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Short Term Notes and Interest Bearing Advance
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Short Term Notes and Interest Bearing Advance

Note 7. Short Term Notes and Interest Bearing Advance

 

Promissory Note

 

On June 9, 2017, the Company entered into a Promissory Note with an unrelated lender in exchange for proceeds in the amount of $15,000. Interest on the note is 12.5% per annum and payable March 1 of each year the note remains outstanding. Payment in full of the Note is due June 9, 2019. Mississippi Gaming Corporation, a wholly owned subsidiary of the Company, guaranteed the Note. In addition, the President of the Company agreed to personally guarantee the Note and to personally secure the Note with an assignment of proceeds due to her under the first lien on the Diamondhead property. The interest payment, which was due March 1, 2018, was not made. Accrued interest due on this obligation amounted to $2,928 and $1,053 at December 31, 2018 and 2017, respectively. This Note was classified as long term on the Company’s 2017 balance sheet (See Note 9).

 

Bank Credit Facility

 

Wells Fargo Bank provides an unsecured credit facility of up to $15,000 to the Company. The facility requires a variable monthly payment of amounts borrowed plus interest, which is applied at 11.24% on direct charges and 24.99% on any cash advanced through the facility. At December 31, 2018, a principal balance of $18,004 remained outstanding on the facility. The lending bank has since cancelled privileges under the facility for non-payment.

 

Interest Bearing Advance

 

On February 2, 2017, the Company borrowed $25,000 from an unrelated third party. The Company expects to enter into a formal note for these funds however the terms of the note have not been finalized. The Note is expected to carry an annual interest rate of approximately 12.5% with a projected due date of December 31, 2017. The Company is in default and as such, the lender may increase the interest rate due by an amount of up to 3% per annum in excess of the rate then otherwise applicable. The Company does not have the funds to repay the advance. The President of the Company has agreed to personally secure the note with an assignment of proceeds due to her under the first lien on the Property. Accrued interest on this obligation amounted to $5,967 and $2,842 at December 31, 2018 and 2017, respectively.

 

The above short term notes and interest bearing advances total $58,004 in aggregate and all are in default under the original agreed to terms.