Notes Payable

6 Months Ended

Jun. 30, 2021

The notes payable balance consists of the following:


Total notes payable, net at January 1, 2021	$	4,074,863
Accretion of discount	75,705
PPP loan forgiveness	(754,000)
Total notes payable, net at March 31, 2021	$	3,396,568
Repayment of short-term debt	(1,334,058)
Accretion of discount	84,086
Total notes payable, net at June 30, 2021	$	2,146,596

Senior Secured Debt

The senior secured debt bears interest at prime plus 0.75% and had an original maturity date of June 30, 2021.

In connection with the June Offering, we entered into the Loan Extension Letter Agreement on June 2, 2021 which provided for an extension of the maturity date on Hale Capital’s portion of the outstanding indebtedness owed under the Amended and Restated Loan Agreement to June 30, 2023. The amount extended constituted $2.2 million of the $3.5 million principal amount outstanding as of June 2, 2021. The remaining $1.3 million of the outstanding principal was repaid in full on June 30, 2021.

The Company concluded that the modification created by this amendment resulted in a troubled debt restructuring under Accounting Standard Codification—Debt (Topic 470) as it was determined that a concession was granted by HCP-FVA. However, as the future payments to be made subsequent to the modification are greater than the carrying value at the time of the modification, no gain or loss was required to be recognized on the troubled debt restructuring. The change is accounted for prospectively using the new effective interest rate of the loan.

As of June 30, 2021, the Company was in compliance with the financial covenants contained in the Amended and Restated Loan Agreement.

Loan under the Paycheck Protection Program

On April 28, 2020, the Company entered into a loan with Peapack-Gladstone Bank in an aggregate principal amount of $754,000 (the "PPP Loan") pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

The PPP Loan was evidenced by a promissory note, dated April 28, 2020 and matured two years from the disbursement date and bears interest at a rate of 1.000% per annum, with the first six months of interest deferred. The PPP Loan was subject to forgiveness to the extent proceeds were used for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest expenses (collectively, “Qualifying Expenses”), pursuant to the terms and limitations of the PPP. The Company used a significant majority of the PPP Loan amount for Qualifying Expenses and the PPP Loan was forgiven on March 30, 2021.