|6 Months Ended|
Jun. 30, 2022
7. NOTES PAYABLE
In connection with the July 2021 acquisition of 100% of the equity of TopPop, on July 26, 2021, the Company issued to the sellers promissory notes in the aggregate principal amount of $4,900,000 (the “TopPop Notes”). The TopPop Notes bear interest at the rate of 10% per annum, matured on July 26, 2022 and are secured by all of the outstanding membership interest in TopPop. Holders of approximately $3.55 million of these notes have agreed to extend the term for 30 days and have indicated that they will not seek cash settlement prior to August 2023. The Company expects to be able get further extension of notes if needed. The Company has not received any demand for payment on any of the other notes.
On July 26, 2021, the Company assumed an SBA note from the acquisition of TopPop. The note bears an interest rate of 3.75% per annum and matures on January 22, 2051.
As of June 30, 2022, notes payable consisted of a $150,000 SBA note and the $5,042,467 notes to former owners of TopPop.
Interest expense on these notes for the three and six months ended June 30, 2022 was $125,308 and $249,261, respectively. Interest expense on notes payable for the three and six months ended June 30, 2021 was $30,754 for both periods.
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