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Notes Payable
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Notes Payable

Note 11 – Notes Payable

 

Notes payable consists of the following at September 30, 2022 and December 31, 2021, respectively: 

          
   September 30,   December 31, 
   2022   2021 
         
On April 8, 2022, the Company received $80,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 20,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.  $80,000   $– 
           
On April 8, 2022, the Company received $500,000 pursuant to a note and warrant purchase agreement from an accredited investor, as lender. The unsecured note bears interest at 6% per annum, compounded semi-annually, and was payable in cash semi-annually on June 30th and December 31st. On August 23, 2022, the note was amended to update the terms of the interest payment to be payable at the earlier of the maturity date or January 1, 2025, rather than being paid semi-annually. The note matures on April 8, 2025. The noteholders also received warrants to purchase 125,000 shares of common stock, exercisable at $2.35 per share over a ten-year term.   500,000    – 
           
On June 16, 2020, the Company entered into a loan authorization and loan agreement with the United States Small Business Administration (the “SBA”), as lender, pursuant to the SBA’s Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business (the “EIDL Loan Agreement”) encompassing a $150,000 Promissory Note issued to the SBA (the “EIDL Note”)(together with the EIDL Loan Agreement, the “EIDL Loan”), bearing interest at 3.75% per annum. In connection with entering into the EIDL Loan, the Company also executed a security agreement, dated June 16, 2020, between the SBA and the Company (the “EIDL Security Agreement”) pursuant to which the EIDL Loan is secured by a security interest on all of the Company’s assets. Under the EIDL Note, the Company is required to pay principal and interest payments of $731 every month beginning June 16, 2022, as extended. All remaining principal and accrued interest is due and payable on June 16, 2050. The EIDL Note may be repaid at any time without penalty.  $150,000   $150,000 
           
Total notes payable   730,000    150,000 
Less unamortized debt discounts:   373,383    – 
Notes payable   356,617    150,000 
Less: current maturities   –    – 
Notes payable, less current maturities  $356,617   $150,000 

 

The Company recorded total discounts of $444,330, consisting of debt discounts on warrants granted to accredited investors on April 8, 2022. The discounts are being amortized to interest expense over the term of the notes, until repayment, using the straight-line method, which closely approximates the effective interest method.

 

The Company recognized $90,983 and $4,431 of interest expense for the nine months ended September 30, 2022 and 2021, respectively. Interest expense consisted of $20,036 of stated interest, and $70,947 of amortized debt discounts related to stock-based warrants for the nine months ended September 30, 2022. Interest expense of $4,431 consisted entirely of the stated interest on the EIDL Loan during the nine months ended September 30, 2021.