Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2016
Related Party Transactions [Abstract]  


On December 31, 2007, as a part of our acquisition of assets from GGLLC, we acquired a note receivable from Abyss Group, LLC (“Abyss”), an entity that was formerly related to the wife of our CEO (the “Related Party Note Receivable”).  Subsequently, Abyss assigned the note to Carpathia Associates, LLC (“Carpathia”), an entity controlled by our CEO.  The note receivable was a ten-year unsecured note with a 6% fixed interest rate, which required monthly principal and interest payments of $6,598 with the unpaid principal and interest due in February 2017.  The terms of the note were amended whereby the monthly principal and interest payment was reduced to $3,332 and the unpaid principal and interest was to be due August 2015.

As part of the acquisition of assets from GGLLC in 2007, we entered into a note payable to GGLLC.  Subsequently, GGLLC assigned the note payable to Carpathia (the “Carpathia Note Payable”). The Carpathia Note Payable originally required monthly principal and interest payments of $9,159 at a fixed interest rate of 7.3% through February 2017, at which time a balloon payment of $1,003,000 would be due.  

On August 10, 2015, our Board of Directors approved an agreement of offset (the “Offset Agreement”) between us and Carpathia.  The Offset Agreement amended the terms of the Related Party Notes Receivable and the Carpathia Note Payable and offset these two notes between the two parties.  The effective result is that the balloon payment of $437,313, due in August 2015 under the original terms of the Related Party Notes Receivable, will be applied to reduce the balance then owed on the Carpathia Note Payable.  The Board believes that we benefit from the arrangement as the Offset Agreement extends the Carpathia Note Payable’s balloon payment of $354,480 from February 2017 to December 2018.

The balance of the Related Party Note Receivable was $0 at December 31, 2016 and 2015.  Interest income associated with this note receivable was $0 and $13,443 for December 31, 2016 and 2015, respectively.

The balance of the Carpathia Note Payable was $509,135 and $579,083 at December 31, 2016 and 2015, respectively.  Interest expense associated with this note payable was $39,963 and $60,985 for December 31, 2016 and 2015, respectively.

On October 26, 2015, we entered into a Promissory Note (the “Saucier Note”) with our CEO, pursuant to which our CEO loaned us $500,000 for working capital purposes.  In April 2016, pursuant to the terms of the Saucier Note, we paid $535,000 in full satisfaction of the balance due, relieving us of any further payments or obligations under this arrangement.