| NOTES PAYABLE, NON-CURRENT |
| 11. |
NOTES PAYABLE, NON-CURRENT |
The Company has the following
outstanding notes payable as of December 31, 2021 and 2020:
SCHEDULE
OF NOTES PAYABLE
| 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:
SCHEDULE 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 |
) |
|