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Notes Payable, Net

12 Months Ended

Dec. 31, 2021

Note 4: Notes Payable, net

Notes payable, net consisted of the following at December 31, 2021:

	Gross		Discount			Net		Interest Rate			Maturity Date (including effect of March 1, 2022 transactions)
TIF loan	$	9,451,000	$	(1,611,476	)	$	7,839,524		5.20	%	7/31/2048
Preferred equity loan		3,600,000		-			3,600,000		7.00	%	Various
City of Canton Loan		3,500,000		(6,509	)		3,493,491		5.00	%	7/1/2027
New Market/SCF		2,999,989		-			2,999,989		4.00	%	12/30/2024
Constellation EME		5,227,639		-			5,227,639		6.05	%	12/31/2022
JKP Capital loan		6,953,831		-			6,953,831		12.00	%	3/31/2024
MKG DoubleTree Loan		15,300,000		(83,939	)		15,216,061		5.00	%	9/13/2023
Convertible PIPE Notes		24,059,749		(11,168,630	)		12,891,119		10.00	%	3/31/2025
Canton Cooperative Agreement		2,670,000		(174,843	)		2,495,157		3.85	%	5/15/2040
Aquarian Mortgage Loan		7,400,000		(439,418	)		6,960,582		10.00	%	3/31/2024
Constellation EME #2		4,455,346		-			4,455,346		5.93	%	4/30/2026
IRG Note		8,500,000		-			8,500,000		8.00	%	3/31/2024
ErieBank Loan		13,353,186		(598,966	)		12,754,220		4.50	%	6/15/2034
PACE Equity Loan		8,250,966		(277,729	)		7,973,237		6.05	%	12/31/2046
Total	$	115,721,706	$	(14,361,510	)	$	101,360,196

Notes payable, net consisted of the following at December 31, 2020:

	Gross		Discount			Net
TIF loan	$	9,654,000	$	(1,666,725	)	$	7,987,275
Syndicated unsecured term loan		170,090		-			170,090
Preferred equity loan		1,800,000		-			1,800,000
Naming rights securitization loan		1,821,559		(113,762	)		1,707,797
City of Canton Loan		3,500,000		(7,681	)		3,492,319
New Market/SCF		2,999,989		-			2,999,989
Constellation EME		9,900,000		-			9,900,000
Paycheck protection plan loan		390,400		-			390,400
JKP Capital loan		6,953,831		(13,887	)		6,939,944
MKG DoubleTree Loan		15,300,000		(443,435	)		14,856,565
Convertible PIPE Notes		21,797,670		(13,475,202	)		8,322,468
Canton Cooperative Agreement		2,670,000		(181,177	)		2,488,823
Aquarian Mortgage Loan		40,000,000		(2,156,303	)		37,843,697
Total	$	116,957,539	$	(18,058,172	)	$	98,899,367

During the years ended December 31, 2021 and 2020, the Company recorded amortization of note discounts of $5,160,242 and $10,570,974, respectively. During the years ended December 31, 2021 and 2020, the Company recorded paid-in-kind interest of $2,091,990 and $4,066,691, respectively.

Accrued Interest on Notes Payable

As of December 31, 2021 and 2020, accrued interest on notes payable, were as follows:

	December 31,
	2021		2020
TIF loan	$	22,208	$	-
Preferred equity loan		203,350		27,125
New Market/SCF		89,682		-
Constellation EME		-		248,832
Paycheck protection plan loan		-		2,706
City of Canton Loan		5,979		4,472
JKP Capital Note		1,251,395		416,836
MKG Doubletree loan		-		67,716
Canton Cooperative Agreement		39,416		20,593
Aquarian Mortgage Loan		-		333,333
ErieBank Loan		26,706		-
PACE Equity Loan		30,824		-
Total	$	1,669,560	$	1,121,613

The amounts above were included in “accounts payable and accrued expenses” and “other liabilities” on the Company’s consolidated balance sheets, as follows:

	December 31,
	2021		2020
Accounts payable and accrued expenses	$	1,669,560	$	1,094,488
Other liabilities		-		27,125
	$	1,669,560	$	1,121,613

TIF Loan

For the Company, the Development Finance Authority of Summit County (“DFA Summit”) offered a private placement of $10,030,000 in taxable development revenue bonds, Series 2018. The bond proceeds are to reimburse the developer for costs of certain public improvements at the Hall of Fame Village powered by Johnson Controls, which are eligible uses of tax-incremental funding (“TIF”) proceeds.

Under the cooperative agreement entered into by the Company, two subsidiaries, the City of Canton, DFA Summit, Stark County Port Authority, and the bank trustee, the Company and certain subsidiaries have been exempted from certain real estate taxes. However, the Company must make real estate tax payments on the TIF parcels sufficient to cover future required payments on the bond debt service until the 2018 bonds are no longer outstanding. This is a significant commitment made by the Company and is guaranteed by an individual’s trust, an individual, and two subsidiaries of the Company.

Since the bond debt service is fixed and determinable, a liability has been recorded as of December 31, 2021 and 2020, representing the present value of the future bond debt service payments. The term of the TIF requires the Company to make installment payments through July 31, 2048. The current imputed interest rate is 5.2%, which runs through July 31, 2028. The imputed interest rate then increases to 6.6% through July 31, 2038 and finally increases to 7.7% through the remainder of the TIF. The Company is required to make payments on the TIF semi-annually in June and December each year.

7.00% Series A Cumulative Redeemable Preferred Stock (Preferred Equity Loan)

On April 1, 2021, the Company received $900,000 in advance of a subscription agreement to purchase shares of 7.00% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”). On August 12, 2021, the Company entered into a subscription agreement with ACC to issue to the Investor 900 shares of Series A Preferred Stock at a price of $1,000 per share for an aggregate purchase price of $900,000.

On September 22, 2021, the Company issued an additional 900 shares of Series A Preferred Stock to the Investor at a price of $1,000 per share for an aggregate purchase price of $900,000.

The Company had 3,600 and 1,800 shares of Series A Preferred Stock outstanding and 52,800 and 52,800 shares of Series A Preferred Stock authorized as of December 31, 2021 and 2020, respectively. The Series A Preferred Stock is required to be redeemed for cash after five years from the date of issuance and is recorded in “Notes payable, net” on the Company’s consolidated balance sheet.

City of Canton Loan

On December 30, 2019, the Company entered into a loan facility with the City of Canton, OH, whereby it may borrow up to $3,500,000. The loan accrues interest at a rate of 0.5% per annum. Upon an event of default, the interest rate will increase to five percent (5%) per annum on the outstanding balance at the time of default. The loan shall mature on July 1, 2027. During the year ended December 31, 2020, the Company borrowed the maximum amount of $3,500,000 on the loan. The Company has the option to extend the loan’s maturity date for three years, to July 1, 2030, if the Company meets certain criteria in terms of the hotel occupancy level and maintaining certain financial ratios.

New Market/SCF

On December 30, 2019, the Company entered into a loan facility with New Market Project, Inc., whereby it may borrow up to $3,000,000, of which the proceeds are to be used for the development of McKinley Grand Hotel, as described below. During the year ended December 31, 2020 the Company borrowed $2,999,989 on this facility. The loan has a maturity date of December 30, 2024 and accrues interest at a rate of 4% per annum. In the event of default, including failure to pay upon final maturity, the interest rate shall increase by adding a 5% fee that applies to each succeeding interest rate change that would have applied had there been no default.

Constellation EME

On December 30, 2019, the Company entered into a loan facility with Constellation NewEnergy, Inc. (“Constellation”) whereby it may borrow up to $9,900,000 (the “Constellation Loan Facility”). The proceeds of the Constellation Loan Facility are to be held in escrow by a custodian to fund future development costs. The proceeds will be released from escrow as development costs are incurred. The Constellation Loan Facility was amended on April 13, 2020 to modify the payment schedule and maturity date, reflecting current project timetables. The maturity date is December 31, 2022 and payments are due in 29 monthly installments totaling $11,075,000, with an effective interest rate of 6.1%. Beginning in August 2020 through December 2020, the monthly installment amount is $55,000, which increases in January 2021 to $450,000 through December 2022. During the year ended December 31, 2020, the Company borrowed the full amount under the Constellation Loan Facility.

The Company also has a sponsorship agreement with Constellation. Refer to Note 6 for additional information.

Paycheck Protection Program Loan

On April 22, 2020, the Company obtained a Paycheck Protection Program Loan (“PPP Loan”) for $390,400. The PPP Loan had a fixed interest rate of 1% and required the Company to make 18 monthly payments beginning on November 22, 2020, with a maturity date of April 22, 2022, subject to debt forgiveness provisions from the Small Business Association. On February 1, 2021, the Company obtained notice from the Small Business Association that the full outstanding amount of the PPP Loan was forgiven. During the year ended December 31, 2021, the Company recognized the forgiveness of the PPP Loan as “Gain on extinguishment of debt” in the Company’s consolidated statement of operations.

JKP Capital Loan

On June 24, 2020, HOF Village and HOFV Hotel II executed a loan evidenced by a promissory note (the “JKP Capital Loan”) in favor of JKP Financial, LLC (“JKP”) for the principal sum of $7,000,000. The JKP Capital Loan bears interest at a rate of 12% per annum and matures on December 2, 2021, on which date all unpaid principal and accrued and unpaid interest is due. The JKP Capital Loan is secured by the membership interests in HOFV Hotel II held by HOF Village.

On March 1, 2022, the Company and JKP agreed, among other things, to extend the maturity date of the JKP Capital Loan to March 31, 2024. See Note 14, Subsequent Events, for more information.

MKG DoubleTree Loan

On September 14, 2020, the Company entered into a construction loan agreement with Erie Bank, a wholly owned subsidiary of CNB Financial Corporation, a Pennsylvania corporation, as lender. The Company has applied and been approved for a first mortgage loan for $15.3 million (“MKG DoubleTree Loan”) with a variable interest rate of 1.75% plus the prime commercial rate, at which no time can it drop below 5%, for the purpose of renovating the McKinley Grand Hotel in the City of Canton, Ohio. The initial maturity date is 18 months after the exercised loan date, March 13, 2022, and the agreement includes an extended maturity date of September 13, 2022, should HOFRE need more time with an extension fee of 0.1% of the then outstanding principal balance. The MKG DoubleTree Loan has certain financial covenants whereby the Company must maintain a minimum tangible net worth of $5,000,000 and minimum liquidity of not less than $2,000,000. These covenants are to be tested annually based upon the financial statements at the end of each fiscal year.

On March 1, 2022, the Company and Erie Bank agreed to extend the maturity date of the MKG DoubleTree Loan to September 13, 2023. See Note 14, Subsequent Events, for more information.

Convertible PIPE Notes

On July 1, 2020, concurrently with the closing of the Business Combination, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with certain funds managed by Magnetar Financial, LLC and other purchasers (together, the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers in a private placement (the “Private Placement”) $20,721,293 in aggregate principal of the Company’s 8.00% Convertible Notes due 2025 (the “PIPE Notes”). Interest on PIPE Notes is payable quarterly in either cash or an increase in the principal amount of PIPE Notes (“PIK Interest”). If the Company pays interest as PIK Interest, the interest rate for such payment is 10%, rather than 8%. Pursuant to the terms of the Note Purchase Agreement, the PIPE Notes may be converted into shares of Common Stock at a conversion price equal to $6.90 per share. There are also Note Redemption Warrants that may be issued pursuant to the Note Purchase Agreement upon redemption of the PIPE Notes that will be exercisable for a number of shares of Common Stock to be determined at the time any such warrant is issued. The exercise price per share of Common Stock of any warrant will be equal to the conversion price of the PIPE Notes at the time such warrant is issued pursuant to the Note Purchase Agreement.

Canton Cooperative Agreement

On September 1, 2020, HOFRE entered into a Cooperative Agreement with DFA Summit, the City of Canton, Ohio (“Canton”), the Canton Regional Energy Special Improvement District, Inc. (the “District”), and U.S Bank National Association for the construction of the Series 2020C Project. The Series 2020C Project constitutes a port authority facility and a special energy improvement project under the Special Improvement District Act. HOFRE applied and received approval from the District and Canton for the aforementioned project. The loan amount is $2,670,000, with a discount of $182,723, which will be amortized over the life of the loan using the effective interest method.

In order to pay for the costs of the Series 2020C Project, the District and HOFRE have requested and been approved by DFA Summit, to issue and sell the Series 2020C Bonds pursuant to an indenture and make a portion of the proceeds of the Series 2020C Bonds available to the developer to undertake the provision of the Series 2020C Project.

While the Series 2020C Bonds are outstanding, HOFRE shall pay the special assessment and the service payments semi-annually to the Canton County Treasurer pursuant to and in accordance with the Assessing Ordinance, the TIF Act, and the TIF Ordinance. The service payments shall be in the same amount as the real property taxes that would have been charged and payable against the improvements had the TIF Exemption not been granted. The special assessment payments will be made on January 31^st and July 31^st over the course of 17 years, commencing on January 31, 2022 with a maturity date of January 31, 2039. For the first eight years, each payment will consist of $188,188 and decrease to $161,567 beginning in 2030.

Aquarian Mortgage Loan

On December 1, 2020, the Company entered into a mortgage loan (the “Aquarian Mortgage Loan”) with Aquarian Credit Funding, LLC (“Aquarian”), as administrative agent and with Investors Heritage Life Insurance Company and Lincoln Benefit Life Company, as lenders, for $40,000,000 of gross proceeds. The Aquarian Mortgage Loan bears interest at 10% per annum. Upon the occurrence and during the continuance of an event of default, Aquarian may, at its option, take such action, without notice or demand, that Aquarian deems advisable to protect and enforce its rights against the Company, including declaring the debt to become immediately due and payable.

On August 30, 2021, the Company and Aquarian amended the terms of the Aquarian Mortgage Loan whereby the Company paid $20 million to Lincoln Benefit Life Company. In accordance with such payment, Lincoln Benefit Life Company was removed as a lender and the aggregate principal of the Aquarian Mortgage Loan was reduced to $20 million as of September 30, 2021. The Company and Aquarian also agreed to extend the maturity date of the Aquarian Mortgage Loan to March 31, 2022.

On December 15, 2021, the Company repaid approximately $13 million of the Aquarian Mortgage Loan.

On March 1, 2022, CH Capital Lending, LLC, an affiliate of our director Stuart Lichter (“CH Capital Lending”), purchased the Aquarian Mortgage Loan from Aquarian, and the Company and CH Capital Lending agreed, among other things, to extend the due date of the Aquarian Mortgage Loan to March 31, 2024. See Note 14, Subsequent Events, for more information.

Constellation EME #2

On February 1, 2021, the Company entered into a loan facility with Constellation whereby it may borrow up to $5,100,000 (the “Constellation EME #2”). The proceeds of the Constellation EME #2 are to be held in escrow by a custodian to fund future development costs. The proceeds will be released from escrow as development costs are incurred. The maturity date is April 30, 2026, and payments are due in 60 monthly installments totaling $6,185,716, with an effective interest rate of 8.7%.

The Company also has a sponsorship agreement with Constellation. Refer to Note 6 for additional information.

IRG Note

On November 23, 2021, the Company, and IRG entered into a promissory note (the “IRG Note”) pursuant to which IRG made a loan to the Company in the aggregate amount of $8,500,000 (the “Loan Amount”). Interest will accrue on the outstanding balance of the Note at a rate of 8% per annum, compounded monthly. The Company will pay interest to IRG under the Note on the first day of each month, in arrears. The Note has a maturity date of June 30, 2022.

On March 1, 2022, IRG assigned 50% of the IRG Note to IRG, LLC and 50% of the IRG Note to JKP. Also on March 1, 2022, the Company, IRG, and JKP agreed, among other things to extend the maturity date of the split IRG Note to March 31, 2024. See Note 14, Subsequent Events, for more information.

ErieBank Loan

On December 15, 2021, HOF Village Center For Excellence, LLC (“CFE”), a wholly-owned subsidiary of the Company, as borrower, entered into a loan agreement with ErieBank, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender (“ErieBank”), pursuant to which the Company may borrow up to $22,040,000 (the “ErieBank Loan”). The maturity date is June 15, 2034, provided CFE has a right to extend the maturity date for an additional six months to December 15, 2034, subject to certain conditions. Through December 31, 2021, the Company has borrowed $13,353,186 under the ErieBank Loan.

For the period from disbursement until June 15, 2024 or, if CFE elects and qualifies for an extension option, up to and including December 15, 2024, CFE is obligated to make interest only monthly payments at a rate equal to the sum of 1.00% plus the prime commercial rate with a floor of 4.50% per annum. Beginning July 2024, or, if CFE elects and qualifies for an extension option, beginning January 2025, CFE shall make monthly principal plus interest payments based upon an assumed 25-year amortization schedule, with the entire outstanding principal balance plus accrued but unpaid interest due and payable on the maturity date at a rate, depending on a debt service coverage ratio test, equal to the five-year rate as published by the Federal Home Loan Bank of Pittsburgh plus 2.65% - 3.00% per annum, with a floor of 3.75% - 4.25%.

The ErieBank Loan is collateralized by the Constellation Center for Excellence.

PACE Equity Loan

On December 15, 2021, CFE entered into the Energy Project Cooperative Agreement (the “Cooperative Agreement”) among the City of Canton, Ohio (the “City”), the Canton Regional Energy Special Improvement District, Inc., CFE and PACE EQUITY LLC (“PACE”). Pursuant to (A) the Cooperative Agreement and (B) a Resolution of the City Council of the City approving the Petition for Special Assessments for Special Energy Improvement Projects submitted by CFE and Newco to the City, together with the Canton Regional Energy Special Improvement District Project Plan Supplement to Plan for Constellation Center for Excellence project a portion of the costs of certain energy components of the Project shall be paid for with funds from Project advances under the Cooperative Agreement. PACE made available a Project advance in the amount of $8,250,966, of which $7,500,000.00 was used to pay down the Aquarian Mortgage Loan.

Bridge Loan

On June 30, 2020, the Company entered into an amendment to the $65 million bridge loan (the “Bridge Loan”) dated March 20, 2018, that the Company had originally utilized to build the Tom Benson Stadium, among the Company, various lenders party thereto (“Lenders”) and GACP Finance Co., LLC (“GACP”), as administrative agent (the “Term Loan Agreement”), which further extended the maturity date to November 30, 2020, updated certain defined terms to align with the final transaction structure resulting from the Business Combination, specified the amount of proceeds from the Business Combination and Private Placement (defined below) that were required to be paid towards amounts outstanding under the Term Loan Agreement (the “Gordon Pointe Transaction Prepayment Amount”), added a fee payable to certain Lenders relative to the amounts owed after giving effect to the Gordon Pointe Transaction Prepayment Amount, amended various provisions related to mandatory prepayments of outstanding amounts owed under the Term Loan Agreement (including, but not limited to, prepayments due in connection with future equity and debt raises), and other minor amendments regarding HOF Village Hotel II, LLC (“HOF Village Hotel II”) and Mountaineer to facilitate their planned operations. The Bridge Loan has an exit fee of 1% on the balance due at the maturity of the loan, which the Company is accreting over the term of the Bridge Loan.

At the date of the Business Combination, on July 1, 2020, the Company used proceeds from the Business Combination to pay $15,500,000 on the Bridge Loan, while an additional $15,000,000 converted into equity in the newly formed HOFRE. The remaining balance following the Business Combination was approximately $34,500,000. The maturity date on the remaining balance had been extended one month to November 30, 2020. During the fourth quarter of 2020, the Company paid off the remaining $34,500,000 outstanding balance owed previously using a portion of the proceeds from the November 2020 Public Offering and the Aquarian Mortgage Loan.

Syndicated Unsecured Term Loan and Preferred Equity Loan

On January 1, 2016, as amended and restated on October 15, 2017, the Company entered into a financing agreement with a syndicate of lenders, including affiliates of IRG Canton Village Member, LLC, a member of HOF Village (the “IRG Member”), for a loan amount up to $150,000,000 as an unsecured promissory note (the “Syndicated Unsecured Term Loan”). The Syndicated Unsecured Term Loan may not be prepaid either in whole or in part until the initial maturity date without the express consent of the lender. Proceeds from the Syndicated Unsecured Term Loan are intended to cover working capital and the construction costs for venues including the Tom Benson Hall of Fame Stadium, youth fields, and campus infrastructure projects. The maturity date is February 26, 2021, and the Syndicated Unsecured Term Loan accrues interest at a rate of 12% per annum.

On December 11, 2018, the Company and various parties signed the Master Transaction Agreement setting forth various terms and conditions for the development of the Hall of Fame Village powered by Johnson Controls. As part of the Master Transaction Agreement, American Capital Center, LLC (“ACC”), an affiliate of the Company, exchanged $106,450,000 of the Company’s debt and $24,470,142 of accrued interest and origination fees, as well as $336,579 of amounts due to PFHOF, by converting it to preferred equity instruments with a face value of $95,500,000 and an amended subordinated debt agreement with a face value of $6,450,000. In accordance with the Extinguishment of Liabilities subtopic of the FASB ASC 470-50, given that ACC was a related party, the Company treated the Master Transaction Agreement as a capital transaction and recapitalized the debt to equity in the amount of $96,076,120, net of discounts and unamortized deferred financing costs.

The subordinated debt accrues interest at a rate of 5% and the balance is due February 26, 2021. The remaining subordinated debt is subordinate to the Bridge Loan. Additionally, the subordinated debt contains a payment-in-kind (“PIK”) interest provision, which represents contractually deferred interest added to the subordinated debt outstanding balance that is due at maturity. For the years ended December 31, 2020 and 2019, the Company incurred PIK interest of $256,441 and $353,530, respectively. As part of the Business Combination, on July 1, 2020, the entire balance of the Preferred Equity Loan’s and all but $170,089 of the Syndicated Unsecured Term Loan outstanding were converted into an aggregate of 13,762,039 shares of common stock.

Land Loan with Affiliate

On July 10, 2017, the Company entered into a promissory note with the PFHOF, an affiliate of HOFRE, for purpose of the acquisition of land at the Hall of Fame Village powered by Johnson Controls. The promissory note had an outstanding balance of $1,273,888 at June 30, 2020 and December 31, 2019, which bore interest at a rate of 1.22% per annum. The loan may be prepaid in whole or in part without penalty. For any unpaid balance after December 31, 2017, the interest rate was increased by 5%. The loan was subordinate to the Bridge Loan and had a maturity date of February 26, 2023. On July 2, 2020, the Company issued 580,000 shares in exchange of (a) full satisfaction of the promissory note in the amount of $1,273,888, (b) accrued interest in the amount of $50,158, and (c) other amounts due to PFHOF in the amount of $4,266,793. The Company determined that the issuance of shares for full satisfaction of the note resulted in a loss on extinguishment of debt of $209,160.

Naming Rights Securitization Loan

On November 9, 2017, the Company, through a subsidiary, JCIHOFV Financing, LLC, entered into a secured loan with a financial institution for $22,800,000, collateralized by the entire payment stream of the Johnson Controls Naming Rights Agreement, dated November 17, 2016 (see Note 6). Monthly payments include principal and interest at 4% per annum with the remaining principal balance due on March 31, 2021. During the year ended December 31, 2021 the loan was repaid in full.

New Market/SCF

McKinley Grand Mortgage

On October 22, 2019, the Company purchased the McKinley Grand Hotel in Canton, Ohio for $3.9 million, which was partially financed by separate notes payable of $1,900,000 and $1,807,339.

The $1,807,339 note payable, in favor of CH Capital Lending, LLC (the “CH Capital Note”), accrued interest at a fixed rate equal to 10% per annum. The Company was required to make payments commencing on or prior to December 30, 2019. The maturity date of the CH Capital Note was April 30, 2020 and interest was payable quarterly. The Company was previously in default on the CH Capital Note, however the CH Capital Note was paid in full on June 24, 2020.

The $1,900,000 note payable had a maturity date of October 22, 2021. Interest accrued at a rate equal to the greater of (i) 3.75% or (ii) the sum of the LIBOR rate plus 2.75%. The Company was required to make interest payments commencing on November 1, 2019, and on the first day of each successive month until the note was repaid. In September 2020, the Company paid off the full outstanding $1,900,000 principal and interest owed, using proceeds from the MKG Double Tree Loan.

IRG November Note

On February 7, 2020, as effective on November 27, 2019, HOF Village, as borrower, entered into a subordinated promissory note with Industrial Realty Group, as lender, in an amount up to $30,000,000 (the “IRG November Note”). As of December 31, 2019, the aggregate principal amounts, excluding PIK interest, borrowed under the IRG November Note was $11,585,792. The IRG November Note accrues interest at a rate of 12% per annum and had a maturity date of November 1, 2020. Additionally, the IRG November Note contained a PIK interest provision, which represents contractually deferred interest added to the IRG November Note outstanding balance that is due at maturity. For the years ended December 31, 2020 and 2019, the Company incurred $1,858,744 and $85,009 of PIK interest, respectively. On July 1, 2020, upon consummation of the Business Combination, Industrial Realty Group exchanged $9,000,000 of the outstanding balance under the IRG November Note for PIPE Notes.

IRG November Note (continued)

On December 29, 2020, the Company entered into a securities purchase agreement with Industrial Realty Group, LLC, a Nevada limited liability company (“IRG”), and CH Capital Lending, LLC, a Delaware limited liability company affiliated with IRG (the “Purchaser”), pursuant to which the Company sold Purchaser 10,813,774 shares of the Company’s common stock, par value $0.0001 per share, and warrants to purchase 10,036,925 shares of common stock for an aggregate purchase price of $15,239,653. The Purchase Price was paid in the form of the cancellation in full of certain financial obligations owed by the Company and its affiliates to IRG and its affiliates in the amount of the Purchase Price, including the IRG November Note. The Company determined that the issuance of shares and warrants for full satisfaction of the note resulted in a loss on extinguishment of debt of $3,404,244. The Company valued the warrants using the following assumptions:

	Warrants
Stock Price	$	1.29
Exercise Price	$	1.40
Dividend Yield		N/A
Expected Volatility		49.45	%
Risk-Free Interest Rate		0.37	%
Number of Shares		10,036,925
Value (USD)	$	5,196,116
Term (in years)		5.00

SCF Subordinated Note

On June 22, 2020, the Company entered into a loan facility with Stark Community Foundation (the “SCF Subordinated Note”) for $1,000,000. The SCF Subordinated Note has a fixed interest rate of 5% per annum, has a PIK interest provision that was payable semi-annually in arrears on each July 22 and January 22 commencing July 22, 2020, and with a maturity date of June 22, 2023. On July 1, 2020, the SCF Subordinated Note was exchanged for PIPE Notes, described in greater detail above, under “Convertible PIPE Notes”.

Future Minimum Principal Payments

The minimum required principal payments on notes payable outstanding as of December 31, 2021 are as follows:

For the years ending December 31,	Amount
2022		44,614,079
2023		1,589,801
2024		4,753,428
2025		29,823,490
2026		1,397,073
Thereafter		33,543,835
Total Gross Principal Payments	$	115,721,706

Less: Discount		(14,361,510	)

Total Net Principal Payments	$	101,360,196

The table above does not reflect the result of any refinancing of debt subsequent to December 31, 2021.

The Company has various debt covenants that require certain financial information to be met. If the Company does not meet the requirements of the debt covenants, the Company will be responsible for paying the full outstanding amount of the note immediately. As of December 31, 2021, the Company was in compliance with all relevant debt covenants.