Notes Payable

12 Months Ended

Dec. 31, 2021

Senior Secured Debt

The Company is currently a party to an Amended and Restated Term Loan Credit Agreement, dated as of February 23, 2018, as amended December 27, 2019, by and between the Company and HCP-FVA, (the “Amended and Restated Loan Agreement”). In connection with the June Offering, we entered into the Loan Extension Letter Agreement that 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, which constituted approximately $2,176,621 of the $3,510,679 million principal amount outstanding as of June 2, 2021 (the “Term Loan”). The remaining $1,334,058 of the principal amount outstanding, which was owed to other lenders, was repaid in full on June 30, 2021. The senior secured debt bears interest at prime plus 0.75%. 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.

Under the Amended and Restated Loan Agreement, in the event the Term Loan is prepaid for any reason, such prepayment will be subject to the payment of a premium in an amount equal to 5% of the principal amount prepaid. The Term Loan is required to be prepaid upon the occurrence of certain events, including but not limited to certain asset dispositions, the incurrence of additional indebtedness, the receipt of insurance proceeds, and a change of control, subject to certain exceptions.

The Amended and Restated Loan Agreement has customary representations, warranties and affirmative and negative covenants. The negative covenants include financial covenants by the Company to maintain minimum cash denominated in U.S. dollars plus accounts receivable outstanding for less than 90 days of $2 million. The Amended and Restated Loan Agreement also contains customary events of default, including but not limited to payment defaults, cross defaults with certain other indebtedness, breaches of covenants, bankruptcy events and a change of control. In the case of an event of default, as administrative agent under the Loan Agreement, HCP-FVA may (and upon the written request of lenders holding in excess of 50% of the Term Loan, which must include HCP-FVA, is required to) accelerate payment of all obligations under the Loan Agreement, and seek other available remedies.

As of December 31, 2021, the Company was in compliance with the financial covenants contained in the Amended and Restated Term Loan Credit Agreement.

The notes payable balance consists of the following:


Total notes payable, net at December 31, 2019	$	3,853,634
Accretion of discount	467,229
Proceeds from issuance of the PPP loan	754,000
Repayment of short-term debt	(1,000,000)
Total notes payable, net at December 31, 2020	$	4,074,863
Accretion of discount	167,293
PPP loan forgiveness	(754,000)
Repayment of short-term debt	(1,334,058)
Total notes payable, net at December 31, 2021	2,154,098

Loan under the Paycheck Protection Program

On April 28, 2020, the Company received a loan from Peapack-Gladstone Bank in an aggregate principal amount of $754,000, pursuant to the Paycheck Protection Program under the CARES Act (the "PPP Loan").

The PPP Loan was evidenced by a promissory note (the “Note”) dated April 28, 2020. The PPP Loan matured two years from the disbursement date and bore interest at a rate of 1.000% per annum, with the first six months of interest deferred. Principal and interest were payable monthly commencing six months after the disbursement date and were permitted to be

prepaid by the Company at any time prior to maturity with no prepayment penalties. On March 30, 2021, the PPP Loan was forgiven in full.

The PPP Loan is included in notes payable, net of debt issuance costs and discounts in the accompanying condensed consolidated balance sheet.