Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE (Tables)

v3.22.2.2
NOTES PAYABLE (Tables)
6 Months Ended
Jun. 30, 2022
Notes Payable  
SCHEDULE OF NOTES PAYABLE RELATED PARTIES

The Company has the following outstanding notes payable as of June 30, 2022 and December 31, 2021:

 

Note   Issuance
Date
  Maturity Date   Interest
Rate
   

Original

Borrowing

   

Balance at

June 30,

2022

   

Balance at

December 31,

2021

 
Related party note payable (A)   December 1, 2015   April 1, 2023     12.0 %   $ 1,249     $ 725     $ 725  
Related party note payable (B)   April 4, 2016   June 4, 2021     12.0 %     343       40       40  
Note payable (C)   May 15, 2020   May 15, 2050     3.75 %     150       150       150  
Convertible Notes Due 2023 (D)   January 12, 2022   January 12, 2023     6.0 %   $ 6,300       4,404       -  
Debt discount                             (128 )     -  
Debt issuance costs                             (196 )     -  
Total notes payable                             4,995       915  
Non-current                             (875 )     (875 )
Current                           $ 4,120     $ 40  

 

  (A) On December 1, 2015, the Company issued a convertible note payable to Mr. Cutaia, the Company’s Chief Executive Officer and a director, to consolidate all loans and advances made by Mr. Cutaia to the Company as of that date. On May 12, 2022, the maturity date of the note was extended to April 1, 2023. As of June 30, 2022, and December 31, 2021, the outstanding balance under the note was $725.
     
  (B) On April 4, 2016, the Company issued a convertible note payable to Mr. Cutaia, in the amount of $343, to consolidate all advances made by Mr. Cutaia to the Company during the period December 2015 through March 2016. As of June 30, 2022 and December 31, 2021, the outstanding balance under the note was $40.

 

 

  (C)

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. Installment payments, including principal and interest, will begin on October 15, 2022. As of June 30, 2022, and December 31, 2021, the outstanding balance of the note amounted to $150, respectively.

 

  (D)

On January 12, 2022, the Company entered into the Note Offering, which provided for the sale and issuance of an aggregate original principal amount of $6,300 in convertible notes due 2023. The Company and the Note Holders also entered into a security agreement, dated January 12, 2022, in connection with the Note Offering, pursuant to which the Company granted a security interest to the Note Holders in substantially all of its assets. There are no financial covenants related to these notes payable.

 

   

The Company received $6,000 in gross proceeds from the sale of the Notes. The Notes bear interest of 6.0% per annum, have an original issue discount of 5.0%, mature 12 months from the closing date, and have an initial conversion price of $3.00, subject to adjustment in certain circumstances as set forth in the Notes.

 

In connection with the Note Offering, the Company incurred $460 of debt issuance costs. The debt issuance costs and the debt discount of $300 are being amortized over the term of the Notes using the effective interest rate method. During the six months ended June 30, 2022, the Company amortized $172 of debt discount and $264 of debt issuance costs. As of June 30, 2022, the amount of unamortized debt discount and debt issuance costs was $128 and $196, respectively.

 

As of June 30, 2022, and December 31, 2021, the outstanding balance of the Notes amounted to $4,404, and $0, respectively. During the six months ended June 30, 2022, the Company repaid $1,896 in principal payments pursuant to the Note Holders pursuant to the Notes.

 

Beginning on May 12, 2022, the Company was required to make nine monthly principal payments of $246, plus accrued interest, to the Note Holders, with the remaining principal amount of $2,436, plus accrued interest, due on the maturity date. The Note Holders agreed to allow the Company to defer the payment originally due on June 12, 2022 and to instead increase the amount of the principal payments required to be made beginning on July 12, 2022 to $281, with the remaining principal amount of $2,436, plus accrued interest, due on the maturity date. There was no change in the aggregate amount of indebtedness as a result of this payment deferral.

SCHEDULE OF INTEREST EXPENSE

The following table provides a breakdown of interest expense for the periods presented:

 

                 
    Three Months Ended June 30,  
    2022     2021  
             
Interest expense – amortization of debt discount   $ 372   $ 565
Interest expense – amortization of debt issuance costs     151     -  
Interest expense – other     119     31
                 
Total interest expense   $ 642   $ 596

 

Total interest expense for notes payable to related parties (see Notes A and B above) was $23 and $29 for the three months ended June 30, 2022 and 2021, respectively. The Company paid $0 and $34 in interest to related parties for the three months ended June 30, 2022 and 2021, respectively.

 

The following table provides a breakdown of interest expense for the periods presented:

 

                 
    Six Months Ended June 30,  
    2022     2021  
             
Interest expense – amortization of debt discount   $ 908   $ 1,040
Interest expense – amortization of debt issuance costs     264     -  
Interest expense – other     226     64
                 
Total interest expense   $ 1,398   $ 1,104