Long-term Debt to Related Party

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-term Debt to Related Party

Note 8 – Long-term Debt to Related Party

On July 15, 2017, the Company entered a 30-month secured promissory note (the “Note”), to LeoGroup Private Investment Access, LLC (the “Holder”), a significant shareholder and hence related party, in the principal amount of $2,000,000 with an effective interest rate of 34%. The Note provides that the Company shall make monthly principal and interest payments of $100,000 to the Holder for 30 months through January 2020. The Note is secured by a first priority security interest in all the assets of Company, except the Company’s accounts receivable. The Note contains customary financial covenants of the Company and customary events of default. The Company is currently in compliance with this Note. Subject to the terms and conditions of the Note, so long as any event of default, as described in the Note, is continuing, without cure, for a period of five (5) business days after written notice from the Holder to the Company or a longer period if set forth in the notice from Holder or if agreed to by the parties, all obligations of the Company under the Note shall be immediately due and payable, and the Holder may exercise any other remedies available at law or in equity. The Note may not be prepaid, in whole or in part, at any time and from time to time, unless expressly agreed to in writing by the Holder. The total amount of related party interest expense during the three and nine months ended September 30, 2018 was approximately $116,000 and $392,000. There was interest expense of approximately $140,000 for both the three and nine months ended September 30, 2017.

The balance of the long-term debt as of September 30, 2018 and December 31, 2017 was as follows:

	September 30, 2018			December 31, 2017
Total Debt	$	1,289,240		$	1,797,049
Less: current portion	$	(916,145	)	$	(722,908	)
Long-term debt, net	$	373,095		$	1,074,141

Maturities of long-term debt at September 30, 2018, are as follows:

December 31,
2018 (remaining three months)	$	215,100
2019		976,906
2020		97,234
	$	1,289,240