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NOTES PAYABLE
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
NOTES PAYABLE

19. NOTES PAYABLE

 

Notes payable at September 30, 2024 and December 31, 2023, were comprised of the following:

                    
   Collateral  Guarantors  Interest
rate		  Due date  September 30,
2024		   December 31,
2023		 
AGREE secured construction loans   AGREE hotels  -  7.0%  January 1, 2025  $68,750,000   $67,632,000 
Circle 8 revolving credit facility    Circle 8 cranes with a book value of $29.6 million  -  10.0%  December 16, 2025   13,651,000    15,907,000 
16% promissory note (in default)  -   Ault & Company and Milton C. Ault, III  16.0%
(default rate of 24.0%) 		  July 15, 2024   5,572,000    2,572,000 
Circle 8 equipment financing notes   Circle 8 equipment with a book value of $4.3 million  -  10.5%  September 15, 2025 through June 15, 2027   3,829,000    5,629,000 
15% term notes (in default as of November 1, 2024)  -   Milton C. Ault, III  15.0%
(default rate of 22.99%)		  October 31, 2024   5,399,000    - 
8% demand loans  -  -  8.0%  Upon demand   -    950,000 
Sentinum note payable  -  -  12.5%  -   -    1,067,000 
ROI promissory note (in default)  -  -  15.0%
(default rate of 18.0%)		  April 30, 2024   2,094,000    - 
Other ($0.9 million in default)  -  -  -  -   5,501,000    3,808,000 
Total notes payable              $104,796,000   $97,565,000 
Less:                      
Unamortized debt discounts               (306,000)   (453,000)
Total notes payable, net              $104,490,000   $97,112,000 
Less: current portion               (87,730,000)   (11,692,000)
Notes payable – long-term portion              $16,760,000   $85,420,000 

 

OID Only Term Note

 

On July 2, 2024, the Company entered into a term note agreement with institutional investors for the sale of up to $2.6 million in term notes, of which the principal amount of $1.8 million was immediately funded. A term note was issued at a discount, with net proceeds to the Company of $1.5 million. The term note does not accrue any interest. The term note was scheduled to mature on August 2, 2024. The term note is guaranteed by Mr. Ault. The term note maturity was extended to October 16, 2024, and an extension fee of $0.2 million accrues monthly until the term note is paid in full. The term note is included in “Other” in the table above.

 

ROI 15% Term Note

 

On February 9, 2024, ROI entered into a $1.77 million term note agreement with an institutional investor bearing interest of 15%. The term note was issued at a discount, with net proceeds to ROI of $1.75 million. The term note was scheduled to mature February 14, 2024. This note has been guaranteed by Ault & Company and Mr. Ault. The term note was subsequently amended to increase the principal amount due to $2.1 million, increase the interest rate to 18% and extend the maturity date to April 30, 2024. The term note is in default as of May 1, 2024.

 

15% Term Notes

 

Between April 29, 2024 and August 29, 2024, the Company entered into note agreements totaling $5.7 million with an institutional investor bearing interest of 15%. The term notes were issued at a discount, with net proceeds to the Company of $5.1 million. The term notes were amended to extend the maturity dates to October 31, 2024. The note is default as of November 1, 2024.

 

$20 Million Credit Agreement

 

On June 4, 2024 the Company entered into a Loan Agreement (the “Credit Agreement”) with two institutional investors (collectively, the “Lender”). The Credit Agreement provides for an unsecured, non-revolving credit facility with an aggregate draw limit of $20.0 million. However, the Company is restricted to having no more than $2.0 million in principal amount of outstanding advances at any given time under the Credit Agreement. As of September 30, 2024, $2.0 million has been advanced, exclusive of a $0.4 million original issue discount (“OID”).

 

All loans under the Credit Agreement will be evidenced by a promissory note. The Lender made an Advance to the Company of $1.5 million on the execution date. The advances are due December 4, 2024, provided, however, that if on such date, the Company has executed an equity line of credit agreement relating to the sale of shares of the Company’s 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, has an effective registration statement relating thereto and is not currently in default under such agreement, then the maturity date shall be automatically extended until June 4, 2025. The Lender is not obligated to make any further Advances under the Credit Agreement after the maturity date. Advances under the Credit Agreement will include the addition of an OID of 20% to the amount of each Advance and all Advances will bear interest at the rate of 15.0% per annum and may be repaid at any time without penalty or premium.

 

The obligations of the Company under the Credit Agreement are secured by a guaranty provided by Milton C. Ault, the Executive Chairman of the Company.

 

Circle 8 revolving credit facility

 

On October 16, 2024, Circle 8 was in default related to reporting requirements under the terms of their revolving credit facility. Circle 8 was able to obtain a waiver on November 19, 2024 to cure the event of default.

 

Notes Payable Maturities

 

The contractual maturities of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of September 30, 2024 were:

     
Year    
2024 (remainder)  $19,261,000 
2025   84,124,000 
2026   879,000 
2027   266,000 
2028   266,000 
   $104,796,000 

 

Interest Expense

                    
   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2024   2023   2024   2023 
Contractual interest expense  $5,350,000   $4,986,000   $10,725,000   $9,645,000 
Forbearance fees   1,050,000    518,000    3,300,000    7,319,000 
Amortization of debt discount   1,366,000    634,000    4,800,000    18,216,000 
Total interest expense  $7,766,000   $6,138,000   $18,825,000   $35,180,000