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Related Party Transactions
3 Months Ended
Mar. 31, 2019
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 10 – RELATED PARTY TRANSACTIONS

 

On July 30, 2018, pursuant to the terms of the Amendment (Note 7), the Company issued to Mr. John Herzog, a significant stockholder of the Company a subordinated promissory note in the principal amount of $1,000,000 (the "Note") for cash proceeds of $1,000,000. The Note initially matured on March 31, 2019 (though the Company has the right to prepay the Note, in whole or in part, at any time prior to maturity) and bears interest at a rate of 12% per annum, compounding annually. The Note is subordinated to the Credit Agreement. The Company used the proceeds received to make the initial payment under the Credit Agreement.

 

On November 14, 2018, the Company issued to John Herzog, a subordinated promissory note in the principal amount of $2,000,000 for cash proceeds of $2,000,000.

 

On March 1, 2019, the Company entered into Amendment No. 1 to Subordinated Promissory Note (the "Subordinated Note Amendment") with Mr. Herzog. The purpose of the Subordinated Note Amendment was to amend that certain subordinated promissory note issued on July 26, 2018 in the principal amount of $1,000,000 to reflect an increase in the amount of principal due under the note from $1,000,000 to $3,000,000 reflecting a payment made by the payee to the Company of $2,000,000 on November 14, 2018 (the proceeds of which were used by the Company to make a second required payment under the Credit Agreement) and to extend the maturity date of the Note from March 31, 2019 to September 30, 2020.

 

Total interest expense on the two loans from Mr. Herzog for the three months ended March 31, 2019 was $88,767. Total accrued interest as of March 31, 2019 and December 31, 2018 is $131,616 and $52,849, respectively.

 

As of March 31, 2019 and December 31, 2018, the Company has total accrued compensation due to Mr. Yakov of $568,080 and $568,292, respectively, and advances to be repaid to Mr. Yakov of $17,684 and $17,684, respectively.

 

On August 10, 2018, Ronny Yakov, the CEO, loaned the Company $25,000, in order to pay for audit services. Mr. Yakov loaned the Company an additional $45,000 to the Company during the three months ended March 31, 2019. The loans are unsecured, bears interest at 12% and are due on demand. As of March 31, 2019, there is $2,367 of interest accrued on these loans.