NOTES PAYABLE |
6 Months Ended | ||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||
NOTES PAYABLE |
NOTE 4: NOTES PAYABLE Notes Payable - Unrelated Parties On September 6, 2018, the Company issued the Amended and Restated Secured Promissory Note in the principal amount of $582,260 (the “A&R Note”). The principal amount of the A&R Note represents (i) $500,000 which Healthier Choices Management Corp. (“HCMC”) loaned to the Company on September 6, 2018, and (ii) $82,260, which represents the aggregate amount owed by the Company under the Original Notes as of September 6, 2018. The A&R Note, which has a maturity date of September 6, 2021, had the effect of amending and restating the Note and bears interest at the rate of 7% per annum. Pursuant to the terms of the A&R Note, the Company agreed to pay HCMC 155 weekly payments of $4,141, commencing on September 14, 2018 and ending on September 14, 2021, and a balloon payment for all remaining accrued interest and principal in the 156th week. The Company at its option has the right, by giving 15 business days’ advance notice to HCMC, to prepay a portion or all amounts outstanding under the A&R Note without penalty or premium. The balance of the note as of June 30, 2021 was $276,133. On July 22, 2019, the Company issued a promissory note in the principal amount of $250,000 (the “Lendistry Note”) to Lendistry, LLC. The principal amount due under the Lendistry Note bears interest at the rate of 24% per annum, and permits Lendistry, LLC to deduct weekly ACH payments from the Company’s bank account in the amount of $1,240 plus up to 11% of Credit Card Sales until the principal amount due and accrued interest is repaid. Any unpaid principal amount and any accrued interest is due on July 25, 2025. The Lendistry Note is unsecured. The balance of the note was repaid during the six months ended June 30, 2021. On September 17, 2019, the Company issued a promissory note in the principal amount of $100,000 (the “Kabbage Note”) to Kabbage, Inc. The principal amount due under the Kabbage Note bears interest at an annual rate of 37%, and requires monthly payments of principal and interest of $10,083 through maturity in . The Kabbage Note is unsecured. The balance of the note as of June 30, 2021 was $46,505.On September 24, 2019, the Company entered into a working capital account agreement with Paypal Working Capital (“Paypal Note”), pursuant to which the Company borrowed $37,000, requiring repayment in amounts equal to 30% of sales collections processed through Paypal, but no less than $4,143, every 90 days, until the total amount of payments equals $41,435. The balance of the note was repaid during the six months ended June 30, 2021. Payroll Protection Program Loan The Company’s long-term debt is comprised of promissory notes pursuant to the Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) (see below), under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) enacted on March 27, 2020 and revised under the provisions of the PayCheck Protection Flexibility Act of 2020 on June 5, 2020 and administered by the United States Small Business Administration (“SBA”). In April 2020, the Company received a loan (the “April 2020 PPP Loan”) in the amount of $203,662 under the “PPP. The April 2020 PPP Loan accrues interest at a rate of 1% and has an original maturity date of two years which can be extended to five years 2 by mutual agreement of the Company and the SBA. The April 2020 PPP Loan contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. In March 2021, the Company received a loan (the “March 2021 PPP Loan” and together with April 2020 PPP Loan, the “PPP Loans”) in the amount of $190,057 under the PPP. The March 2021 PPP Loan accrues interest at a rate of 1% and has an original maturity date of two years which can be extended to five years 2 by mutual agreement of the Company and SBA. The March 2021 PPP Loan contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties.
13 Under the terms of the PPP Loans, a portion or all of the PPP Loans are forgivable to the extent the loan proceeds are used to fund qualifying payroll, rent and utilities during a designated twenty-four week period. Payments are deferred until the SBA determines the amount to be forgiven. The Company intends to utilize the proceeds of the PPP Loans in a manner which will enable qualification as a forgivable loan. However, no assurance can be provided that all or any portion of the PPP Loans will be forgiven. The balance on the PPP Loans totaled $393,719 as of June 30, 2021 and have been classified as a long-term liability in notes payable, less current portion on the accompanying balance sheets. Economic Injury Disaster Loan On July 9, 2020 and June 24, 2020, the Company received an EIDL in the aggregate amount of $159,900, payable in monthly installments of principal and interest totaling $731 over 30 years beginning in June 2021. The note accrues interest at an annual rate of 3.75%. The EIDL is secured by all tangible and intangible property. The balance on this EIDL was $159,900 as of June 30, 2021 and has been classified as a long-term liability in notes payable, less current portion on the accompanying balance sheets. The following is a summary of notes payable activity for the six months ended June 30, 2021:
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