Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE

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NOTES PAYABLE
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
NOTES PAYABLE

6. NOTES PAYABLE

 

The Company has the following outstanding notes payable as of March 31, 2024 and December 31, 2023:

 

Note   Issuance Date   Maturity Date   Interest Rate     Original Borrowing     Balance at March 31, 2024       Balance at December 31, 2023  
Note payable (A)     May 15, 2020     May 15, 2050     3.75 %   $ 150     $ 132     $ 137  
Promissory note payable (B)     November 7, 2022     May 7, 2024     9.0 %     5,470       -       1,179  
Promissory note payable (C)     October 11, 2023     April 11, 2025     9.0 %     1,005       1,005       1,005  
Debt discount                             -       (99 )
Debt issuance costs                             -       (73 )
Total notes payable                             1,137       2,149  
Non-current                             (113 )     (362 )
Current                           $ 1,024     $ 1,787  

 

  (A)

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. As of March 31, 2024 and December 31, 2023, the outstanding principal and accrued interest balance due under the note was $133 and $137, respectively.
     
  (B)

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 six 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 were being amortized over the term of the November Notes using the effective interest rate method. As of December 31, 2023, the amount of unamortized debt discount and debt issuance costs was $99 and $73, respectively. During the three months ended March 31, 2024, the Company amortized the remaining amount of $99 of debt discount and $73 of debt issuance costs.
     
   

During the three months ended March 31, 2024, the Company issued 11,484,403 shares of its common stock pursuant to an exchange agreement in exchange for a reduction of $1,720 on the outstanding balance of the November Notes. The shares issued for the share exchange agreement were valued based upon the Nasdaq at-the-market price and is being consistently applied for each share exchange. As a result, there was no gain or loss on the transaction.

 

On March 18, 2024, the Company paid the November Notes in full.
     
  (C)

On October 11, 2023, the Company entered into a note purchase agreement with Streeterville pursuant to which Streeterville purchased the Note in the aggregate principal amount of $1,005. The Note bears interest at 9.0% per annum compounded daily. The maturity date of the Note is 18 months from the date of its issuance.

 

As of March 31, 2024, the outstanding balance of the Note amounted to $1,049, which includes accrued interest of $44.

 

Subsequent to March 31, 2024, the Company issued 7,630,271 shares of its common stock pursuant to an exchange agreement in exchange for a reduction of $1,057 on the outstanding balance of the Note. The shares issued for the share exchange agreement were valued based upon the Nasdaq at-the-market price and is being consistently applied for each share exchange. As a result, there was no gain or loss on the transaction.

 

On May 3, 2024, the Note was repaid in full.

 

The following table provides a breakdown of interest expense:

 

    2024     2023  
    Three Months Ended March 31,  
    2024     2023  
             
Interest expense – amortization of debt discount   $ 99     $ 86  
Interest expense – amortization of debt issuance costs     73       69  
Interest expense – other     53       315  
                 
Total interest expense   $ 225     $ 470