NOTE 6.  TERM LOAN & NOTES PAYABLE

Term Loan

On September 3, 2014, we entered into a $2,000,000 revolving line of credit agreement with Wells Fargo Bank, N.A. Outstanding principal on the line of credit bore interest at the 30 day London Interbank Offered Rate (“LIBOR”) plus 2%, resulting in an effective rate of 2.16% at September 30, 2020.

In September 2017, the line of credit agreement was amended, whereby the outstanding principle was due and payable in full on August 31, 2018 and the maximum amount we could borrow under the line of credit was $1,750,000. On September 7, 2018 we entered into an Amended and Restated Revolving Line of Credit Note to extend our revolving line of credit facility, whereby the outstanding principal was due and payable in full on August 31, 2019. On September 30, 2019 the credit line was amended into a one-year term loan precluding any additional draws on the note, but all other terms of the loan remained the same. The term loan remained guaranteed by Peter L. Dalrymple, a member of our Board of Directors, and was secured by a first lien interest in certain of his assets.

On August 31, 2020, Mr. Dalrymple paid off in full the $610,000 principal balance of our term loan with Wells Fargo Bank, which was due and payable on that same date. The term loan (which was converted from a line of credit facility) had been guaranteed by Mr. Dalrymple and secured by a first lien interest in certain of his assets.

During the three months ended September 30, 2020 and 2019 the Company recorded $2,281 and $14,999 respectively in interest expense related to the Wells Fargo term loan, and during the nine months ended September 30, 2020 and 2019 the Company recorded $15,090 and $50,180 respectively in interest expense related to this term loan.

Notes payable

Upon Peter L. Dalrymple paying off the principal balance of the Wells Fargo term loan on our behalf, on August 31, 2020, we issued Mr. Dalrymple a $610,000 one-year secured promissory note, which note bears interest at a rate of 6% per annum, with monthly payments of interest only due until maturity, when all unpaid interest and principal is due. This note is secured by collateral, which includes all our accounts receivable and a pledge of the stock of Quad Video Halo, Inc., our wholly owned subsidiary. 

During the three and nine months ended September 30, 2020 the Company recorded interest expense of $3,023 on the Peter Dalrymple note. The Company did not record any interest expense for the three and nine months ended September 30, 2019 on this note, as the note was initiated August 31, 2020.

Paycheck Protection Program – SBA Loan

On April 22, 2020 we received an SBA loan in the amount of $64,097 under the federal Paycheck Protection Program which helps businesses keep their workforce employed during the Coronavirus crisis. The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act signed into law in March of 2020. The Paycheck Protection Program is a loan designed to provide direct incentive for small businesses to keep their workers on the payroll, which will be forgiven if all employees are kept on the payroll for eight weeks and the money is used for the sole purpose of payroll, rent, mortgage interest, or utilities, subject to the provisions in the program. The loan carries an interest rate of 1% and is due in two years on April 22, 2022. There is no collateral and no personal guarantees. The first payment is not due until November 2020, seven months from issuance. For the reasons discussed throughout this report, we believe current economic uncertainty relating to the Coronavirus crisis makes the loan necessary to support our ongoing operations. While we anticipate that the entire balance of the loan will be forgiven based on our disbursements of payroll and rent, no assurance can be provided at this time.

During the three and nine months ended September 30, 2020 the Company recorded interest expense of $320 on the Paycheck Protection Program loan. The Company did not record any interest expense for the three and nine months ended September 30, 2019 on this loan, as the loan was initiated April 22, 2020.