Notes Payable (Notes)

12 Months Ended

Dec. 31, 2020

NOTES PAYABLE

Canada Emergency Business Account (“CEBA”) Loan

On April 22, 2020, the Company received a Canadian dollar loan in the principal amount of 40,000 CAD ($31,422 USD as of December 31, 2020), from TD Canada Trust Bank pursuant to a CEBA term loan agreement (the “CEBA Loan”). The CEBA Loan has an initial term from inception through December 31, 2022 (the “Initial Term”) and an extended term from January 1, 2023 through December 31, 2025 (the “Extended Term”). No interest is accrued and no payments are due on the loan during the Initial Term. If the Company repays 75% of the CEBA Loan (30,000 CAD) on or prior to December 31, 2022, the remaining 10,000 CAD balance will be forgiven. Otherwise, interest will begin to accrue on the unpaid balance on January 1, 2023 with monthly interest payments commencing on January 31, 2023 until the CEBA Loan is paid in full on or before the end of the Extended Term.

Paycheck Protection Program (“PPP”) Loan

On April 23, 2020, the Company received a loan from Western Alliance Bank (the “Lender”) in the principal amount of $1,905,100, under the PPP evidenced by a promissory note issued by the Company (the “Note”) to the Lender.

The term of the Note is two years, though it may be payable sooner in connection with an event of default under the Note. The PPP Loan carries a fixed interest rate of one percent per year. Certain amounts received under the PPP Loan may be forgiven if the loan proceeds are used for eligible purposes, including payroll costs and certain rent or utility costs, and the Company meets other requirements regarding, among other things, the maintenance of employment and compensation levels.

Loan payments on the PPP Loan may be deferred to either (1) the date that the SBA remits the Company’s loan forgiveness amount to the Lender or (2) ten months after the end of the Company’s loan forgiveness covered period, if the Company does not apply for loan forgiveness. The Company submitted its forgiveness application for the entire amount of the loan in December 2020 and is awaiting approval from the SBA. The forgiveness of the PPP Loan is dependent on the Company

qualifying for the forgiveness of the PPP Loan based on its adherence to the forgiveness criteria under the CARES Act, and no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

Finance Obligation

The Company has two long term payment plans with a vendor to pay for its computer equipment in four annual payments between October 2019 and February 2023. The Company used an imputed interest rate of 9.5%, based on its incremental borrowing rate, to determine the present value of its finance obligation. The total balance owed was $74,295 and $72,510 as of December 31, 2020 and 2019, respectively, with the short-term portion of $30,487 and $26,837 recorded under accrued expenses in the consolidated balance sheets as of December 31, 2020 and 2019, respectively.

Secured Credit Facility

The Company has a secured credit facility agreement (also referred to herein as “line of credit”) with Western Alliance Bank, the parent company of Bridge Bank, N.A. of San Jose, California, which it obtained on March 1, 2013 and expanded on April 13, 2015. Pursuant to the secured credit facility agreement, as amended, the Company may submit requests for funding up to 80% of its eligible accounts receivable up to a maximum credit limit of $5 million. This agreement is secured by the Company’s accounts receivable and substantially all of the Company’s other assets. The agreement automatically renews in April of each year and requires the Company to pay an annual facility fee of $20,000 (0.4% of the credit limit) and an annual due diligence fee of $1,000. Interest accrues on the advances at the rate of prime plus 1.5% per annum and the default rate of interest is prime plus 7%.

The Company had no amounts outstanding under this secured credit facility as of December 31, 2020 and 2019. Assuming that all of the Company’s trade accounts receivables were eligible for funding, the Company would have approximately $4.1 million in available credit under the agreement as of December 31, 2020.

The annual fees are capitalized in the Company’s consolidated balance sheet within other current assets and are amortized to interest expense over one year. During the twelve months ended December 31, 2020 and 2019, the Company amortized $21,000 and $25,215, respectively, of the secured credit facility costs through interest expense. The remaining value of the capitalized loan costs related to the secured credit facility as of December 31, 2020 is $7,000; this amount will be amortized to interest expense over the next four months.

Interest expense on financing arrangements recorded in the Company’s consolidated statements of operations was $36,125 and $60,155 during the twelve months ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the future contractual maturities of our debt obligations by year is set forth in the following schedule:


2021	$	1,507,626
2022	492,771
2023	10,420
Total	$	2,010,817