| SCHEDULE OF CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE |
The
Company has the following outstanding notes payable as of September 30, 2023 and December 31, 2022:
SCHEDULE
OF CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
| Note |
|
Issuance Date |
|
Maturity Date |
|
Interest Rate |
|
|
Original Borrowing |
|
|
Balance at September 30, 2023 |
|
|
Balance at December 31, 2022 |
|
| 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 |
|
| Note payable (C) |
|
May 15, 2020 |
|
May 15, 2050 |
|
|
3.75 |
% |
|
|
150 |
|
|
|
142 |
|
|
|
150 |
|
| Convertible Notes Due 2023 (D) |
|
January 12, 2022 |
|
January 12, 2023 |
|
|
6.0 |
% |
|
|
6,300 |
|
|
|
- |
|
|
|
1,350 |
|
| Promissory note payable (E) |
|
November 7, 2022 |
|
May 7, 2024 |
|
|
9.0 |
% |
|
|
5,470 |
|
|
|
2,184 |
|
|
|
5,470 |
|
| Debt discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(171 |
) |
|
|
(408 |
) |
| Debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(127 |
) |
|
|
(309 |
) |
| Total notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,753 |
|
|
|
7,018 |
|
| Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(142 |
) |
|
|
(1,215 |
) |
| Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,611 |
|
|
$ |
5,803 |
|
| |
(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 19, 2021, the Company amended
the note to allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which
was the closing price of the common stock on the amendment date. On May 12, 2022, the maturity date of the note was extended to April
1, 2023. As of September 30, 2023 and December 31, 2022, the outstanding balance under the note was $876 and $811, respectively.
As of September 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents accrued interest was $151
and $86, respectively. See Note 14 for Subsequent Events. |
| |
|
|
| |
(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. On May 19, 2021, the Company amended the note to
allow for conversion of the note at any time at the discretion of the holder at a fixed conversion price of $41.20, which was the
closing price of the common stock on the amendment date. On September 20, 2023, the Company repaid all of the outstanding principal
and accrued interest amounting to $48. As of September 30, 2023 and December 31, 2022, the outstanding balance under the note was
$0 and $45, respectively. As of September 30, 2023 and December 31, 2022, the portion of the outstanding balance that represents
accrued interest was $0 and $5, respectively. |
| |
(C) |
On
May 15, 2020, the Company executed an unsecured loan with the SBA under the Economic Injury Disaster Loan program in the amount of
$150. Installment payments, including principal and interest, began on October 26, 2022. In September 2022, the SBA approved an additional
loan of $350. As of November 10, 2023, the Company has not received these funds. As of September 30, 2023 and December 31, 2022,
the outstanding balance under the note was $142 and $150, respectively. |
| |
|
|
| |
(D) |
On
January 12, 2022, the Company entered into a securities purchase agreement (the “January Note Purchase Agreement”) with
three institutional investors (collectively, the “January Note Holders”) providing for the sale and issuance of an aggregate
original principal amount of $6,300 in convertible notes due January 2023 (each, a “Note,” and, collectively, the “Notes,”
and such financing, the “January Note Offering”). The Company and the January Note Holders also entered into a security
agreement, dated January 12, 2022, in connection with the January Note Offering, pursuant to which the Company granted a security
interest to the January Note Holders in substantially all of its assets. The January Note Purchase Agreement prohibits the Company
from entering into an agreement to effect any issuance of common stock involving a Variable Rate Transaction (as defined therein)
during the term of the agreement, subject to certain exceptions set forth therein. The January Note Purchase Agreement also gives
the January Note Holders the right to require the Company to use up to 15% of the gross proceeds raised from future debt or equity
financings to redeem the Notes, which redemptions have been elected by the January Note Holders. 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 $120.00, subject to adjustment
in certain circumstances as set forth in the Notes. |
| |
|
|
| |
|
In
connection with the January Note Offering, the Company paid $461 of debt issuance costs. The debt issuance costs and the debt discount
of $300 were amortized over the term of the Notes using the effective interest rate method. As of December 31, 2022, the amount of
unamortized debt discount and debt issuance costs was $6 and $10, respectively. During the nine months ended September 30, 2023,
the Company amortized the remaining amount of debt discount and debt issuance costs. |
| |
|
|
| |
|
As
of December 31, 2022, the outstanding principal balance of the Notes amounted to $1,350. On January 26, 2023, the Company repaid
in full all outstanding obligations under the January Note Offering dated January 12, 2022. |
| |
(E) |
On
November 7, 2022, the Company entered into a note purchase agreement (the “November Note Purchase Agreement”) and promissory
note with an institutional investor (the “November Note Holder”) providing for the sale and issuance of an unsecured,
non-convertible promissory note in the original principal amount of $5,470, which has an original issue discount of $470, resulting
in gross proceeds to the Company of approximately $5,000 (the “November Note,” and such financing, the “November
Note Offering”). The November Note matures eighteen months following the date of issuance. Commencing nine months from the
date of issuance, the Company is required to make monthly cash redemption payments in an amount not to exceed $600. |
| |
|
|
| |
|
The
November Note may be repaid in whole or in part prior to the maturity date for a 10% premium. The November Note requires the Company
to use up to 20% of the gross proceeds raised from future equity or debt financings, or the sale of any subsidiary or material asset,
to prepay the November Note, subject to a $2,000 cap on the aggregate prepayment amount. Until all obligations under the November
Note have been paid in full, the Company is not permitted to grant a security interest in any of its assets, or to issue securities
convertible into shares of common stock, subject in each case to certain exceptions. verbMarketplace, LLC entered into a guaranty,
dated November 7, 2022, in connection with the November Note Offering, pursuant to which it guaranteed the obligations of the Company
under the November Note in exchange for receiving a portion of the loan proceeds. |
| |
|
|
| |
|
In
connection with the November Note Offering, the Company incurred $335 of debt issuance costs. The debt issuance costs and the debt
discount of $450 are being amortized over the term of the November Notes using the effective interest rate method. As of December
31, 2022, the amount of unamortized debt discount and debt issuance costs was $402 and $299, respectively. During the nine months
ended September 30, 2023, the Company paid $375 in cash and $4,092 in shares; amortized $231 of debt discount and $172 of debt issuance
costs. As of September 30, 2023, the amount of unamortized debt discount and debt issuance costs was $171 and $127, respectively. |
| |
|
|
| |
|
On
May 16, 2023, the Company received a redemption notice under the terms of the November Note Purchase Agreement for $300. The Company
missed two payments resulting in a Payment Failure Balance Increase of 10% on the outstanding principal balance per occurrence pursuant
to the terms of the agreement totaling $1,205. These costs have been recorded as finance costs in the Company’s condensed consolidated
statement of operations for the nine months ended September 30, 2023. |
| |
|
|
| |
|
As
of September 30, 2023 and December 31, 2022, the outstanding balance of the November Notes amounted to $2,647 and $5,544, respectively.
|
| |
|
|
| |
|
See
Note 14 for Subsequent Events. |
|