Notes Receivable

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Notes Receivable

Notes Receivable

On February 2, 2016, the Company entered into a loan and security agreement with C2Go, Inc., a Nevada corporation, pursuant to which the Company agreed to loan a principal amount of $200,000 to C2Go with an interest rate of 10% per annum for a term of 18 months. C2Go’s obligations under the loan and security agreement are secured by a first lien on all assets of C2Go. The debt is senior, and any future debt incurred by C2Go must be subordinated to the debt of the loan and security agreement. Upon maturity of the debt, C2Go is required to issue to the Company 5% of the issued and outstanding shares of common stock of C2Go as of the date of issuance, on a fully diluted basis, giving effect to any convertible securities, warrants, etc., such shares being validly issued, fully-paid and non-assessable shares for no additional consideration.

Upon an event of default the interest rate under the loan and security agreement will rise to 18% per annum. The full principal of the note, plus accrued and unpaid interest, was due to be repaid on or before August 2, 2017.  C2Go did not make any payment on that date.  Pursuant to the Note, C2Go has until August 16, 2017 to cure the payment default.  If C2Go does not make the payment at that time, the Company may choose to pursue its security interest in the Note, which was secured against C2Go's assets. The Company is in ongoing discussions with C2Go regarding the payment due on the note. C2Go has indicated there are ongoing discussions with an investor to raise money to cover the principal and the unpaid interest. Due to the uncertainty of the situation and “more likely than not” recognition threshold as of June 30, 2017, the Company has not recorded a loss reserve on the note receivable.

On March 7, 2017, the Company agreed to provide $500,000 to Singular Payments, LLC, a Florida limited liability company, under a secured line of credit promissory note. Interest on the note does not accrue until the earlier of May 31, 2017, the date of closing and funding the Company’s proposed acquisition of Singular Payments or the termination of a non-binding letter of intent regarding the proposed acquisition, or until such mutually agreed upon extended date. Thereafter, interest will accrue at a rate of ten percent per annum. Upon an event of default, interest will accrue at the maximum lawful rate or 15% per annum. The line of credit matures on November 1, 2019.

If the Singular Payments acquisition closes before interest accrues, any unpaid principal amount will be offset against the cash portion of the purchase price. If the acquisition does not close on or before interest accrues, any unpaid principal amount plus interest will have to be paid in 30 equal monthly installments. The note may be prepaid in whole or in part at any time and without a penalty.

The line of credit is secured by a security agreement of the same date granting a first security interest over all of Singular Payment’s property, inventory, proceeds, and intellectual property, among others, a membership interest pledge agreement over 100% of all Singular Payments, LLC membership interests, and a personal guaranty agreement by Vaden Landers, the sole owner of Singular Payments.

The term of the line of credit and letter of intent were extended on May 30, 2017 (through August 1, 2017) and subsequently, on August 2, 2017 (through August 31, 2017). In addition, the loan was increased to $600,000 on August 2, 2017. As of June 30, 2017, the Company has not recorded an allowance for credit losses on this note receivable.