CEA Industries Inc. Debt Disclosure
Note 8 – Note Payable and Accrued Interest
On February 10, 2021, the Company entered into a note payable with its current bank in the principal amount of $514,200, for working capital purposes.
The loan amount incurred interest at 1% and was due on February 5, 2026. The loan could have been repaid in advance without penalty. The loan was also potentially forgivable in full provided proceeds were used for payment of payroll expenses, rent, utilities and mortgage interest and certain other terms and conditions were met. If any portion of the loan was not forgiven, payments would commence 10 months following the end of the 24-week deferral period. The loan had typical default provisions, including for change of ownership, general lender insecurity as to repayment, non-payment of amounts due, defaults on other debt instruments, insolvency, dissolution or termination of the business as a going concern and bankruptcy.
During the year ended December 31, 2021, interest of $2,832 was accrued in respect of this note payable.
CEA Industries Inc.
Notes to Consolidated Financial Statements
December 31, 2022
(in US Dollars except share numbers)
On November 30, 2021, the Company received notice from the bank that its loan received on February 10, 2021, in the principal amount of $514,200 and all accrued interest of $2,832, was fully forgiven. This gain on loan forgiveness was recorded as Other Income in the Statement of Operations during the year.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 28, 2023 | Showing above |
| 2018 | Mar 19, 2019 | |
| 2016 | Mar 31, 2017 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.