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SUBSEQUENT EVENT
12 Months Ended
Dec. 31, 2017
Subsequent Events [Abstract]  
SUBSEQUENT EVENT

On March 2, 2018 (the “Closing Date”), the Company entered into a one-year Loan Agreement (the “Agreement”) with Cherokee Financial, LLC (“Cherokee”) under which Cherokee will provide the Company with $150,000. The proceeds from the loan will be used by the Company to pay a $75,000 principal reduction payment to Cherokee and $1,000 in legal fees in connection with the financing. Net proceeds to the Company are $74,000 and, they will be used for working capital and general business purposes.

 

The annual interest rate under the Loan Agreement is 12% paid quarterly in arrears with the first interest payment being due on May 15, 2018. The loan is required to be paid in full on February 15, 2019 unless paid off earlier (with no penalty) at the Company’s sole discretion. In connection with the Loan Agreement, the Company is required to issue 150,000 restricted shares of common stock to Cherokee within thirty (30) days of the Closing Date.

 

In the event of default, this includes, but is not limited to, the Company’s inability to make any payments due under the Loan Agreement, Cherokee has the right to increase the interest rate on the financing to 18% and the Company would be required to issue and additional 150,000 restricted shares of common stock to Cherokee.

 

On April 11, 2018, Crestmark provided the Company with a waiver related to its non-compliance with the TNW covenant in the Crestmark LSA. As consideration for the granting of the waiver, Crestmark increased the interest rate on the Crestmark Line of Credit from Prime Rate plus 2% to Prime Rate plus 3%. The increase in interest rate will be effective as of May 1, 2018.