Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Interest Expense

v3.21.1
Notes Payable and Interest Expense
3 Months Ended
Mar. 31, 2021
Notes Payable and Interest Expense [Abstract]  
Notes Payable and Interest Expense

6. Notes Payable and Interest Expense

 

The following table presents details of our notes payable as of March 31, 2021 and December 31, 2020:

 







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Facility

 

Maturity

 

Interest Rate

 

Balance at

March 31,

2021

 

Balance at

December 31,

2020

BDC Term Loan

 

October 15, 2021

 

23.5% 

 

$

131,821 

 

$

160,088 

ACOA Note

 

February 1, 2024

 

 —

 

 

101,641 

 

 

111,430 

Wintrust Bank

 

November 14, 2021

 

Prime + 1.5%

 

 

266,667 

 

 

366,667 

TD Bank

 

December 31, 2022

 

 —

 

 

31,764 

 

 

31,390 

Chase Bank

 

April 10, 2022

 

1% 

 

 

891,103 

 

 

891,102 

Related Party Note

 

various

 

15% 

 

 

500,000 

 

 

580,000 

Total Debt

 

 

 

 

 

 

1,922,996 

 

 

2,140,677 

Less current portion

 

 

 

 

 

 

(432,237)

 

 

(641,676)

Long-term debt, net of current portion

 

 

 

 

 

$

1,490,759 

 

$

1,499,001 

 

BDC Term Loan

 

On January 8, 2016, Livelenz, a wholly-owned subsidiary of the Company (“Livelenz”), 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 would have matured, and the commitments would have terminated on September 15, 2019.

 

On July 26, 2019, Livelenz, 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 October 15, 2021. In accordance with the amendment, the Company will commence monthly payments beginning on August 15, 2019 of principal in the amount of $8,500 CAD in addition to the monthly payment of accrued interest. These payments will increase to $10,000 CAD on November 15, 2019, $12,000 CAD on September 15, 2020, $14,000 CAD on March 15, 2021, and $16,000 CAD on September 15, 2021 in addition to the monthly interest. During the three months ended March 31, 2021 we repaid $30,004 USD of principal.

 

ACOA Note

 

On November 6, 2017, 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 the note will mature, and the commitments will terminate on February 1, 2024. The monthly principal payment amount of $3,000 CAD increased to $3,500 CAD beginning on November 1, 2019, $4,000 CAD on August 1, 2021, $4,500 CAD on August 1, 2022, and $2,215 CAD during the remaining term of the agreement.  Payments from April-December of 2020 were voluntarily deferred by ACOA due to COVID-19. During the three months ended March 31, 2021 we repaid $11,054 USD of principal. 

  

Wintrust Loan

 

On November 14, 2018, the Company 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, the Company will commence monthly payments of principal in the amount of $33,333 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.

 

On August 7, 2020, the Company entered into an amendment of their original loan agreement dated November 14, 2018 with Wintrust Bank. Under this agreement the covenant calculation was amended to calculate covenants under a borrowing base methodology. The Company had defaulted under the March 31, 2020 and June 30, 2020 covenants which were waived upon execution of the amendment and the Company has not committed any defaults under loan agreement subsequent to the amendment. During the three months ended March 31, 2021 we repaid $100,000 of principal.

 

Chase Loan

 

On April 10, 2020, we entered into a commitment loan with Chase Bank, N.A. under the CARES act and SBA Paycheck Protection Program, in the principal aggregate amount of $891,103, which is due and payable two years after issuance. This note bears interest on the unpaid balance at the rate of one percent (1%) per annum. The note contains a deferral period of ten months after the 24 week usage period, for which no interest or principal payments are due. Forgiveness of the loan may be obtained by meeting certain SBA requirements.

 

TD Bank Loan

 

On April 22, 2020, we entered into a commitment loan with TD Bank under the Canadian Emergency Business Account (“CEBA”), in the principal aggregate amount of $40,000 CAD, which is due and payable on December 31, 2022. This note bears interest on the unpaid balance at the rate of zero percent (0%) per annum during the initial term. Under this note no interest or principal payments are due until January 1, 2023. Under the conditions of the loan, twenty-five percent (25%) of the loan will be forgiven if seventy-five percent (75%) is repaid prior to the initial term date.

 

Related Party Notes

 

During February 2018, we conducted a private placement of Unsecured Promissory Notes (individually, a “Note” and collectively, the “Notes”) in the aggregate principal amount of $1,080,000 to certain investors, officers and directors of the Company. Each Note bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum and the principal and accrued interest is due and payable no later than December 1, 2020. We may prepay any of the Notes without notice, subject to a two percent (2%) pre-payment penalty. The Note offer was conducted by our management and there were no commissions paid by us in connection with the solicitation.

 

On February 26, 2020, we issued an unsecured Note in the principle aggregate amount of $200,000, which becomes due two years after the date of issuance. This Note bears interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay this Note without notice, subject to a two percent (2%) pre-payment penalty.



On November 18, 2020, we issued two additional unsecured Notes in the principle aggregate amount of $500,000, which becomes due two years after the date of issuance. These Notes bear interest on the unpaid balance at the rate of fifteen percent (15%) per annum. The Company may prepay these Notes without notice, subject to a two percent (2%) pre-payment penalty.



On December 31, 2020 $1,200,000 of these Notes and the accrued interest of $192,208 was settled into equity. We recorded a loss on settlement of debt of $668,260 for the year ended December 31, 2020.



On January 25, 2021, we repaid $65,000 for an unsecured Note.  On January 27, 2021, we repaid the remaining $15,000 of the unsecured Note and accrued interest of $34,379.

 

As of March 31, 2021, we have a principal balance remaining of $500,000 and accrued interest of $27,708 outstanding.

 

Interest Expense

 

Interest expense was $32,516 and $77,189 during the three months ended March 31 2021 and 2020, respectively.