Notes Payable

3 Months Ended

Mar. 31, 2019

PaymentOnCapitalLease

Notes Payable

Note 5.  Notes Payable

On July 17, 2018, the Company entered into a Master Loan Agreement (the “Loan”) with PDS Gaming LLC (“PDS” or the “Lender”) to make a series of advances under the Loan in the principal amount of up to $2,500,000 for the purposes of financing the purchase or manufacturing of equipment. The Loan will be evidenced by Promissory Notes (each a “Note” and collectively the “Notes”) executed by the Company payable to the order of the Lender, and secured by a Security Agreement dated of even date with the Loan, between the Company and the Lender (the “Security Agreement”) granting a security interest to the Lender in all of the Company’s right, title and interest in and to personal property, tangible and intangible, wherever located or situated and whether now owned or acquired or created. The Loan will be advanced, in parts, pursuant to the Loan and in the amounts of each Note during the advance period which expires on July 17, 2019. Each subsequent advance will be made at the Lender’s sole and absolute discretion.

The Notes will bear interest on the outstanding principal amount at the lesser of the maximum rate or interest rate specified on each note based on a 360 day year. Payments consisting of principal and interest, as well as “Contingent Interest Payments” (“CIP”) of $3.50 per day for each on-line day up to a maximum of 730 on-line days for each unit financed under the Note are due and payable monthly. Each Note matures in 36 months and CIP obligations mature 48 months after the respective closing of each Note.

Interest expense and CIP obligations relating to these Notes were $58,320 and $36,487, respectively, for the three months ended March 31, 2019.

On March 29, 2019, the Lender agreed to increase the total principal amount that may be borrowed under the Loan from $2,500,000 to $5,500,000. All other terms of the Loan remain unchanged and in full force.

Notes payable consist of the following:

	Advance Date	Maturity Date	Note Amount		Monthly Payment		Interest Rate			March 31, 2019			December 31, 2018
Advance 1	7/17/2018	7/17/2021	$	489,989	$	16,083		11	%	$	394,703		$	431,407
Advance 2	9/18/2018	9/18/2021	$	723,565	$	23,741		11	%		618,778			671,986
Advance 3	11/15/2018	11/15/2021	$	662,686	$	21,743		11	%		586,747			647,018
Advance 4	1/21/2019	1/21/2022	$	581,700	$	19,085		11	%		553,900			—
Advance 5	3/29/2019	3/29/2022	$	343,732	$	11,284		11	%		343,732			—
Total Notes Payable											2,497,860			1,750,411
Less: amounts classified as current											(867,251	)		(572,298	)
Long-Term Notes Payable										$	1,630,609		$	1,178,113

 The following table lists the principal payments due on the Notes as of March 31, 2019:

Year Ending December 31,		Amount
	2019	$	641,046
	2020		942,906
	2021		861,769
	2022		52,139
		$	2,497,860

On May 10, 2019, the Company closed on its next advance (“Advance 6”) under the Loan. In addition, PDS agreed to amend terms of each Note and certain terms and conditions of the Loan Agreement in the Second Amendment to Master Loan Agreement. See Note 12, Subsequent Events, for more information on the Advance 6 transaction and the terms of each amendment.