Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

Long-Term Debt
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  


Long-term debt consists of the following:


      June 30,
    December 31,
  Senior Secured Notes, due July 6, 2018 (discount is based on imputed interest rate of 26%)   $ 5,750,000     $ 5,750,000  
  Less: unamortized discount and debt issuance costs on Senior Secured Notes     -       (987,500 ) 
  Net Senior Secured Notes     5,750,000       4,762,500  
  Secured mortgage payable, due November 2026, to Bank for 100 Commerce Drive Building due in monthly installments of $11,951, inclusive of principal and interest     1,724,608       1,741,378  
  Note payable, former building owner interest payment only due in monthly installments of $1,604 interest at 5.5%. A balloon payment of $350,000 plus unpaid interest due August 2018.     350,000       350,000  

Related Parties Notes, due December 6, 2018, interest rate 12.0%

    550,000       -  
        8,374,608       6,853,878  
  Less current portion     6,682,264       5,143,997  
  Long-term debt   $ 1,692,344     $ 1,709,881  


On December 26, 2017, as part of its initial efforts to spin-off Surefly, the Company entered into a Securities Purchase Agreement with several existing institutional investors pursuant to which the company issued original issue discount Senior Secured Notes in the aggregate principal amount of $5,750,000 in consideration of gross proceeds of $5,000,000 paid by the Spin-Off Investors. The loan is convertible into Surefly equity upon achieving the spin-off. On June 28, 2018, the Company entered into an amendment agreement with the Spin-Off Investors. The amendment agreement provided that the Senior Secured Notes were amended to provide a maturity date of July 6, 2018.


Amortization expense recorded as interest related to the debt issuance costs and unamortized discounts for the Senior Secured Notes was $987,500 for the six months ended June 30, 2018.


On June 7, 2018, the Company received a short-term loan in the aggregate principal amount of $550,000 from Stephen S. Burns, H. Benjamin Samuels, Gerald Budde and Ray Chess, each an executive officer and/or director of the Company (collectively, the “Related Parties”). To evidence the loans, the Company issued the Related Parties promissory notes (the “Related Parties Notes”) in the aggregate principal amount of $550,000. The Related Parties Notes are unsecured obligations of the Company and are not convertible into equity securities of the Company. Principal and interest under the Related Parties Notes are due and payable December 6, 2018, however, in the event that the Company raises in excess of $10,000,000 in equity financing, then the Company will use part of its proceeds to pay off the Related Parties Notes. Under no circumstance may the Related Parties Notes be paid off on or prior to the 91st day following the maturity date of the Senior Secured Notes issued by the Company on December 27, 2017 in the principal aggregate amount of $5,750,000. Interest accrues on the Related Parties Notes at the rate of 12.0% per annum. The Related Parties Notes contain terms and events of default customary for similar transactions. The Company used the net proceeds from the transaction for general business and working capital purposes.