Long-Term Debt

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 6. LONG-TERM DEBT

Long-term debt is comprised of the following:

	December 31, 2018			December 31, 2017
Real estate loans	$	4,255,152		$	4,518,424
Hard Rock Note, net of discount		6,000,000			7,422,912
Machinery loans		327,879			513,317
Transportation loans		292,722			353,400
		10,875,753			12,808,053
Current portion of long-term debt		(4,578,759	)		(6,101,678	)
	$	6,296,994		$	6,706,375

Real Estate Loans

On February 1, 2019, we signed a loan agreement for $3,129,861 related to our commercial bank loan for our Vernal, Utah Campus. We paid $1,000,000 towards the previous loan  that was scheduled to mature on February 15, 2019, upon refinancing. The loan requires monthly payments of approximately $43,000, including principal and interest at 7.25%, and is secured by the land and buildings at our Vernal, Utah Campus. A balloon payment of $2,500,000 is due upon maturity on February 15, 2021.

Hard Rock Note

In 2014, the Company purchased all of the interests of Hard Rock. Consideration consisted of $12.5 million paid in cash at closing and a $12.5 million seller’s note (the “Hard Rock Note”). The Hard Rock Note and subsequent amendments are secured by the patents, patents pending, other patent rights, and trademarks transferred to Hard Rock by Hard Rock in the closing of the acquisition. At issuance, the fair value of the Hard Rock Note was determined to be $11,144,000, which was less than the face value due to a below-market interest rate. The resulting discount of $1,356,000 is amortized to interest expense using the effective interest method, totaling approximately $78,000 and $76,000 during 2018 and 2017, respectively.

On November 21, 2018, certain of our subsidiaries entered into an amended and restated note with the seller in our acquisition of Hard Rock Solutions, LLC. As amended and restated, the Hard Rock Note accrues interest at 7.25% per annum and matures on October 5, 2020. We made all the required principal and accrued interest payments related to the note for 2018. Under the current terms of Hard Rock Note, we are required to pay principal payments of $750,000 (plus accrued interest) on each January 5, April 5, July 5 and October 5 in 2019 and 2020. On January 10, 2019, the Company made a principal payment of $750,000 and an interest payment of $183,411.

Transportation Loans

Vehicles

Our loans for Company vehicles and other transportation are with various financing parties we have engaged with in connection with the acquisition of the vehicles. As of December 31, 2018, the loans bear interest ranging from 0%-8.29% with maturity dates ranging from October 2019 through October 2021, and are collateralized by the vehicles. Our cumulative monthly payment under these loans as of December 31, 2018 was approximately $2,200, including principal and interest.

Airplane Loan

Our loan for the Company airplane bears interest at 7.35%, requires monthly payments of principal and interest of approximately $3,500, matures in May of 2026 and is collateralized by the airplane. 

Future annual maturities of total debt are as follows (1) :

Year
2019	$	4,578,760
2020		3,519,077
2021		2,599,458
2022		51,962
2023		33,520
Total debt	$	10,782,777

(1) Excludes discounts for debt issuance costs.