Quarterly report pursuant to Section 13 or 15(d)

6. Notes Payable and Interest Expense

6. Notes Payable and Interest Expense
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
6. Notes Payable and Interest Expense

6.  Notes Payable and Interest Expense


The following table presents details of our notes payable as of March 31, 2019 and December 31, 2018:


Facility   Maturity   Interest Rate   Balance at March 31, 2019   Balance at December 31, 2018
BDC Term Loan   September 15, 2019   12%   $ 252,730      $ 252,837   
ACOA Note   May 1, 2021   -     137,395        141,081   
Wintrust Bank   November 1, 2021   6.75%     1,000,000        1,000,000   
Related Party Note   March 31, 2021   15%     1,580,000        80,000   
Total Debt             2,970,125        1,473,918   
Less current portion             (617,140)       (1,279,590)  
Long-term debt, net of current portion           $ 2,352,985      $ 194,328   


BDC Term Loan


On January 8, 2016, Livelenz, a wholly-owned subsidiary of the Company, entered into an amendment of their original loan agreement dated August 26, 2011 with the Business Development Bank of Canada (“BDC”). Under this agreement the loan will mature, and the commitments will terminate on September 15, 2019.




On April 29, 2016, Livelenz, a wholly-owned subsidiary of the Company, entered into an amendment of the original agreement dated December 2, 2014 with the Atlantic Canada Opportunities Agency (“ACOA”). Under this agreement, repayments began on June 1, 2016, and the note will mature and the commitments will terminate on May 1, 2021.


SVB Working Capital Line of Credit Facility


In March 2016, we entered into a Working Capital Line of Credit Facility (the “Facility”) with Silicon Valley Bank (“SVB”) to provide up to $2 million to finance our general working capital needs. The Facility is funded based on cash on deposit balances and advances against our accounts receivable based on customer invoicing. Interest on Facility borrowings is calculated at rates between the prime rate minus 1.75% and prime rate plus 3.75% based on the borrowing base formula used at the time of borrowing. The Facility contains standard events of default, including payment defaults, breaches of representations, breaches of affirmative or negative covenants, and bankruptcy. As of March 31, 2018, this Facility was paid off and closed.


Under the terms of the Facility, the Company is obligated to pay a commitment fee on the available unused amount of the Facility commitments equal to 0.5% per annum.


The Company capitalized debt issuance costs of $42,287 as of March 31, 2018 related to the Facility, which have been amortized on a straight-line basis to interest expense over the two-year term of the Facility. As of March 31, 2018, the Company has fully amortized these costs.


Wintrust Loan


On November 14, 2018, we entered into a Loan and Security Agreement with Wintrust Bank. The Loan and Security Agreement provides for a single-term loan to us in the original principal amount of $1,000,000.  Interest accrues on the unpaid principal amount at the rate of prime plus 1.5%. The loan is a three-year loan and is interest-only payable for the first six months of the loan. Commencing on May 1, 2019, we will commence monthly payments of principal in the amount of $33,333.33 in addition to the monthly payment of accrued interest. The loan is secured by all of our assets other than our intellectual property. We used the proceeds of the loan to re-finance a loan in the principal amount of $1,000,000 we assumed as part of the acquisition of the Belly assets.


Related Party Notes


During the three months ended March 31, 2019 we issued unsecured notes in the principle aggregate amount of $1,500,000, which are due March 2021.  These notes bear interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay any of the Notes without notice, subject to a two percent (2%) pre-payment penalty.


Interest Expense


Interest expense was $41,905 and $57,489 during the three months ended March 31, 2019 and 2018, respectively.