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DEBT OBLIGATIONS
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
DEBT OBLIGATIONS

NOTE 3. DEBT OBLIGATIONS

 

Debt obligations is comprised of the following:

 

   September 30, 2021   December 31, 2020 
Economic injury disaster loan (EIDL)  $150,000   $150,000 
Payroll protection program loan (PPP)   —    10,000 
Contingent consideration promissory note - Nobility Healthcare Division Acquisition   350,000    — 
Contingent consideration promissory note – Nobility Healthcare Division Acquisition   650,000    — 
Contingent consideration earn-out Agreement – TicketSmarter Acquisitions   4,244,400    — 
           
Debt obligations   5,394,400    160,000 
Less: current maturities of debt obligations   4,547,421    11,727 
Debt obligations, long-term  $846,979   $148,273 

 

Debt obligations mature as follows as of September 30, 2021:

 

   September 30, 2021 
2021 (October 1, 2021 to December 31, 2021)  $4,245,882 
2022   403,049 
2023   403,166 
2024   203,286 
2025   3,412 
2026 and thereafter   135,605 
      
Total  $5,394,400 

 

 

2020 Small Business Administration Notes.

 

On May 4, 2020, the Company issued a promissory note in connection with the receipt of the Paycheck Protection Program (“PPP”) Loan of $1,418,900 (the “PPP Loan”) under the Small Business Administration’s (the “SBA”) PPP Program under the Coronavirus Aid, Relief, and Economic Security Act ( the “CARES Act”). The PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments were deferred for nine months after the date of disbursement and total $79,851 per month thereafter. The PPP Loan could have been prepaid at any time prior to maturity with no prepayment penalties. The promissory note contained events of default and other provisions customary for a loan of this type. The PPP provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. The Company intends to use the majority of the PPP Loan amount for qualifying expenses and to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act. The Company used the majority of the PPP Loan amount for qualifying expenses and to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act. The Company applied for forgiveness of the PPP Loan and December 10, 2020, the Company was fully forgiven of its $1,418,900 PPP Loan. Additionally, the Company was fully forgiven, during the three months ended June 30, 2021, of its $10,000 EIDL advance received with the PPP Loan.

 

On May 12, 2020, the Company received $150,000 in loan funding from the SBA under the EIDL program administered by the SBA, which program was expanded pursuant to the recently enacted CARES Act. The EIDL is evidenced by a secured promissory note, dated May 8, 2020, in the original principal amount of $150,000 with the SBA, the lender.

 

Under the terms of the note issued under the EIDL program, interest accrues on the outstanding principal at the rate of 3.75% per annum. The term of such note is thirty years, though it may be payable sooner upon an event of default under such note. Monthly principal and interest payments are deferred for twelve months after the date of disbursement and total $731 per month thereafter. Such note may be prepaid in part or in full, at any time, without penalty. The Company granted the secured party a continuing interest in and to any and all collateral, including but not limited to tangible and intangible personal property.

 

Contingent Consideration Promissory Notes

 

On June 30, 2021, Nobility Healthcare, LLC, a subsidiary of the Company, issued a contingent consideration promissory note (the “Contingent Note”) in connection with the Stock Purchase Agreement between Nobility and a private Company (the “Seller”) of $350,000. The Contingent Note has a three-year term and bears interest at a rate of 3.00% per annum. Quarterly principal and interest payments are deferred for six months and is due in equal quarterly installments on the seventh business day of each quarter. The principal amount of the Contingent Note is subject to an earn-out adjustment, being the difference between the $975,000 (the “Projected Revenue”) and the cash basis revenue (the “Measurement Period Revenue”) collected by the Seller in its normal course of business from the clients existing on June 30, 2021, during the period from October 1, 2021 through September 30, 2022 (the “Measurement Period”) measured on a quarterly basis and annualized as of the relevant period. If the Measurement Period Revenue is less than the Projected Revenue, such amount will be subtracted from the principal balance of this Contingent Note on a dollar-for-dollar basis. If the Measurement Period Revenue is more than the Projected Revenue, such amount will be added to the principal balance of this Contingent Note on a dollar-for-dollar basis. In no event will the principal balance of this Contingent Note become a negative number. The maximum downward earn-out adjustment to the principal balance will be to zero. There are no limits to the increases to the principal balance of the Contingent Note as a result of the earn-out adjustments.

 

The contingent consideration promissory note is considered to be additional purchase price; therefore, the estimated fair value of the contingent liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition. Management has recorded the contingent consideration promissory note at its estimated fair value of $350,000 at the acquisition date. Management will continue to estimate the fair value of this Contingent Note at each reporting date with the change, if any recorded as a gain or loss in the statement of operations during the relevant period.

 

 

On August 31, 2021, Nobility Healthcare, LLC, a subsidiary of the Company, issued a contingent consideration promissory note (the “Contingent Payment Note”) in connection with the Stock Purchase Agreement between Nobility and a private Company (the “Sellers”) of $650,000. The Contingent Payment Note has a three-year term and bears interest at a rate of 3.00% per annum. Quarterly principal and interest payments are deferred for six months and is due in equal quarterly installments on the seventh business day of each quarter. The principal amount of the Contingent Payment Note is subject to an earn-out adjustment, being the difference between the $3,000,000 (the “Projected Revenue”) and the cash basis revenue (the “Measurement Period Revenue”) collected by the Sellers in its normal course of business from the clients existing on September 1, 2021, during the period from December 1, 2021 through November 30, 2022 (the “Measurement Period”) measured on a quarterly basis and annualized as of the relevant period. If the Measurement Period Revenue is less than the Projected Revenue, such amount will be subtracted from the principal balance of this Contingent Payment Note on a dollar-for-dollar basis. If the Measurement Period Revenue is more than the Projected Revenue, such amount will be added to the principal balance of this Contingent Payment Note on a dollar-for-dollar basis. In no event will the principal balance of this Contingent Payment Note become a negative number. The maximum downward earn-out adjustment to the principal balance will be to zero. There are no limits to the increases to the principal balance of the Contingent Payment Note as a result of the earn-out adjustments.

 

The contingent consideration promissory note is considered to be additional purchase price, therefore the estimated fair value of the contingent liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition. Management has recorded the contingent consideration promissory note at its estimated fair value of $650,000 at the acquisition date. Management will continue to estimate the fair value of this Contingent Payment Note at each reporting date with the change, if any recorded as a gain or loss in the statement of operations during the relevant period.

 

Contingent consideration earn-out Agreement – TicketSmarter Acquisition

 

On September 1, 2021, TicketSmarter, Inc., a subsidiary of the Company, issued a contingent consideration earn-out agreement (the “TicketSmarter Earn-Out”) in connection with the Stock Purchase Agreement between TicketSmarter, Inc., Goody Tickets, LLC and TicketSmarter, LLC (“TicketSmarter”) of $4,244,400. The TicketSmarter Earn-Out shall be payable with ninety percent (90%) readily available funds and ten percent (10%) in stock consideration. The principal amount of the TicketSmarter Earn-Out is subject to an earn-out adjustment, being the difference between the $2,896,829 (the “Projected EBITDA”) and the actual EBITA (the “Measurement Period EBITDA”) generated by TicketSmarter in its normal course of business, during the period from September 1, 2021 through December 31, 2021 (the “Measurement Period”). If the Measurement Period EBITDA is less than seventy percent (70%) of the Projected EBITDA, there will be zero contingent payment. If the Measurement Period EBITDA is between seventy percent (70%) and one hundred percent (100%) of the Projected EBITDA, then a fractional amount of the contingent payment will be paid out. If the Measurement Period EBITDA is more than the Projected EBITDA, the full principal balance of this TicketSmarter Earn-Out will be paid out. In no event will the principal balance of this TicketSmarter Earn-Out become a negative number. The maximum downward earn-out adjustment to the earn-out balance will be to reduce the balance to zero.

 

The contingent consideration earn-out is considered to be additional purchase price, therefore the estimated fair value of the contingent liability is recorded as a liability at the acquisition date and the fair value is considered part of the consideration paid for the acquisition. Management has recorded the contingent consideration earn-out at its estimated fair value of $4,244,400 at the acquisition date. Management will continue to estimate the fair value of this TicketSmarter Note at each reporting date with the change, if any recorded as a gain or loss in the statement of operations during the relevant period.