NOTE L – DEBT AND LEASE OBLIGATIONS

Debt and lease obligations consist of the following:

	(in thousands)
	December 31, 2017			December 31, 2016

Line of credit	$	3,393		$	3,780
Unsecured term loan		153			144
Notes payable - DFS		-			198
Notes payable - MedTech (net of $46 and $79 in debt issue costs at December 31, 2017 and 2016, respectively)		4,754			4,721
Notes payable - related parties		345			648
Capital lease obligations		208			337
Total debt and lease obligations		8,853			9,828
Less: current portion (including related parties)		(3,760	)		(4,245	)
	$	5,093		$	5,583

Line of Credit

In August 2017, NetWolves' lending institution extended its $4.0 million line of credit. Advances under the line, which expires on March 31, 2018, bear interest at a rate of LIBOR plus 2.25% (aggregating 3.82% and 3.02% at December 31, 2017 and 2016, respectively) and are secured by substantially all of the assets of NetWolves Network Services, LLC and guaranteed by Vaso Corporation. At December 31, 2017, the Company had drawn approximately $3.4 million against the line.

In August 2016, the Company executed an additional $2.0 million line of credit agreement with the same institution. Advances under the line, which was extended in August 2017 to expire on March 31, 2018, bear interest at a rate of LIBOR plus 2.25% and are secured by substantially all of the assets of the Company. No advances under the line had been drawn as of December 31, 2017 and 2016. The line of credit agreement includes certain financial covenants. At December 31, 2017 and 2016, the Company was not in compliance with both and one of such covenants, respectively.

In March 2018, both lines of credit were extended through June 29, 2018 (see Note R).

Unsecured Term Loan

In November 2017, Biox extended its one-year unsecured term loan of RMB1,000,000 (approximately $153,000) with a Chinese bank for an additional year maturing on November 30, 2018. The loan bears interest at 5.22% per year.

Notes Payable

The Company financed certain NetWolves equipment purchases through notes payable to Dell Financial Services (“DFS”). The notes, which were secured by the financed equipment, bore interest at a fixed rate of 6.55% per annum, and were payable in 36 monthly installments. The final installment was paid in October 2017.

On May 29, 2015, the Company entered into a Note Purchase Agreement with MedTechnology Investments, LLC (“MedTech”) pursuant to which it issued MedTech a secured subordinated promissory note (“Note”) for $3,800,000 for the purchase of NetWolves. MedTech was formed to acquire the Note, and $1,950,000 of the aggregate funds used to acquire the Note was provided by six of our directors. In June 2015, a second Note for $750,000 was issued to MedTech for working capital purposes, of which $250,000 was provided by a director and a director’s relative. In July 2015, an additional $250,000 was borrowed under the Note Purchase Agreement. The Notes bear interest at an annual rate of 9%, mature on May 29, 2019, may be prepaid without penalty, and are subordinated to any current or future Senior Debt as defined in the Subordinated Security Agreement. The Subordinated Security Agreement secures payment and performance of the Company’s obligations under the Notes and as a result, MedTech was granted a subordinated security interest in the Company’s assets.

Capital lease obligations

In July 2016, the Company entered into two three-year lease agreements for network equipment installed at its Florida data center. Assets under capital leases and related accumulated amortization is recorded under property and equipment in the accompanying consolidated balance sheets. The future minimum lease payments as of December 31, 2017 are set forth in the following table:

	(in thousands)
Years ending December 31,
2018	$	143
2019		85
		228
Portion representing interest		(13	)
Portion representing executory costs		(7	)
Total capital lease obligations	$	208

Total amounts payable by the Company under its various debt and capital lease obligations outstanding as of December 31, 2017 are:

					(in thousands)
Years ending December 31,	Debt		Capital leases		Total
2018		3,632	$	128	$	3,760
2019		5,059		80		5,139
Total	$	8,691	$	208	$	8,899