|9 Months Ended|
Sep. 30, 2022
|Debt Disclosure [Abstract]|
Note 6 - Debt
As of September 30, 2022 and December 31, 2021, debt consisted of the following:
Outstanding as of September 30, 2022
On March 12, 2021, the Company entered into a note payable agreement (“Broken Stone Agreement”) with Broken Stone Investments, LLC. for the principal amount of $200,000, bearing interest at 5% per annum, with all principal and accrued interest thereon due and payable at maturity of June 1, 2023. The Broken Stone Agreement calls for monthly principal and interest payments of $8,774 to commence on July 1, 2021, through maturity on June 1, 2023. As of September 30, 2022, the balance on this loan was $77,380.
In July 2022 the Company entered into two Commercial Premium Finance Agreements ("the Agreement") totaling $1.17 million for an eleven-month term with interest rates of 4.64% and 5.25%. The proceeds from these transactions were used to partially fund the premiums due under some of the Company's insurance policies. The amounts payable are secured by the Company's rights under such policies. As of September 30, 2022, the combined remaining balance totaled $1,037,942, and the Company recognized $2,696 in interest expense during the three months ended September 30, 2022 .
On September 28, 2022, the Company entered into a Revenue Loan and Security Agreement, ("RLSA"), in the amount of $4 million with Decathlon Alpha IV, L.P., ("Decathlon") providing for a loan facility of up to a maximum of $6 million. The RLSA requires monthly payments, calculated as a percentage of the Company’s net revenue from the month preceding the immediately preceding month (subject to an annual payment cap) with all outstanding advances and the Interest (as defined in the Loan Agreement) being due at maturity on June 13, 2027 (unless accelerated upon a change of control or the occurrence of other events of default). There are no prepayment penalties under the Loan Agreement, but any payoff would be subject to the Minimum Interest (as defined in the Loan Agreement). The Company has accounted for the loan facility as debt in accordance with ASC 470-10-25-2 and uses the effective interest rate method to estimate the timing and amount of future cash flows in accordance with ASC 835-30. Interest does not accrue on advance(s) pursuant to the Loan Agreement, rather a minimum amount of Interest (as defined in the Loan Agreement) is due pursuant to the terms of the Loan Agreement. The advances are secured by all property of the Borrower and are guaranteed by the Company and certain of the Company’s Subsidiaries.
Future minimum principal payments on the notes payable are, as of September 30, 2022:
Retired debt during the nine months ended September 30, 2022
The Company repaid approximately $6,842,000 debt with Origin bank on January 28, 2022 and $40,000 debt with First United Bank on May 6, 2022.
The Company held various vehicle financing and lease obligations which were paid off during the three months ended September 30, 2022.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef