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Notes Payable
 6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Notes Payable

Note 9. Notes Payable

Convertible Notes

In March 2016, the Company entered into a 10% Senior Secured Convertible Note Purchase Agreement (the Purchase Agreement) with the purchasers of $8,000,000 principal amount of 10% Senior Secured Convertible Notes due August 15, 2018 (the Notes), at par, in a private placement transaction effected pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended. Pursuant to amendments to the Notes and related documents in February and October 2018, the interest rate was reduced to 8%, the maturity date of the Notes was extended to August 15, 2023, and the optional conversion price was reduced from $170.00 of Note principal per share of common stock to $11.434 of Note principal per share of common stock.

In accordance with the October 2018 amendment to the Notes, the Company used $7.4 million of the proceeds from a public offering of securities effected in October 2018 to repay a portion of the Notes. Semi-annual interest payments have been made in each of February 2019, August 2019, February 2020 and August 2020 for approximately $78,000, $109,000, $112,000 and $122,000, respectively, in-kind with the issue of additional notes (Interest Notes) to the Purchasers.  The Interest Notes have terms identical to the Notes.

The Company issued 42,672 shares of its common stock valued at $139,964 to the Note holder in settlement of the accrued interest of $123,066 for the six month period ended February 15, 2021.  The Company recorded a loss of $16,898 on this payment, which was recorded in other income in the condensed consolidated statements of operation.

In January and February 2021, a holder of warrants, who was also the holder of the Notes, exercised warrants to purchase 613,791 shares of the Company’s common stock at an exercise price of $2.40 per share for total proceeds of

$1,473,098. The proceeds from the exercise of these warrants were used to repay a portion of the principal amount of the Notes.

In March 2021, the Company made a repayment of $1,554,173 in settlement of the outstanding principal amount of the Notes, and the Note holder’s security interest was terminated. The Company recorded a gain of $64,757 on the Note settlement, and the gain was recorded in other income in the condensed consolidated statements of operations.

PPP Note

 

On May 7, 2020, the Company entered into a Promissory Note with Wells Fargo Bank, N.A. (the Lender) in an aggregate principal amount of $579,330 (the PPP Note), pursuant to the Paycheck Protection Program (the PPP) under the CARES Act.

 

The Company applied to the Lender for forgiveness of the PPP Note, under the terms of the PPP, and, in May 2021, obtained forgiveness for the full amount of the PPP Note and recognized the forgiven amount in other income in the condensed consolidated statements of operations.