Notes Payable

3 Months Ended

Mar. 31, 2022

Notes payable with related parties [Abstract]

Notes payable with related parties [Text Block]

8. Notes Payable

Notes Payable with Related Parties

In December 2018, the Company entered into related party convertible notes payable (the “2018 Related Notes” and together with the

Convertible Notes, the “Reorganization Convertible Notes”) for $

2.0

 million in aggregate proceeds, received in three tranches. The 2018

Related Notes bore simple interest at an annual rate of

5

% and contain a number of provisions addressing events of default and

prepayment. In accordance with the Contribution and Exchange Agreement, on March 2, 2021, the 2018 Related Notes were converted

into Series A preferred stock. 

During the three months ended March 31, 2021, the Company recognized interest expense of less than $

0.1

 million on the 2018 Related

Notes.

2019 Executive Note

In November 2019, the Company borrowed $

0.1

 million from its Chief Executive Officer (the “2019 Executive Note”). No formal loan

agreement was executed. The Company has elected to accrue interest at an annual rate of

5

%, consistent with the terms and conditions

of the Convertible Notes and 2018 Related Notes, which was the closest benchmark the Company could evaluate. The 2019 Executive

Note was repaid in August 2021. 

The activity of the 2018 Related Notes and 2019 Executive Note is as follows (in thousands):

Note Payable—Airplane

In connection with the acquisition of an airplane, the Company entered into a note payable agreement (the “2025 Note”) in June 2020

for $

11.5

 million, with an annual interest rate of

3.4

% and a maturity date of June 9, 2025. Principal and interest payments are payable

monthly in the amount of $

0.07

 million with a final payment of $

9.4

 million at maturity. The 2025 Note is guaranteed by the co-founders

of the Company. In addition, the Company incurred debt issuance costs of $

0.3

 million, which are being amortized over the term of the

loan. There are no financial covenants associated with the 2025 Note. 

The carrying value of the 2025 Note is as follows (in thousands):

As of March 31, 2022, the remaining principal payments for the 2025 Note, are as follows (in thousands):

Interest expense associated with the 2025 Note was $

0.1

 million for each of the three months ended March 31, 2022 and 2021. As of

March 31, 2022, accrued interest of less than $

0.1

 million was included in accrued expenses and other liabilities in the accompanying

condensed consolidated balance sheets as of March 31, 2022 (unaudited) and December 31, 2021.

Note Payable—Paycheck Protection Program

The Company applied for and received a loan, which is in the form of a note dated May 5, 2020, from HSBC Bank USA, National

Association (“HSBC”) in the aggregate amount of approximately $

0.3

 million (the “PPP Loan”), pursuant to the Paycheck Protection

Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides

for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. As of

March 31, 2021, there were no events of default under the PPP Loan. 

The Company paid off the PPP Loan in full, including all accrued but unpaid interest to the repayment date, in August 2021.

2018 Related Notes and 2019 Executive Note

Related Party

Principal

Accrued

Interest

Balance

December 31, 2020

$

2,100

$

194

$

2,294

Accrued interest

—

18

18

Conversion

(2,000)

(205)

(2,205)

March 31, 2021

$

100

$

7

$

107

March 31,

December 31,

2022

2021

Principal

$

10,776

$

10,883

Unamortized debt issuance cost

(170)

(184)

Carrying amount

10,606

10,699

Less: current portion

(380)

(376)

Note payable, net of current portion and debt issuance cost

$

10,226

$

10,323

Amount

2022

$

322

2023

444

2024

458

2025

9,552

$

10,776