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NOTES PAYABLE
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 6 – NOTES PAYABLE

 

PPP Loan and Forgiveness

 

In June 2020, the Company and its subsidiaries received three loans in the aggregate amount of approximately $249 thousand (the “PPP Loan”) under the new Paycheck Protection Program legislation administered by the SBA. These loans bear interest at one percent per annum (1.0%) and mature five years from the date of the first disbursement. The proceeds of the PPP Loan must be used for payroll costs, lease payments on agreements entered into before February 15, 2020 and utility payments under lease agreements entered into before February 1, 2020. At least 60% of the proceeds must be used for payroll costs and certain other expenses and no more than 40% may be used on non-payroll expenses. Proceeds from the PPP Loan used by the Company for the approved expense categories may be fully forgiven by the SBA if the Company satisfies applicable employee headcount and compensation requirements. During the years ended December 31, 2022 and 2021, the Company had a total of $63,400 and $184,914 of its PPP loans forgiven by the SBA which is included in gain on debt forgiveness on the accompanying consolidated statement of operations.

 

As of December 31, 2022, the Company had no remaining PPP loan balance. As of December 31, 2021, the PPP loan balance was $63,400 and is reflected on the Company’s consolidated balance sheet as current liabilities, within notes payable, net.

 

Working Capital Loans

 

In October 2022, the Company received proceeds of $976,000 under a 12-month working capital loan with Amazon. The terms of the loan include interest in the amount of $62,157. The total outstanding balance of $976,000, is included in notes payable, net, on the accompanying consolidated balance sheet as of December 31, 2022.

 

In November 2022, the Company received proceeds of $1,930,000 under two 10-month working capital loans with Balanced Management. The terms of the loans include loan origination fees in the amount of $60,000 and total interest of $840,000. The total outstanding balance of $1,821,250, is included in notes payable, net on the accompanying consolidated balance sheet as of December 31, 2022.

 

Merchant Funding Agreement

 

On March 17, 2021, the Company entered into a Merchant Funding Agreement with MO Technologies USA, LLC (“MO Tech”), which provides cash advances to the Company based on the Company’s accounts receivable for a total cash advance of $600,000. The terms of the funding agreement include a service charge of 3.99% on cash advances from MO Tech. The total balance owed under this agreement was repaid in full in May 2021.

 

On June 23, 2021, the Company entered into a Merchant Funding Agreement with MO Tech, which provides cash advances to the Company based on the Company’s accounts receivable for a total cash advance of $350,000. The terms of the funding agreement include a service charge of 3.99% on cash advances from MO Tech. The total balance owed under this agreement was repaid in full in August 2021.

 

Total interest expense on notes payable, inclusive of amortization of debt discounts, amounted to $653,156 and $159,494 for the years ended December 31, 2022 and 2021, respectively.