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LOANS PAYABLE AND LINES OF CREDIT
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
LOANS PAYABLE AND LINES OF CREDIT

NOTE 10 – LOANS PAYABLE AND LINES OF CREDIT

 

Loans Payable

 

Loans payable was as follows:

 

   Interest Rate     Maturities   June 30, 2023   December 31, 2022 
                   
Term loans (US dollar denominated)  5.00% – 155.11%     2023 - 2027   $1,368,439   $5,461,520 
Term loans (Chilean peso denominated)  3.48% - 7.14%     2023 - 2029    5,970,400    6,541,113 
               7,338,839    12,002,633 
Less, current portion              (3,593,253)   (7,758,831)
Long term loans payable             $3,745,586   $4,243,802 

 

In June 2022, we entered into a bridge loan, secured by substantially all of our assets, in the principal amount of $5,000,000 bearing an interest rate of 4.00% per annum payable monthly with a maturity date of December 14, 2022, which was extended to March 14, 2023. We did not repay this bridge loan on the maturity date, which resulted in an event of default under the terms thereof. As a result, the interest rate applicable to amounts due under this bridge loan increased from 4.00% to 7.50%. This bridge loan was repaid in full on March 20, 2023. We recorded interest expense of zero and $116,667 during the three months and six months ended June 30, 2023, respectively.

 

Various subsidiaries in the United States are borrowers under certain term loans. These term loans require monthly principal and interest payments. These term loans are secured by various assets owned by our subsidiaries. We recorded aggregate interest expense on these term loans of $32,257 and $38,479 for the three and six months ended June 30, 2023, respectively. Accrued interest as of June 30, 2023 was zero. The aggregate effective interest rate of the term loans is 9.87%.

 

Our Latin America subsidiaries are the borrowers under certain term loans denominated in Chilean Pesos. These term loans require monthly principal and interest payments. These term loans are secured by various assets owned by our subsidiaries. We recorded aggregate interest expense on these term loans of $119,494 and $255,410 for the three and six months ended June 30, 2023. Accrued interest as of June 30, 2023 was zero. The aggregate effective interest rate of the term loans is 8.17%.

 

In March 2023, we entered into a Cash Advance Agreement, pursuant to which we received gross proceeds of $2,000,000 and paid $87,500 in upfront fees. The terms of the Cash Advance Agreement call for us to remit aggregate weekly payments of $99,398 until such time as we have repaid $2,870,000. The effective interest rate of the Cash Advance Agreement is 155.11%. This Cash Advance Agreement is secured by the accounts receivable of CISO Global Inc. and our wholly-owned subsidiaries, Talatek, LLC and True Digital Security, Inc. We recorded interest expense of $497,525 and $584,053 for the three and six months ended June 30, 2023, respectively.

 

Convertible Notes Payable

 

In October 2021, we issued a convertible note to Neil Stinchcombe in the principal amount of $1,500,000 bearing an interest rate of 5.00% per annum payable at maturity with a maturity date of January 27, 2022, with a conversion price of $5.00 per share. On March 10, 2022, we entered into an amendment to the note pursuant to which the maturity date was extended to October 27, 2022. In March 2023, we entered into a letter agreement with Neil Stinchcombe to resolve certain payment terms of his convertible note. We agreed to repay the principal amount of the note in three equal installments of $500,000 on each of March 31, April 28, and May 31, 2023, with accrued interest to be paid on May 31, 2023. The principal amount of this note, plus all accrued interest was repaid in full as of June 30, 2023. At December 31, 2022, we had accrued interest of $119,007. We recorded interest income of $18,118 and interest expense of $632 during the three and six months ended June 30, 2023.

 

 

In June 2022, we issued an unsecured convertible note in the principal amount of $1,000,000 bearing an interest rate of 5.00% per annum payable monthly with a maturity date of June 2023, with a conversion price of $7.83 per share. The outstanding principal of this note can be redeemed at any time by us or at maturity at 105%. At maturity in June 2023, we repaid the unpaid accrued interest on this convertible note and rolled the principal amount of $1,050,000 into a new convertible note with the lender. We recorded interest expense of $9,601 and $22,101 for the three and six months ended June 30, 2023.

 

In June 2023, we issued an unsecured convertible note in the principal amount of $1,050,000 bearing an interest rate of 10.00% per annum payable monthly. The principal amount, together with accrued and unpaid interest is due on June 7, 2024. At anytime prior to or on the maturity date, the holder is permitted to convert all of the outstanding principal amount into 4.20% of the authorized units of our wholly owned subsidiary vCISO, LLC. We recorded interest expense of $5,480 for the three and six months ended June 30, 2023.

 

In March 2023, we issued an unsecured convertible note to Hensley & Company in the principal amount of $5,000,000 bearing an interest rate of 10.00% per annum. The principal amount, together with accrued and unpaid interest is due on March 20, 2025. At any time prior to or on the maturity date, Hensley & Company is permitted to convert all or any portion of the outstanding principal amount and all accrued but unpaid interest thereon into shares of our common stock at a conversion price of $1.20 per share. During the three and six months ended June 30, 2023, we recorded interest expense of $125,000 and $138,888, respectively. At June 30, 2023, we had accrued interest of $138,888. Mr. McCain, a director of our company, is President and Chief Operating Officer of Hensley & Company.

 

Future minimum payments under the above loans payable and convertible notes payable due as of June 30, 2023 were as follows: 

  

      
2023 (remainder of)   $2,686,053 
2024    2,775,049 
2025    6,391,531 
2026    596,496 
2027    328,864 
Thereafter    654,596 
Total future minimum payments    13,432,589 
Less: discount    (43,750)
Total    13,388,839 
Less: current    (4,643,253)
Long term debt, net of current portion   $8,745,586