Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYBALE

v3.7.0.1
NOTES PAYBALE
6 Months Ended
Jun. 30, 2017
Successor [Member]  
NOTES PAYBALE

NOTE 9 – NOTES PAYBALE

 

Successor

 

On June 30, 2017, the Company entered into a Loan Agreement, a Secured Promissory Note (“Note”) and a personal guarantee with respect to the funding by certain institutional investors Alpha Capital Anstalt and Brio Capital Master Fund Ltd. of up to $1,125,000 in debt. The Company, until December 31, 2018, has the ability to request quarterly advances of up to the lesser of (i) $250,000 or (ii) one sixth (1/6) of the revenue reported in the Form 10-Q or 10-K for the previous calendar quarter or previous fiscal year, whichever is most recent, provided that such revenue generated a profit of at least 10 percent (10%). The investors may advance the funds in their absolute discretion. In June 2017, the Company was advanced $125,005. The Note shall become due and payable 18 months from each advance date. The Company must make payments to the investors in an amount of $350, including interest at 10% per annum, every business day from the date of the first advance, which shall be increased proportionately upon each advance. The Note is secured with the assets of the Company pursuant to a security agreement dated December 23, 2015. In addition, the Company’s CEO has personally guaranteed the Note. As additional consideration for the loan, the investors received 1,500,000 shares of restricted common stock, in aggregate, valued at $105,000 (based on our stock price on the date of grant) along with $2,500 in cash for reimbursement of expenses incurred and recorded as debt issuance costs.

 

The Agreement and Note are being entered into in accordance with the halachically accepted exemptions on the paying of interest payments in business transactions known as “heter iska”. The Company is still accounting for the interest in accordance with GAAP.

 

Predecessor

 

CCI borrows funds from third parties from time to time for working capital purposes. For the six months ended June 30, 2016 (Predecessor), CCI had borrowings of $181,500 (including $31,500 of debt discount), repayments of $107,926, and accretion of debt discount of $31,500 for a balance of $115,699 at June 30, 2016.

 

CCI issued notes payable to Menno Holterman (“Holterman Notes”), a director of CCI. During the year ended December 31, 2015, CCI borrowed an additional $278,273 bearing no interest and had no repayments for a balance of $459,681 at December 31, 2015 (“2015 Note”). During the six months ended June 30, 2016, CCI had no borrowings and had no repayments. For the 2015 Note, we imputed interest on the principal amount of the borrowings at 10% per annum. The terms of the December 2014 Note call for interest only payments payable for the first three months of the December 2014 Note and beginning April 2015, payment of principal amortized over the remaining term of the note plus interest. The December 2014 Note was due June 1, 2016. As CCI is in default, the Holterman Notes were reclassed to short term notes payable – related party. CCI recognized interest expense of $11,620 and $23,240 under Other expense in the accompanying condensed consolidated Statements of Operations for the three and six months ended June 30, 2016 (Predecessor), respectively.