DEBT

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

DEBT

NOTE 5 — DEBT

Total debt of the Company was as follows as of September 30, 2021 and December 31, 2020:

Debt Type	September 30, 2021			December 31, 2020
Convertible notes payable	$	4,750,000		$	1,445,000
Convertible notes payable - fair value option		1,253,689			1,527,293
Notes payable		1,201,931			1,273,394
Term loan		600,195			900,292
Paycheck Protection Program loans		304,169			3,099,869
Total debt	$	8,109,984		$	8,245,848
Less current portion of debt		(1,057,317	)		(2,909,479	)
Noncurrent portion of debt	$	7,052,667		$	5,336,369

The table below details the maturity dates for the Company’s debt as of September 30, 2021:

Debt Type	Maturity Date	2021		2022		2023		2024		2025		Thereafter
Convertible notes payable	Ranging between June 2023 and March 2030	$	—	$	—	$	4,750,000	$	—	$	—	$	500,000
Nonconvertible promissory notes	Ranging between January 2022 and December 2023		25,287		307,685		868,959		—		—		—
Term loan Bank United	March 31, 2023		100,033		400,130		100,032		—		—		—
Paycheck Protection Program loans	May 5, 2022		114,063		190,106		—		—		—		—
		$	239,383	$	897,921	$	5,718,991	$	—	$	—	$	500,000

Convertible Notes Payable

On March 2021, April 2021, June 2021, August 2021 and September 2021 the Company issued ten convertible promissory notes to four noteholders in the aggregate amount of $5,950,000. The convertible promissory notes bear interest at a rate of 10% per annum and mature on the second anniversary of their respective issuances. The balance of each convertible promissory note and any accrued interest may be converted at the noteholder’s option at any time at a purchase price based on a 90-day average closing market price per share of the Common Stock but not at a price less than $2.50 per share.

During the nine months ended September 30, 2021, the holders of nine convertible notes issued during 2020 and 2021 converted the principal balance of $2,645,000 plus accrued interest of $11,944 into 509,881 shares of Common Stock at conversion prices ranging between $3.69 and $9.46 per share.

The Company recorded interest expense related to these convertible notes payable of $88,000 and $130,482 during the three and nine months ended September 30, 2021, respectively, and made cash interest payments amounting to $109,176 during the nine months ended September 30, 2021 related to the convertible promissory notes.

As of September 30, 2021 and December 31, 2020, the principal balance of the convertible promissory notes of $4,750,000 and $1,445,000, respectively, was recorded in noncurrent liabilities under the caption convertible promissory notes on the Company’s condensed consolidated balance sheets.

The following is a summary of the Company’s convertible notes payable as of September 30, 2021:

					Fair Value
	Principal Amount		Net Carrying Amount		Amount		Level
10% convertible notes due in June 2023	$	1,850,000	$	1,850,000	$	1,812,000		3
10% convertible notes due in August 2023		2,000,000		2,000,000		1,955,000		3
10% convertible notes due in September 2023		900,000		900,000		876,000		3
	$	4,750,000	$	4,750,000	$	4,643,000

Subsequent to September 30, 2021, the holders of three convertible notes converted the principal balance of $1,850,000 into 172,550 shares of Common Stock at conversion prices ranging between $10.71 and $10.74 per share.

Convertible Notes Payable at Fair Value

The Company had convertible promissory notes outstanding with aggregate principal amounts of $1,600,000 as of December 31, 2020 for which it elected the fair value option. As such, the estimated fair value of each note was recorded on their respective issue dates. At each balance sheet date, the Company records the fair value of the convertible promissory notes with any changes in the fair value recorded in the condensed consolidated statements of operations.

On each of January 13, 2021 and January 27, 2021, notes with a remaining aggregate principal balance of $1,100,000 were converted into 281,554 shares of Common Stock at purchase prices ranging between $3.90 and $3.91 per share. The Company had a balance of $1,253,689 and $947,291 in noncurrent liabilities as of September 30, 2021 and December 31, 2020, respectively, and $580,000 in current liabilities as of December 31, 2020 recorded on its condensed consolidated balance sheets related to the convertible promissory notes measured at fair value. The Company recorded a loss in fair value of $223,923 and a gain of $8,730 for the three months ended September 30, 2021 and 2020, respectively, and losses in fair value of $826,398 and $540,231 for the nine months ended September 30, 2021 and 2020, respectively, on its condensed consolidated statements of operations.

The Company recorded interest expense of $9,863 and $29,589 in its condensed consolidated statements of operations during the three and nine months ended September 30, 2021, respectively, and made cash interest payments amounting to $29,589 during the nine months ended September 30, 2021 related to these convertible promissory notes.

Nonconvertible Promissory Notes

As of September 30, 2021, the Company has outstanding unsecured nonconvertible promissory notes in the aggregate amount of $1,201,933, which bear interest at a rate of 10% per annum and mature between January 15, 2022 and December 10, 2023.

As of September 30, 2021 and December 31, 2020, the Company had a balance of $305,037 and $846,749, respectively, recorded as current liabilities and $896,894 and $426,645, respectively in noncurrent liabilities on its condensed consolidated balance sheets related to these nonconvertible promissory notes. The Company recorded interest expense related to these nonconvertible promissory notes of $30,317 and $32,668 for the three months ended September 30, 2021 and 2020, respectively, and $92,765 and $99,648 for the nine months ended September 30, 2021 and 2020, respectively. The Company made interest payments of $93,186 and $100,028 during the nine months ended September 30, 2021 and 2020, respectively, related to the nonconvertible promissory notes.

Term Loan

On March 31, 2020, 42West and The Door, as co-borrowers, entered into a three-year term loan (the “Term Loan”) with Bank United, N.A, which bears interest at a rate of 0.75% points over the Lender’s Prime Rate, provides for monthly repayment of principal and interest and matures on March 15, 2023. For the three and nine months ended September 30, 2021, the Company made principal payments in the amount of $100,033 and $300,098, respectively. During the three and nine months ended September 30, 2021, the Company recorded interest expense and paid interest of $6,813 and $23,334. As of September 30, 2021, the outstanding balance on the Term Loan was $600,195.

The Term Loan contains both customary affirmative and negative covenants. The bank tests for compliance with debt covenants on an annual basis based on the financial statements of 42West and The Door as of and for the year ended December 31. Based on current economic factors and uncertainties due to COVID-19, the Company believes it is out of compliance with certain debt covenants as of and for the three and nine months ended September 30, 2021. As such, the Company classified the entire balance of the Term Loan in current liabilities on its condensed consolidated balance sheet as of September 30, 2021.

Paycheck Protection Program Loan

In April 2020, the Company and its subsidiaries received an aggregate amount of $2.8 million of PPP Loans established under the CARES Act. Through our acquisition of Be Social in August 2020, the Company assumed a PPP Loan of $304,169. 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 PPP Loans and qualifying for the forgiveness of the PPP Loans based on its adherence to the forgiveness criteria. Throughout 2021, the Company and its subsidiaries applied for forgiveness of all PPP Loans received. On June 28, 2021, the Company was notified that the SBA had approved our application to forgive the entire amount of the loans for 42West and Dolphin, which in aggregate amounted to $1.1 million. Between July 1, 2021 and August 17, 2021, the Company was notified that the SBA had approved our applications to forgive the entire amounts of the loans for Viewpoint, Shore Fire and The Door, which in aggregate amounted to $1.7 million. Subsequent to September 30, 2021, the Company was notified that the SBA had approved our application to forgive the entire amount of the loan for Be Social, which amounted to $0.3 million. As of the date of this Quarterly Report on Form 10-Q, all PPP Loans have been forgiven.

As of September 30, 2021, the principal balance of the loan in the amount of $304,169 was recorded in current liabilities on the Company’s condensed consolidated balance sheet.