Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.20.1
Debt
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Debt

NOTE 8 – DEBT

Bank Lines of Credit

 

Bressner Technology GmbH has three revolving lines of credit with German institutions totaling €3,600,000 (US$3,968,492).  Borrowing under the lines of credit bear interest at variable rates of Euribor plus a stated rate.  Current rates are between 3.75% and 7.99%.  There were no outstanding lines of credit balances as of March 31, 2020 and December 31, 2019.

Foreign Debt Obligations

Bressner Technology GmbH has two term loans outstanding with a total balance outstanding of €763,556 (US$841,713) as follows:

Bressner entered into a note payable in September 2017, in the amount of €400,000 (US$436,272) which bears interest at 2.125% and matured on January 31, 2020.  As of March 31, 2020, this note has been paid in full.  Quarterly principal payments of €25,000 (US$28,068) were due in January, April, July and November of 2019.  The balance outstanding as of December 31, 2019 is €25,000 (US$28,068).            

Bressner entered into a note payable in April 2019 in the amount of €500,000 (US$561,350) which bears interest at 2.25% and matures on March 30, 2021 with monthly payments of principal and interest of €22,232 (US$24,960). The balance outstanding as of March 31, 2020 and December 31, 2019 is €263,556 (US$290,534) and €328,525 (US$368,835), respectively.

Bressner entered into a note payable in June 2019 in the amount of €500,000 (US$551,180) which bears interest at 1.70.% and matures on June 25, 2020 with a balloon payment of principal and interest.  The amount outstanding as of March 31, 2020 and December 31, 2019 is €509,544 (US$561,700) and €508,679 (US$571,095), respectively.  Bressner is in the process of having this loan’s maturity date extend one year.

Bressner entered into a note payable in September 2019 in the amount of €300,000 (US$336,810) which bears interest at 1.65.% and matured on March  24, 2020, with a balloon payment of principal and interest.  The outstanding balance was paid in full as of March 31, 2020.  At December 31, 2019 the outstanding balance was €301,650 (US$338,663).

 

Notes Payable

In April 2019, the Company borrowed $350,000 from three individuals for a two year period at an interest rate of 9.5% which requires the Company to make monthly principal and interest payments of $16,100 per month.  These loans are secured by the assets of the Company.  In connection with these loans, the Company issued to the noteholders warrants to purchase shares of the Company’s common stock equal to 10% of the original principal at a price per share equal to $2.15 per share.  Accordingly, the Company issued to the noteholders warrants to purchase 16,276 shares of the Company’s common stock at an exercise price of $2.15 per share. The relative fair value of each warrant was $0.90.  The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $2.15 per share; five year contractual term; 44.60% volatility; 0.0% dividend rate; and a risk-free interest rate of 2.307%.  The total relative fair value of the warrants issued is $14,037.  The balance outstanding as of March 31, 2020 and December 31, 2019 is $198,134 and $241,054, respectively.

Notes Payable – Related Parties

In April 2019, the Company borrowed $1,150,000 from three individuals who serve on the Company’s board of directors for a two year period at an interest rate of 9.5% which requires the Company to make monthly principal and interest payments of $52,900 per month.  These loans are secured by the assets of the Company.  In connection with these loans, the Company issued to the noteholders warrants to purchase shares of the Company’s common stock equal to 10% of the original principal at a price per share equal to $2.15 per share.  Accordingly, the Company issued to the noteholders warrants to purchase 53,490 shares of the Company’s common stock at an exercise price of $2.15 per share. The relative fair value of each warrant was $0.90.  The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $2.15 per share; five year contractual term; 42.60% volatility; 0.0% dividend rate; and a risk-free interest rate of 2.3067%.  The relative fair value of warrants issued is $46,121. The balance outstanding as of March 31, 2020 and December 31, 2019 is $650,129 and $791,170, respectively.

Debt Discount

 

The relative fair value of warrants were recorded as debt discount, decreasing notes payable and related-party notes payable and increasing additional paid-in-capital on the accompanying consolidated balance sheets.  The debt discounts are being amortized to interest expense over the term of the corresponding notes payable using the straight-line method which approximates the effective interest method.

For the three month periods ended March 31, 2020 and 2019, total debt discount amortization was $7,520 and $0, respectively, and such amounts are included in interest expense in the accompanying consolidated statements of operations.

Total future payments under notes payable and related-party notes payable as of March 31, 2020 are as follows:

 

 

Period Ending March 31,

 

Related

Parties

 

 

Third

Parties

 

 

Foreign

 

 

Total

 

 

Discount

 

2020

 

$

598,482

 

 

$

182,120

 

 

$

841,713

 

 

$

1,622,315

 

 

$

(30,079

)

2021

 

 

51,647

 

 

 

16,014

 

 

 

-

 

 

 

67,661

 

 

 

(1,253

)

Total minimum payments

 

 

650,129

 

 

 

198,134

 

 

 

841,713

 

 

 

1,689,976

 

 

 

(31,332

)

Current portion of notes payable

 

 

(598,482

)

 

 

(182,120

)

 

 

(841,713

)

 

 

(1,622,315

)

 

 

30,079

 

Notes payable, net of current portion

 

$

51,647

 

 

$

16,014

 

 

$

-

 

 

$

67,661

 

 

$

(1,253

)