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NOTES PAYABLE
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 11 – NOTES PAYABLE

 

Convertible Notes

 

Convertible Note Payable to Former Parent

 

As of September 30, 2021, the Company had an amount of $82,458 in convertible notes payable to Former Parent outstanding.

 

Other Convertible Notes

 

As of September 30, 2021 and December 31, 2020, the Company has another convertible note payable in the amount of $100,000 which is included within convertible notes payable. See Note 12 – Commitments and Contingencies – Litigation, Claims and Assessments for details related to the $100,000 other convertible note payable.

 

Other Notes Payable

 

On June 21, 2021 the U.S. Small Business Administration (the “SBA”) forgave the Company’s first Paycheck Promissory Note (“PPP loan”) entered into on May 9, 2020. The aggregate amount forgiven is $875,974, consisting of $866,300 in principal and $9,674 in interest expenses. The forgiven amount was accounted for as a gain on debt extinguishment of $875,974 and was recorded in our condensed consolidated statement of operations.

 

As of September 30, 2021, the Company had an amount of $291,053 in paycheck protection loans second draw (the “PPP 2 Loan”) that was acquired in the Pokemoto acquisition.

 

The PPP 2 Loan is administered by the SBA. The interest rate of the loan is 1.00% per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. Commencing ten months after the effective date of the PPP 2 Loan, the Company is required to pay the Lender equal monthly payments of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the five-year anniversary of the effective date of the PPP 2 Loan (the “Maturity Date”). The PPP 2 Loan contains customary events of default relating to, among other things, payment defaults, making materially false or misleading representations to the SBA or the Lender, or breaching the terms of the PPP 2 Loan. The occurrence of an event of default may result in the repayment of all amounts outstanding under the PPP 2 Loan, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company. Under the terms of the CARES Act, PPP 2 loan recipients can apply for and be granted forgiveness for all, or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities.

 

During the nine months ended September 30, 2021, as part of the Pokemoto acquisition the Company acquired $1,171,400 loans issued by the Small Business Administration under its Economic Injury Disaster Loans (“EIDL”). The Company repaid all the loans in full during the nine months ended September 30, 2021.

 

During the nine months ended September 30, 2021 and 2020, the Company repaid a total amount of $1,249,541 and $488,247, respectively, of the other notes payable.

 

As of September 30, 2021, the Company had an aggregate amount of $1,353,304 in other notes payable. The notes had interest rates ranging between 1% - 8% per annum, due on various dates through October 31, 2025.

 

The maturities of other notes payable as of September 30, 2021, are as follows:

 

   Principal 
Repayments due as of  Amount 
09/30/2022  $186,035 
09/30/2023   207,409 
09/30/2024   216,706 
09/30/2025   157,494 
09/30/2026   585,660 
   $1,353,304 

 

 

MUSCLE MAKER, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements