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Notes Payable - Related Parties
 9 Months Ended
Sep. 30, 2022
Related Party [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Notes Payable - Related Parties

9. Notes Payable - Related Parties

 

Summary of Notes Payable to Related Parties

 

The table below summarizes all notes payable to related parties at September 30, 2022 and December 31, 2021:

 

   September 30, 2022   December 31, 2021 
Notes payable – “2022 Related Notes”  $600,000   $       - 
Less unamortized debt issuance costs   (78,795)   - 
Less current portion   -    - 
Long-term portion of notes payable  $521,205   $- 

 

Future minimum principal payments of the 2022 Notes to related parties are as follows:

 

As of September 30,  Amount 
2025  $600,000 
Total  $600,000 

 

As of September 30, 2022 and December 31, 2021, accrued interest for these notes payable – related parties was $0. As of September 30, 2022 and December 31, 2021, unamortized deferred financing costs and unamortized debt discount were reflected within long term liabilities on the condensed consolidated balance sheets.

 

With respect to all notes payable – related parties outstanding, interest expense, including the amortization of debt issuance costs, for the three and nine months ended September 30, 2022 was $25,880 and $51,759, respectively. For the three and nine months ended June 30, 2021, there was no interest expense in connection with notes payable – related parties.

 

 

2022 Related Notes

 

On April 1, 2022, we issued 12% Subordinated Notes in an aggregate principal amount of $600,000 (the “2022 Related Notes”) to Robert Taglich (holding more than 5% beneficial interest in the Company’s Shares). The entire outstanding principal and unpaid interest of the 2022 Related Notes are due and payable on March 30, 2025. Interest on the 2022 Related Notes accrues at the rate of 12% per annum, payable quarterly in cash, beginning on September 30, 2022. Any accrued but unpaid quarterly installment of interest will accrue interest at the rate of 14.0% per annum. Any overdue principal and accrued and unpaid interest at the maturity date will accrue a mandatory default penalty of 20% of the outstanding principal balance and an interest rate of 14% per annum from the maturity date until paid in full. We used a portion of the net proceeds from the private placement offering to finance the acquisition of Yellow Folder and the remaining net proceeds for working capital and general corporate purposes.