NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES

The Company had the following long-term debt from continuing operations, excluding liabilities held for sale:

	December 31, 2017			March 31, 2018
Goldman Sachs - Tranche A Term Loan - LIBOR Interest on loan date plus 8%, 9.65% at March 31, 2018	$	7,083,257		$	7,815,668
Promissory note payable to a bank, unsecured, bearing interest at a variable rate, 4.75%, at March 31, 2018 with a floor of 4.75% due on demand		1,000,000			1,000,000
Promissory note payable to a bank, unsecured, bearing interest at 5.5%, due on demand		299,578			299,578
Promissory note payable to a bank, unsecured, bearing interest at a variable rate, 5%, at March 31, 2018 with a floor of 5.00% due in monthly installments of $12,300, maturing August 2022		622,259			604,768
Note payable, see description below		-			2,920,691

Less: deferred loan costs		-			(930,416	)
Notes payable to seller of Meridian, subordinated debt		1,475,000			1,475,000

Total debt		10,480,094			13,185,289
Less: current portion		(8,502,387	)		(4,820,629	)
Long term debt less current portion	$	1,977,707		$	8,364,660

Goldman Sachs Credit Agreement

On April 20, 2018, the Company closed a Second Amended and Restated Credit and Guaranty Agreement, see Note 16.

On February 15, 2017, the Company closed an Amended and Restated Credit and Guaranty Agreement (as amended by the First Amendment to Amended and Restated Credit and Guaranty Agreement dated April 28, 2017, the “Credit Agreement”). The Credit Agreement amended and restated the Credit and Guaranty Agreement entered into as of December 22, 2015 (“Prior Credit Agreement”).

Pursuant to the Credit Agreement, certain credit facilities to the Companies, in an aggregate amount not to exceed $89,100,000, consisting of $65,500,000 aggregate principal amount of Tranche A Term Loans (the “Tranche A Term Loans”), $8,600,000 aggregate principal amount of Tranche B Term Loans (the “Tranche B Term Loans”), $10,000,000 aggregate principal amount of MDTL Term Loans (the “MDTL Term Loans”), and up to $5,000,000 aggregate principal amount of Revolving Commitments (the “Revolving Commitments”). In August of 2017 $6,000,000 was transferred from Tranche A to Tranche B. The proceeds of the Tranche A Term Loans made on the Closing Date were used to pay a portion of the purchase price for the acquisitions made in connection with the closing of the Prior Credit Agreement, to refinance existing indebtedness, to fund consolidated capital expenditures, and for other purposes permitted. The proceeds of the Tranche A Term Loans and Tranche B Term Loans made on the Restatement Date shall be applied by Companies to (i) partially fund the Restatement Date Acquisition, (ii) refinance existing indebtedness of the Companies, (iii) pay fees and expenses in connection with the transactions contemplated by the Credit Agreement, and (iv) for working capital and other general corporate purposes.

The proceeds of the Revolving Loans were used for working capital and general corporate purposes. The proceeds of the MDTL Term Loans may be used for Permitted Acquisitions (as defined in the Credit Agreement). The Loans are evidenced, respectively, by that certain Tranche A Term Loan Note, Tranche B Term Loan Note, MDTL Note and Revolving Loan Note, all issued on February 15, 2017 (collectively, the “Notes”). Payment obligations under the Loans are subject to certain prepayment premiums, in addition to acceleration upon the occurrence of events of default under the Credit Agreement.

At March 31, 2018, the Company had a total outstanding gross balance of approximately $83,866,000 consisting of the Tranche A Term Loan, Tranche B and draw of the Revolving Commitments, of which approximately $75.8 million is classified as liabilities held for sale as it relates to the discontinued operations (and subsequent to year end transferred with the sale of such operations) and approximately $8.1 million is classified as held for use. The loans are secured by liens on substantially all of the assets of the Company and its subsidiaries. Tranche A Term Loan, Tranche B and all revolving commitments have a maturity date of December 22, 2020 with interest paid monthly at an annual rate of approximately 9% (subject to variation base on changes in LIBOR or another underlying reference rate), on the Tranche A Term Loan and revolving commitments. Interest is accrued at an annual rate of 12.5% on the Tranche B loan. In addition, there is a commitment fee paid monthly on the Multi-Draw Term Loans and Revolving Commitments at an annual rate of 0.5%. The Company has adopted ASU 2015-03 and is showing loan fees net of long-term debt on the consolidated balance sheet.

The amounts borrowed pursuant to the Loans are secured by a first position security interest in substantially all of the Company’s and subsidiaries assets.

In December of 2015 the Company incurred $1,446,515 of issuance cost related to obtaining the notes. In February 2017, the Company incurred an additional $1,057,950 of debt issuance costs related to the amendment and restatement of these notes. These costs are being amortized over the life of the notes using the effective interest rate method. At March 31, 2018 and December 31, 2017, the gross unamortized balance of the debt discount and issuance costs was $3,933,544 and $3,223,158 related to debt held for use), respectively.

As of March 31, 2018 and at certain times thereafter, the Company was in violation of covenants within its credit agreement with Goldman, Sachs & Co. Such covenant failures included, maintaining certain leverage and EBITDA ratios, exceeding maximum corporate overhead, exceeding maximum growth capital expenditures, and maintaining certain liquidity. As part of the agreement to sell the waste assets to Warren Equity Partners Fund II, $75.8 million of our indebtedness to Goldman Sachs & Co. will be satisfied with approximately $8.1 million remaining with the Company. Also, upon the closing of this agreement, the Company executed a new amended and restated credit agreement with Goldman Sachs & Co., which amended, restated and supersede all covenants in the prior agreement. See Note 15 - Subsequent Events for further discussion.

Subordinated debt

In connection with the acquisition with Meridian Waste Services, LLC on May 15, 2014, notes payable to the sellers of Meridian issued five-year term subordinated debt loans paying interest at 8%. At March 31, 2018 and December 31, 2017, the balance on these loans was $1,475,000 and $1,475,000, respectively. In 2015 the term of these notes were extended an additional 1 and 1/2 years.

Other debts

Note Payable

In February of 2018, the Company added a note payable, net of approximately $2,435,000, to be paid back in weekly installments of approximately $64,000 for 12 months starting from the funding date. The total amount to be paid back is $3,325,000. The Company has the option to prepay the note at certain times. If the Company chooses this option, it will reduce the amount of interest cost associated with this note. The Company recorded original issue discount (“OID”) of approximately $890,000 and deferred loan costs of approximately $125,000. The balance of the OID and the deferred loan costs at March 31, 2018 was approximately $816,000 and $115,000, respectively. The note is guaranteed by an officer of the Company.

Total interest expense in continuing operations for the 3 months ended March 31, 2018 and 2017 was approximately $302,000 and $193,000, respectively.