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NOTES PAYABLE
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 7 - NOTES PAYABLE

 

PPP Loan

 

In May 2020, the Company was granted a loan (the “PPP Loan”) in the amount of $42, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Securities (“CARES”) Act, which was enacted March 27, 2020. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to consider its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The Company made this good faith assertion based upon the adverse impact the COVID-19 pandemic had on its business and the global economy. While the Company has made this assertion in good faith based upon all available guidance, management will continue to assess their continued qualification if and when updated guidance is released by the Treasury Department. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria.

 

The PPP Loan, which was in the form of a note that was granted on May 14, 2020, matures in two years and accrues interest at a rate of 1.00% per annum, payable in monthly payments commencing six months after loan disbursement. The Company also has the option to negotiate with the lender to extend the maturity date to up to five years. The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs and any payments of certain covered interest, lease and utility payments. The Company has used the entire PPP Loan amount for qualifying expenses in the covered period. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The ultimate forgiveness of the PPP Loan is also predicated upon regulatory authorities concurring with management’s good faith assessment that the current economic uncertainty made the loan request necessary to support ongoing operations. If, despite the Company’s good-faith belief that given the circumstances the Company satisfied all eligibility requirements for the PPP Loan, the Company is later determined to have violated any applicable laws or regulations or it is otherwise determined that the Company was ineligible to receive the PPP Loan, the Company may be required to repay the PPP Loan in its entirety and/or be subject to additional penalties. In the event the PPP Loan, or any portion thereof, is forgiven, the amount forgiven is applied to outstanding principal. The Company was granted full forgiveness for the loan in the 4th quarter of 2020 and recorded a gain on forgiveness of $42.

 

 

Unsecured Note

 

On June 22, 2020, the Company issued and sold to a related party an unsecured promissory note in the principal amount of $200, which accrues interest at 10% per annum and matures in one year. On August 28, 2020, the Company paid the note in full including $4 of accrued interest.

 

Notes payable:    
Total carrying value of notes payable at December 31, 2019  $- 
Principal value of unsecured note issued during year ended December 31, 2020  $242 
Forgiveness of notes payable   (42)
Payoff of unsecured note   (200)
Total carrying value of notes payable at December 31, 2020  $- 

 

In addition to the promissory note, the Company granted a seven-year equity warrant to purchase 100,000 shares of the Company’s common stock. The exercise price for each warrant share is equal to $2.50, and the warrants may also be exercised, in whole or in part, by means of a cashless exercise. The warrants were recognized as a debt discount and is amortized over the life of the note. The warrants were valued at $123 using a Black Scholes Merton pricing model with the following underlying assumptions:

 

Price at valuation  $2.21 
Exercise price  $2.50 
Risk free interest   0.34%
Expected term (in years)   7 
Volatility   60.7%