Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

Notes Payable
3 Months Ended
Oct. 31, 2020
Debt Disclosure [Abstract]  
Notes Payable

Note 5—Notes Payable


On April 27, 2020, the Company was granted a loan (the “Loan”) from the Banc of California in the aggregate amount of $952,744, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act, which was enacted March 27, 2020. The term of the loan is two years. If the Company does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness. The Company’s covered period began on April 30, 2020 and ended on October 15, 2020. Monthly payments will be due beginning August 15, 2021 if the Loan is not forgiven. Interest accrues at 1% per year, effective on the date of initial disbursement. The outstanding principal balance on the loan as of October 31, 2020 was $952,744.


Pursuant to the terms of the CARES Act and any implementing rules and regulations, the Company may apply for the Loan to be forgiven by the SBA in whole or in part beginning no sooner than seven weeks from the date of initial disbursement. The Company believes that it has used the proceeds from the Loan for purposes consistent with the PPP. While the Company currently believes that its use of the Loan proceeds will meet the conditions for forgiveness of the Loan, the Company cannot assure that it will be eligible for forgiveness of the Loan, in whole or in part. Any Loan balance remaining following potential forgiveness by the SBA will be fully re-amortized over the remaining term of the Loan. If the Loan is not forgiven the entire principal balance remaining unpaid, along with all accrued and unpaid interest, shall be due and payable on April 30, 2022.


On June 18, 2020, the Company entered into a finance agreement with AFCO Premium Credit LLC (“AFCO”). Pursuant to the terms of the agreement, AFCO loaned the Company the principal amount of $551,803, which would accrue interest at 3.381% per annum, to partially fund the payment of the premium of the Company’s director & officer insurance. The agreement requires the Company to make ten monthly payments of $56,039, including interest, starting on July 18, 2020. At October 31, 2020, the outstanding balance related to this finance agreement was $332,943.


Future minimum payments under note payable liabilities as of October 31, 2020 are as follows:


Years ending July 31,      
2021   $ 642,003  
2022     643,684  
Total   $ 1,285,687