Note 4 - Long-term Debt

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Long-Term Debt [Text Block]

Note 4.     Long-Term Debt

The unpaid principal amount of the Additional Notes (including any PIK Interest) has an interest rate equal to LIBOR (as defined in the Revenue Sharing Agreement) plus 2% per annum (totaling 4.25% and 3.00% at September 30, 2022 and December 31, 2021, respectively); provided that upon and during the continuance of an Event of Default (as set forth in the Revenue Sharing Agreement), the interest rate will increase an additional 2% per annum. Pursuant to the Second Amendment to the Revenue Sharing Agreement, upon the occurrence of certain benchmark transition events, such LIBOR benchmark may be replaced with an alternative benchmark as described therein. Interest may be paid in cash at the option of the Company and otherwise shall be paid by increasing the principal amount of the Additional Notes by the amount of such interest (“PIK Interest”). The Company may prepay the Additional Notes from time to time in whole or in part, without penalty or premium. During the nine months ended September 30, 2022 and year ended December 31, 2021, $145,000 and $140,000, respectively, of Additional Notes were issued to AND34. As of September 30, 2022, the remaining amount of Additional Notes that could be issued was $3,415,000, subject to certain restrictions and limitations outlined in the Revenue Sharing Agreement. Amounts reported as current maturities of long-term debt reflect amounts expected to be paid in the next twelve months.

On July 13, 2020, the Company entered into the SBA Loan pursuant to which the Company received loan proceeds of $150,000. The SBA Loan was made under, and is subject to, the terms and conditions of, the Economic Injury Disaster Loan Program, which was a program expanded for COVID-19 relief under the CARES Act and is administered by the SBA. The term of the SBA Loan is thirty (30) years with a maturity date of July 13, 2050 and the annual interest rate of the SBA Loan is a fixed rate of 3.75% with required monthly payments of $731 beginning in January 2023. During the nine months ended September 30, 2022 and year ended December 31, 2021, $731 and $2,193, respectively, of interest only payments were made. Under the terms of the CARES Act, the use of loan proceeds for the SBA Loan is limited to alleviating economic injury caused by the COVID-19 pandemic. The Company has used the proceeds of the SBA Loan for such purpose.

Long-term debt

	September 30, 2022			December 31, 2021
Additional Notes	$	2,169,422		$	2,024,422
PIK interest on Additional Notes		339,132			276,770
SBA Loan with accrued interest		157,912			154,451
Total long-term debt		2,666,466			2,455,643
Less: current maturities of long-term debt		(6,579	)		(4,386	)
Long-term debt, net of current maturities	$	2,659,887		$	2,451,257

On both May 8, 2020 and February 5, 2021, the Company entered into a Paycheck Protection Program (“PPP”) Loan, a SBA Note and Loan Agreement with HSBC Bank USA, N.A. pursuant to which the Company received loan proceeds of $142,775 (the “PPP Loan First Draw”) and $142,777 (the “PPP Loan Second Draw” and together with the PPP Loan First Draw, the “PPP Loans”), respectively. While applying for the PPP Loan First Draw, the SBA advanced $8,000 of loan proceeds to the Company on April 30, 2020. Under the terms of the CARES Act, recipients can apply for and receive forgiveness for all or a portion of loans granted under the PPP with such forgiveness determined, subject to limitations, based on the use of loan proceeds for certain permissible purposes such as payroll costs and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”), and on the maintenance of employee and compensation levels during the eight-week period following the funding. The Company used the proceeds of both the PPP Loan First Draw and the PPP Loan Second Draw for Qualifying Expenses. In January 2021, $142,775 and $866 of accrued interest from the PPP Loan First Draw were forgiven. In April 2021, the initial advance of $8,000 and $87 of accrued interest was also forgiven. In September 2021, $142,777 and accrued interest of $841 from the PPP Loan Second Draw were forgiven.