NOTES PAYABLE

9 Months Ended

Sep. 30, 2022

Notes Payable

NOTES PAYABLE

15. NOTES PAYABLE

Notes payable at September 30, 2022 and December 31, 2021, were comprised of the following:

	Interest rate	Due date	September 30, 2022			December 31, 2021
Short-term notes payable	12.0%	Nov. 2022	$	35,000		$	118,000
10% original issue discount senior secured notes				-			65,972,000
AGREE Madison secured construction loans	7.0%	January 1, 2025		58,351,000			55,055,000
SMC line of credit	15.5%	June 11, 2023		2,500,000			-
SMC installment notes	7.6%	June 18, 2024		177,000			-
SMC notes payable	6.0%	Sept. 2024-Feb. 2025		353,000			-
XBTO note payable	12.5%	December 30, 2023		3,384,000			-
10% secured promissory notes	10.0%	August 10, 2023		10,093,000			-
Short-term bank line of credit	4.7%	Renews monthly		2,325,000			960,000
Total notes payable			$	77,218,000		$	122,105,000
Less:
Unamortized debt discounts				(1,776,000	)		(27,496,000	)
Total notes payable, net			$	75,442,000		$	94,609,000
Less: current portion				(17,132,000	)		(39,554,000	)
Notes payable – long-term portion			$	58,310,000		$	55,055,000

10% Secured Promissory Notes

On August 10, 2022, the Company, through its BNI subsidiary, entered into a note purchase agreement providing for the issuance of secured promissory notes with an aggregate principal face amount of $11,000,000 and an interest rate of 10%. The purchase price (proceeds to the Company) for the secured promissory notes was $10.0 million. The secured promissory notes have a security interest in $10 million of marketable securities and investments and certain Bitcoin mining equipment with a carrying amount of $23.1 million. The secured promissory notes are further secured by a guaranty provided by the Company, Ault Lending and by Milton C. Ault, the Executive Chairman of the Company. 

The maturity date of the secured promissory notes is August 10, 2023. The Company is required to make monthly payment (principal and interest) of $1,000,000 on the tenth calendar day of each month, starting in September 2022. Provided that the Company makes the first six monthly payments in full and on a timely basis, after six months, the Company may elect to pay a forbearance fee of $250,000 in lieu of a monthly payment, which would extend the maturity date of the related secured promissory notes by one month for each forbearance. The Company may not elect forbearance in consecutive months.

SMC Debt Security Interest

The SMC debt is secured by a perfected security interest in all SMC assets including a first-priority security interest in SMC accounts receivable and inventory.

Amortization of Debt Discount of Secured Promissory Notes

During the three months ended March 31, 2022, the $66 million Secured Promissory Notes were repaid and the Company fully amortized the related debt discount of $26.3 million, which is included within interest expense on the condensed consolidated statements of operations.

The following table summarizes the principal maturity schedule for our notes payable outstanding as of September 30, 2022:

Year	Principal
2022	$	18,049,000
2023		818,000
2024		-
2025		58,351,000
Total	$	77,218,000