Notes Receivable - Related Parties

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Notes Receivable - Related Parties

6. NOTES RECEIVABLE - RELATED PARTIES

Notes Receivable - Related Parties consists of the following as of December 31:

	2016		2015
Note Receivable - Gemini Gaming, LLC	$	-	$	573,428

In connection with the split-off of gaming assets by Global, the Company accepted a note receivable in the amount of $962,373 from Gemini Gaming, LLC. The note bears interest at 4.0% and is payable in quarterly installments of $17,495 beginning on January 1, 2014 through maturity of the note on October 1, 2033. The note is secured by all rights, title, and interest in and to 100,000 shares of the membership interest in Gemini Gaming, LLC. In the event of default, the Company may not take possession of gaming assets or equipment or operate the casino unless duly licensed by the State of Colorado Division of Gaming.

On the acquisition date, the fair value of the note receivable was estimated by discounting the expected cash flows at a rate of 10.0%, a rate at which management believes a similar loan with similar terms and maturity would be made. As a result, the note receivable was discounted by $362,225 to its fair value of $600,148. The discount is accreted into earnings using the interest method over the term of the note. For the years ended December 31, 2016 and 2015, $0 and $16,691, respectively, has been accreted into earnings.

During the quarter ended March 31, 2016, the Company collected an aggregate of $573,428 in repayment of the note from Gemini Gaming, LLC which the Company accepted in full satisfaction of the total outstanding liability under the note. The transaction resulted in the Company recognizing a nominal bad debt expense in the amount of $9,044 for the year ended December 31, 2015.

Note Receivable – Limestone Assisted Living, LLC

The Company extended a loan to Limestone Assisted Living, LLC in the principal amount of $550,000 which is repayable, together with interest at the rate of 10% per annum, on or before the earlier of (i) August 31, 2014 or (ii) from the proceeds of the sale of the Limestone Assisted Living facility. The obligation of Limestone LLC to repay the loan is secured by the personal guarantee of Christopher Brogdon. Proceeds from the loan were used by Limestone LLC to repay and retire a loan in the principal amount of $500,000, plus accrued and unpaid interest, owed to an unaffiliated third party.

The loan was not paid by Limestone LLC as of August 31, 2014 which constituted an event of default. The maturity date of the loan was extended by agreement to August 31, 2015.

On March 25, 2015, the Limestone facility was sold and the note receivable in the amount of $550,000 due the Company was repaid in full, including accrued interest of $54,845.

Note Receivable – GL Investors, LLC

On February 4, 2014, the Company purchased the right to future distributions from a member of GL Investors, LLC in consideration of $100,000. The distribution right does not have a stated maturity date and earns interest at a rate of 13% per annum and is unsecured. During 2015, the Company determined the loan was no longer collectible based on the ability to repay. Accordingly, the Company recorded $100,000 as a bad debt expense on the Consolidated Statements of Operations for the year ended December 31, 2015.

As a result of the transactions above, the Company recognized cash flows from collections on notes receivable – related parties of $573,428 and $574,719 during 2016 and 2015, respectively.