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DEBT
 6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
DEBT

NOTE 5 DEBT

 

The following table presents the details of the principal outstanding:

 

   June 30, 2022   December 31, 2021 
a) PPP1 Loan  $9,514   $11,193 
b) PPP2 Loan   —    178,235 
c) EIDL   150,000    150,000 
d) Note payable   5,557,792    5,557,792 
e) Convertible Notes   1,300,000    1,300,000 
Total  $7,017,306   $7,197,220 
Notes payable, current portion   403,567    404,648 
Non-current term notes payable  $6,613,739   $6,792,572 

 

As of June 30, 2022, the expected future principal payments for the Company’s debt are due as follows:

 

      
     
2022 –Remaining Period  $403,567 
2023   405,931 
2024   1,735,587 
2025   3,032,903 
2026   1,300,376 
2027 and thereafter   138,942 
Total  $7,017,306 

 

CARES Act Loans

 

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. Among other things, the CARES Act established the Paycheck Protection Program (“PPP”), which funded eligible businesses through federally guaranteed loans. Under the PPP, companies are eligible for forgiveness of principal and accrued interest if the proceeds are used for eligible costs, which include, but are not limited to, payroll, benefits, mortgage, lease, and utility expenses.

 

 

a) Paycheck Protection Program Loan - On April 13, 2020, the Company was granted a loan (the “PPP1 Loan”) under the Paycheck Protection Program in the aggregate amount of $269,500.

 

The PPP1 Loan matures on April 13, 2025 and bears interest at a rate of 1.0% per annum, which is payable monthly. The note may be prepaid at any time prior to maturity with no prepayment penalties.

 

The loan obligation was $9,514 and $11,193 as of June 30, 2022 and December 31, 2021, respectively. Monthly principal and interest payments of $289 started in October 2021 with a maturity of April 13, 2025.

 

b) Second Paycheck Protection Program Loan - On February 3, 2021, the Company was granted a loan (the “PPP2 Loan”) under the Paycheck Protection Program Second Draw program in the aggregate amount of approximately $178,000, pursuant to the Paycheck Protection Program under the CARES Act. The Company recognized the forgiveness as Other Income during the six months ended June 30, 2022, the period during which it was forgiven in full. As of December 31, 2021, the loan balance was approximately $178,000.

 

c) EIDL Loan - On June 24, 2020, the Company received a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan (“EIDL”) assistance program. The principal amount of the EIDL Loan is $150,000. The EIDL Loan bears interest at the annual rate of 3.75% and matures in 2050. Additionally, the EIDL Loan is collateralized by certain of the Company’s property as specified within the security agreement.

 

d) Note payable (“NBG”)

 

On December 14, 2021, the Company entered into a new secured promissory note with Nielsen & Bainbridge, LLC (“NBG”), in the amount of approximately $5.9 million, which amended and replaced the April 2016 promissory note. The unpaid principal bears annual interest at the Wall Street Journal prime rate plus 1.75% per year (as compared to an interest rate of 9% per annum prior to the amendment and restatement of the April 2016 note). The amended note matures in December 2026. The note is secured by a first priority security interest in substantially all of the Company’s assets.

 

e) Convertible Notes

 

           
   June 30, 2022   December 31, 2021 
Convertible Notes, dated 9/23/2020  $250,000   $250,000 
Convertible Notes, dated 11/10/2020   100,000    100,000 
Convertible Notes, dated 10/30/2020   300,000    300,000 
Convertible Notes, dated 11/3/2020   600,000    600,000 
Convertible Notes, dated 01/13/2021   50,000    50,000 
Total  $1,300,000   $1,300,000 

 

Included in Convertible Notes are loans provided to the Company from two directors, an officer and two investors. The notes each have the following terms: three-year subordinated convertible promissory note of principal face amounts. Subject to other customary terms, the Convertible Notes mature between September 2023 and January 2024 and bear interest at an annual rate of 6%, which is payable annually in cash or common stock, at the holder’s discretion. At any time after issuance and prior to or on the maturity date, the note is convertible at the option of the holder into shares of common stock at a conversion price of $15 per share.

 

Accrued interest on Convertible Notes was $132,708 and $92,919 as of June 30, 2022 and December 31, 2021, respectively.