Debt

6 Months Ended

Jun. 30, 2023

Debt [Abstract]

DEBT

NOTE 14 DEBT

Debt consisted of the following as of June 30, 2023 and December 31, 2022:

			June 30, 2023						December 31, 2022
(Amounts in thousands)	Note Reference	Maturity Date	Amount Outstanding			Interest Rate			Amount Outstanding			Interest Rate
Secured Notes Payable
Secured senior convertible note payable	A	5/27/23	$	51			6.0	%	$	51			6.0	%
Secured senior convertible note payable	B	8/25/23		59			6.0	%		59			6.0	%
Secured note payable	C	10/25/23		368			6.0	%		368			6.0	%
Secured note payable	D	11/8/23		263			6.0	%		263			6.0	%
Secured note payable	E	11/26/21		875			15.0	%		775			15.0	%
Secured note payable	F	7/29/24		550			8.0	%		550			8.0	%
Secured note payable	G	6/30/23		50			-			50			-
SBA loan	H	5/15/50		150			3.8	%		150			3.8	%
Total secured notes payable				2,366						2,266
Unsecured Notes Payable
Note payable - related party	I	12/31/23		100			5.5	%		100			3.0	%
Note payable	J	7/29/23		26			15.0	%		26			15.0	%
Note payable	K	7/30/23		90			8.0	%		-			-
Note payable	L	8/1/23		80			8.0	%		-			-
Total notes payable				296						126
Unsecured Convertible Notes Payable
Convertible note payable	M	1/29/26		9,805			15.0	%		11,150			3.3	%
Total convertible notes payable				9,805						11,150
Total debt				12,467						13,542
Less: unamortized discounts and debt issuance costs				(4	)					(11	)
Total long-term debt, less discounts and debt issuance costs				12,463						13,531
Less: current portion of debt				(11,913	)					(11,636	)
Long-term portion of debt			$	550					$	1,895

Debt activity during the six months ended June 30, 2023 included the following:

For Note E, $100,000 of penalties and interest were capitalized into principal during the six months ended June 30, 2023 as a result of annual compounding.

For Note F, on March 14, 2023, the Company amended Note F to extend the maturity date to July 29, 2024 with an interest rate of 8% and the ability to convert principal and interest into shares of the Company’s common stock at a 10% discount to the closing price on which the conversion is elected effective September 15, 2023. In addition, the note became secured with a second priority security interest on the assets of its Lighter Than Air Systems Corp. (d/b/a Drone Aviation Corp) business and agreed to extend the term of the advisory agreement pursuant to the original note for an additional two years and issue an additional 12,000 shares of the Company’s common stock per year while the note is outstanding. On April 13, 2023, the Company issued 12,000 shares of the Company’s common stock with a grant date value of $28,080 to the advisor pursuant to the terms of the advisory agreement as consideration for their services.

For Note K, on January 17, 2023, the Company sold an unsecured promissory note in the principal amount of $90,000, which was due on or before July 30, 2023. Of the $90,000 of proceeds from the first note, usage of $88,000 is restricted to make interest payments due to certain holders of Note M. The note becomes immediately due and payable if the Company raises at least $2.5 million in an equity or debt offering and will accrue 8% interest per annum, which increases to 15% per annum if the note isn’t repaid by the maturity date. The issuance of a second note (Note L) made the principal and accrued interest of both notes convertible if they aren’t repaid by the maturity date and the conversion price will equal 81% of the closing market price of the common stock on the day that the holder elects to convert the note(s), subject to a floor price of $5.00 per share. The Company did not repay the note on maturity and therefore the note became convertible as of the maturity date and is in default.

For Note L, on February 1, 2023, the Company sold an unsecured promissory note in the principal amount of $80,000, which was due on or before August 1, 2023. The note becomes immediately due and payable if the Company raises at least $2.5 million in an equity or debt offering and accrues 8% interest per annum, which increases to 15% per annum if the note isn’t repaid by the maturity date. The issuance of this note made the principal and accrued interest of Note K convertible if they aren’t repaid by the maturity date and the conversion price will equal 81% of the closing market price of the common stock on the day that the holder elects to convert the note(s), subject to a floor price of $5.00 per share. The Company did not repay the note on maturity and therefore the note became convertible as of the maturity date and is in default.

For Note M, on May 24, 2022, the Company received notice from counsel for holders of $11.2 million of convertible promissory notes issued in connection with the acquisition of FastBack that the Company had failed to file its Annual Report on Form 10-K in a timely manner, as required by the terms of the convertible promissory notes. While the note holders have the right to accelerate the maturity of the principal, the notice simply indicated that the holders were reserving their rights. On January 20, 2023, the Company paid cash for interest in the amount of $75,985. In addition, during January 2023, pursuant to a limited time offer, certain note holders agreed to amend their note and convert an aggregate of $1.3 million principal of their notes and $0.3 million of accrued interest into 280,625 shares of the Company’s common stock pursuant to a limited time offer for conversions at a discounted rate of 81% of the closing market price of the Company’s common stock on the day special conversion notices were received. As a result of the conversions, which were recorded using inducement accounting, the Company recognized a $1.9 million loss on inducement of debt conversions, which is included in income from continuing operations in the income statement, which represents the fair value of the 280,625 shares of common stock issued pursuant to the limited time offer, less the fair value of the 3,068 shares of common stock that would have been issuable pursuant to the original terms of the convertible notes. Interest is being accrued at the 15.0% default rate during 2023.

Certain agreements governing the secured notes payable, unsecured notes payable, and unsecured convertible notes payable contain customary covenants, such as limitations on liens, dispositions, mergers, entry into other lines of business, investments and the incurrence of additional indebtedness.

All debt agreements are subject to customary events of default. If an event of default occurs with respect to the debt agreements and is continuing, the lenders may accelerate the applicable amounts due. The Company is in default on several debt agreements and has accrued the proper penalties or disclosed any additional contingencies that resulted from the default.

Future maturities contractually required by the Company under long-term debt obligations are as follows as of June 30, 2023:

(Amounts in thousands)	Total
2023	$	11,917
2024		550
2025		-
2026		-
2027		-
Thereafter		-
Total	$	12,467