Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE

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NOTES PAYABLE
6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
NOTES PAYABLE

6. NOTES PAYABLE

 

The Company has the following outstanding notes payable as of June 30, 2024 and December 31, 2023:

 

SCHEDULE OF NOTES PAYABLE

Note   Issuance Date  

Maturity

Date

 

Interest

Rate

   

Original

Borrowing

    Balance at June 30, 2024    

Balance at December 31, 2023

 
Note payable (A)   May 15, 2020   May 15, 2050     3.75 %   $ 150     $ 128     $ 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  
Debt discount                             -       (99 )
Debt issuance costs                             -       (73 )
Total notes payable                             128       2,149  
Non-current                             (112 )     (362 )
Current                           $ 16     $ 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 June 30, 2024 and December 31, 2023, the outstanding principal and accrued interest balance due under the note was $128 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 six months ended June 30, 2024, the Company amortized the remaining amount of $99 of debt discount and $73 of debt issuance costs.
     
   

During the six months ended June 30, 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.

 

During the six months ended June 30, 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 under the share exchange agreement were valued based upon the Nasdaq at-the-market price and is being consistently applied for each share exchange. The shares issued for the final share exchange agreement on May 3, 2024 were valued at a 10% discount resulting in a loss on this particular transaction of $90. This amount has been recorded as a finance cost in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2024.

 

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

 

The following table provides a breakdown of interest expense:

 

SCHEDULE OF INTEREST EXPENSE

    2024     2023  
    Three Months Ended June 30,  
    2024     2023  
             
Interest expense – amortization of debt discount   $ -     $ 77  
Interest expense – amortization of debt issuance costs     -       57  
Interest expense – other     10       165  
                 
Total interest expense   $ 10     $ 299  

 

    2024     2023  
    Six Months Ended June 30,  
    2024     2023  
             
Interest expense – amortization of debt discount   $ 99     $ 163  
Interest expense – amortization of debt issuance costs     73       127  
Interest expense     63       480  
                 
Total interest expense   $ 235     $ 770  

 

Total interest expense for notes payable to related parties was $0 and $46 for the six months ended June 30, 2024 and 2023, respectively. The Company paid no interest to related parties for the six months ended June 30, 2024 and 2023, respectively.