NOTE 12 — LOANS PAYABLE

Loans Payable, Current Portion

The current portion of the Company’s loans payable as of December 31, 2020 and 2019 are as follows:

On January 31, 2020, the loan payable dated October 29, 2019 was amended to increase the principal balance by $3,000 in satisfaction of certain accounts payable. The loans payable issued between September 18, 2019 and March 31, 2020 matured on June 30, 2020. On July 1, 2020, the Company amended the terms of these loans to extend the maturity terms to the earlier of (a) the closing of a qualified financing; or (b) November 1, 2020.

On June 12, 2020, the Company entered into a promissory note agreement with Kingsbrook Opportunities Master Fund LP (“Kingsbrook”) for an aggregate principal sum of $150,000, which bears interest at 15% per annum and matures on August 31, 2021. See Note 13 — Convertible Notes Payable, Extinguishment of Senior Note and Issuance of New Note for additional details. See Note 18 – Subsequent Events for information related to the repayment of this note.

On November 27, 2020, the Company entered into amended loan agreements, excluding the Kingsbrook promissory note and PPP loans (discussed below), with all parties to modify the terms of the loan agreements. The loan agreements were extended and modified to mature at the earlier of (a) a filing pursuant to a Form S-1 Registration Statement; or (b) February 15, 2021. See Note 18 – Subsequent Events for more information on the extension of the loans and repayment of the Kingsbrook promissory note.

The terms of all loan extensions were reviewed and were deemed to be modifications, rather than extinguishments.

Loans Payable, Non-Current Portion

The non-current portion of the Company’s loans payable as of December 31, 2020 are as follows:

During April and May 2020, the Company received loans in the aggregate amount of $53,051 (the “PPP Loans”), under the Payroll Protection Program (“PPP”), to support continuing employment during the COVID-19 pandemic. See Note 18 – Subsequent Events for more information on the application for forgiveness of the PPP Loans.

Effective March 27, 2020, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was passed to benefit companies in the U.S. that were significantly impacted by the pandemic. Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all or a portion of their respective PPP Loans. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan. The Company intends to use the proceeds of their PPP Loans for Qualifying Expenses. However, no assurance is provided that the Company will be able to obtain forgiveness of the PPP Loans in whole or in part. Any amounts not forgiven incur interest at 1.0% per annum and monthly repayments of principal and interest are deferred for six months after the date of disbursement. While the Company’s PPP loans currently have a two-year maturity, the amended law will permit the Company to request a five-year maturity. As of December 31, 2020, the Company recorded accrued interest of $354 related to the PPP loans. During the years ended December 31, 2020, and 2019, the Company recorded interest expense of $354 and $0, respectively, related to the PPP loans.

On June 10, 2020, the Company received GBP £50,000 (USD $64,353) of cash proceeds pursuant to the Bounce Back Loan Scheme (“BBLS”), which provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak. The BBLS is unsecured and bears interest at 2.5% per annum. The maximum loan amount is GBP £50,000 and the length of the loan is six years, with payments beginning 12 months after the date of disbursement. Early repayment is allowed, without early repayment fees. As of December 31, 2020, the Company recorded accrued interest of GBP £514 (USD $702) related to the BBLS loan. During the years ended December 31, 2020, and 2019, the Company recorded interest expense of GBP £514 (USD $702) and $0, respectively, related the BBLS loan.

Loans Payable, Related Parties

Loans payable to related parties (the “Related Party Loans”) consist of loans payable to certain of the Company’s officers, directors and a greater than 10% stockholder. The Company had the following loans payable to related parties outstanding as of December 31, 2020 and 2019:

At issuance, the Related Party Loans provided for a maturity date upon the earliest of (a) the consummation of the Business Combination; (b) June 30, 2020; or (c) 60 days after the respective issuance date. On July 1, 2020, the Company amended the terms of the Related Party Loans to extend the maturity terms to the earlier of (a) the closing of a qualified financing; or (b) November 1, 2020. See Note 18 – Subsequent Events, Extension of the Loan Agreements for additional details. The terms of all loan extensions were reviewed and were deemed to be modifications, rather than extinguishments.

Interest Expense on Loans Payable

For the year ended December 31, 2020, the Company recognized interest expense and interest expense — related parties associated with outstanding loans, of $23,709 and $35,973, respectively. During the year ended December 31, 2019, the Company recognized interest expense and interest expense — related parties associated with outstanding loans, of $2,055 and $3,086, respectively.

As of December 31, 2020, the Company had accrued interest and accrued interest — related parties associated with outstanding loans, of $24,824 and $37,539, respectively. As of December 31, 2019, the Company had accrued interest and accrued interest — related parties associated with outstanding loans, of $2,055 and $3,086, respectively. See Note 17 — Related Parties for additional details.