Notes Payable

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Notes Payable

Note 5. Notes Payable

On October 1, 2018, the Company entered into a promissory note (the “2018 Promissory Note”), which promised to pay Anthony Mack, Chief Executive Officer and significant investor, the principal amount of $500,000, and bore interest at a rate of 11.19% per annum. The 2018 Promissory Note stated that the principal was due at the earlier of an event of default (as defined in the 2018 Promissory Note) and the first anniversary of the date of the 2018 Promissory Note. As of September 30, 2021, the Company had fully repaid the balance due of $500,000 on this promissory note with accrued interest of $166,296.

On January 15, 2019, the Company entered into a promissory note (the “2019 Promissory Note”), which promised to pay Anthony Mack the principal amount of $500,000, and bore interest at a rate of 11.19% per annum. The 2019 Promissory Note stated that the principal was due at the earlier of an event of default (as defined in the 2019 Promissory Note) and the first anniversary of the date of the 2019 Promissory Note. On April 6, 2020, the Company and Anthony Mack entered into an amendment to the 2019 Promissory Note which extended the maturity date from the first anniversary of the date of the 2019 Promissory Note to January 15, 2021, with all other terms remaining consistent. As of September 30, 2021, the Company had fully repaid the balance due of $500,000 on this promissory note with accrued interest of $149,977.

In January 2021, the Company issued notes with an aggregate principal amount of $75,000 and $25,000, respectively. These notes were issued to Anthony Mack for $75,000 and Christopher Chipman, Chief Financial Officer, for $25,000. These notes bore interest as a rate of 1.35% per annum and were subsequently fully repaid with proceeds from the IPO, including accrued interest of $122 and $41, respectively.

On August 29, 2019, the Company entered into a service provider convertible note purchase agreement (the “RRD Note”) with RRD International, LLC (“RRD”). Under the RRD Note, the Company and RRD agreed to make certain compensation due to RRD payable in the form of a convertible promissory note. The RRD Note stated that a maximum principal balance of $400,000 could be applied for services provided by RRD to the Company, which could be converted into equity or cash (all or in part) upon a Qualified Financing (as defined in the RRD Note) or the Conversion Date of March 31, 2020. Borrowings under the RRD Note bore simple interest on the outstanding principal amount of the RRD Note until paid in full at the fixed rate of 10% per annum. During 2020, the RRD Note was amended to increase the maximum principal to $600,000 and to extend the maturity and conversion dates through to January 31, 2021. As of December 31, 2020, the balance on the RRD Note was $493,480, with accrued interest of $34,544.

In February 2021, the Company fully paid the balance on its RRD Note of $528,024, including $34,544 of accrued interest, with proceeds from the Company’s IPO.

On May 4, 2020, the Company entered into a Promissory Note (the “PPP Note”) with PNC Bank as the lender (the “Lender”), pursuant to which the Lender agreed to make a loan to the Company under the Paycheck Protection Program (the “PPP Loan”) offered by the U.S. Small Business Administration (the “SBA”) in a principal amount of $72,100 pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan proceeds are available to be used to pay for payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leaves; rent; utilities; and interest on certain other outstanding debt. The amount that will be forgiven will be calculated in part with reference to the Company’s full time headcount during the period ending October 31, 2020. The interest rate on the PPP Note is a fixed rate of 1% per annum. To the extent that the amounts owed under the PPP Loan, or a portion of them, are not forgiven, the note shall convert to an amortizing term loan and the Company will be required to make principal and interest payments in monthly installments beginning seven months from April 2020. The PPP Note matures in two years. The PPP Note includes events of default. Upon the occurrence of an event of default, the Lender will have the right to exercise remedies against us, including the right to require immediate payment of all amounts due under the PPP Note. On July 2, 2021, the SBA notified the Company that the forgiveness amount totaled $61,816 and was recorded as other income within the statement of operations. The remaining balance of $10,284 was fully repaid by the Company during the quarter ended September 30, 2021.

The following table summarizes the Company’s notes payables:

	September 30, 2021
	Balance as of January 1, 2021		Debt Forgiveness			Notes Issued		Note Payments			Balance as of September 30, 2021
Related party notes payable
Anthony Mack 2018 Promissory Note	$	500,000	$	—		$	—	$	(500,000	)	$	—
Anthony Mack 2019 Promissory Note		500,000		—			—		(500,000	)		—
Related party notes payable		—		—			100,000		(100,000	)		—
Total related party notes payable		1,000,000		—			100,000		(1,100,000	)		—
RRD Note		493,480		—			—		(493,480	)		—
SBA PPP Loan		72,100		(61,816	)		—		(10,284	)		—
Total notes payable		1,565,580		(61,816	)		100,000		(1,603,764	)		—
Less: Current portion of notes payable		543,990		(61,816	)		100,000		(582,174	)		—
Total non-current portion of notes payable	$	1,021,590	$	—		$	—	$	(1,021,590	)	$	—

Interest expense was $93,640 and $129,600 for the nine months ended September 30, 2021 and 2020, respectively. Interest expense was $28,892 and $45,709 for the three months ended September 30, 2021 and 2020, respectively.