Notes Payable

9 Months Ended

Sep. 30, 2021

Notes Payable [Abstract]

Notes Payable

(10) Notes Payable

Paycheck Protection Program Loan

In April 2020, the Company executed a promissory note (Note) with Georgia Primary Bank (the Lender) evidencing an unsecured loan in the amount of $812,500, which was made pursuant to the PPP. The PPP was established under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which was enacted on March 27, 2020, and is administered by the SBA. All the funds under the PPP loan were disbursed to the Company in April 2020 and was recognized as debt on the Company’s financial statements.

The Note provided for a fixed interest rate of one percent per year, and the Company was not imputing any additional interest at a market rate because this was a government-guaranteed obligation. Monthly principal and interest payments of $45,717 on the PPP loan were due beginning November 2020 and the final payment was due in April 2022 (Maturity Date). The Note contained customary event of default provisions.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loans granted under the PPP. Such forgiveness is subject to approval by the SBA and the Lender and determined, subject to limitations, based on factors set forth in the CARES Act, including verification of the use of loan proceeds for payment of payroll costs and payment of mortgage interest, rent, and utilities. In the event the PPP loan, or any portion thereof, is forgiven, it is applied to outstanding principal. As of September 30, 2020, the Company had used all the proceeds from the PPP loan to retain employees, maintain payroll, and make lease and utility payments.

In October 2020, the Company submitted the loan forgiveness application to the Lender requesting forgiveness for the full amount of the loan. The Lender had 60 days from receipt of the loan forgiveness application to issue a decision to the SBA, and the SBA, subject to its review, would remit funds within 90 days after the Lender issues its decision to the SBA.

In June 2021, the Company was notified by the Lender that the PPP Loan in the amount of $812,500 and accrued interest of $9,015 was fully forgiven; and, as a result, the entire amount was derecognized on the Company’s financial statements, which was included as other income for the nine months ended September 30, 2021 on the accompanying statements of comprehensive loss. The SBA reserves the right to audit our fully forgiven PPP loan for an indefinite time.

As of September 30, 2021, no amounts were outstanding under the PPP loan. As of December 31, 2020, the PPP loan balance consisted of $630,010 payable in 2021 and $182,490 in 2022, and interest expense accrued in connection with this PPP loan was $5,654 and was included in accrued expenses on the accompanying balance sheets. For the three months ended September 30, 2021 and 2020, interest expense on the PPP loan was $0 and $2,048, respectively. For the nine months ended September 30, 2021 and 2020, interest expense on the PPP loan was $3,361 and $3,606, respectively.

Economic Injury Disaster Loan advance

In April 2020, the Company received the SBA Economic Injury Disaster Loan advance (EIDL advance) of $10,000. This EIDL advance was originally included in notes payable since the SBA was required to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment remitted by SBA to the lender. In December 2020, the Economic Aid to Hard-Hit Small Business, Nonprofits and Venues Act (Economic Aid Act) was signed into law, which repealed the SBA requirement to deduct the amount of any EIDL advance received by a PPP borrower from the PPP forgiveness payment. As a result of the Economic Aid Act, the Company recognized the EIDL advance as other income in December 2020.

As of September 30, 2021 and December 31, 2020 no amounts were outstanding under the EIDL advance.  For the three and nine months ending September 30, 2021 and 2020, no amounts were recognized as EIDL other income.

AFCO Credit Corporation (AFCO)

In the first quarter of 2021, the Company executed two Promissory Notes with AFCO (AFCO notes) to finance certain insurance premiums totaling $64,842, requiring the Company to pay $16,210 in down payments and make monthly installment payments. The annual interest rate is 10.5% and the current monthly installment payments total $6,094, which represents principal and interest. The final installment payments were paid on October 12, 2021.

In the second quarter of 2021, the Company executed another Promissory Note with AFCO (AFCO note) to finance certain insurance premiums totaling $558,367, requiring the Company to pay $111,673 in a down payment and make monthly installment payments. The annual interest rate is 5.25% and the monthly installment payment is $45,751, which represents principal and interest. The final installment payment is due April 18, 2022.

As of September 30, 2021, the principal balance on all the AFCO promissory notes was $320,866 and is included in Notes payable – current portion in the accompanying balance sheets. Interest expense in connection with the three AFCO promissory notes was $5,846 and $0 for the three months ended September 30, 2021 and 2020, respectively; and interest expense in connection with the three AFCO promissory notes was $7,170 and $0 for the nine months ended September 30, 2021 and 2020, respectively.