2021 the entire note and accrued interest, totaling $91,000, was forgiven and accounted for as a gain on debt extinguishment.

 

The following table provides a breakdown of interest expense:

 

    2021     2020  
    Years Ended December 31,  
    2021     2020  
             
Financing costs   $ -     $ (248,000 )
Interest expense - amortization of debt discount (see Note 9)     (2,461,000 )     (493,000 )
Interest expense- other (see Note 10)     (114,000 )     (153,000 )
                 
Total interest expense   $ (2,575,000 )   $ (894,000 )