Quarterly report pursuant to Section 13 or 15(d)

Note Payable

v3.8.0.1
Note Payable
3 Months Ended
Feb. 28, 2018
Debt Disclosure [Abstract]  
Note Payable

Note 4– Note Payable

On May 20, 2016, the Company entered into a Credit Agreement (“Agreement”) with Texas Capital Bank, National Association (“TCB”) for a term loan of $8.0 million in senior credit facilities. The proceeds of the term loan were used by the Company to fund repurchases of the Company’s common stock. Subject to the terms of the Agreement, on May 20, 2016, TCB advanced the Company $100.00. On July 1, 2016, TCB advanced the remaining principal amount of $7,999,900 per a promissory note dated May 20, 2016 between the Company and TCB, at a rate of 3.75% per annum plus LIBOR, payable monthly with a maturity date of July 2021. On August 26, 2016, the Company entered into a First Amendment to Credit Agreement with TCB. Pursuant to terms of the First Amendment to Credit Agreement, on August 26, 2016, TCB made an additional advance to the Company in principal amount of $2,133,433 per an Amended and Restated Promissory Note dated August 26, 2016 between the Company and TCB. The additional proceeds of the term loan were used by the Company to fund the extinguishment of revenue sharing agreements. As of February 28, 2018 and November 30, 2017, principal paid to date is $3,133,000 and $2,633,000, respectively, at a rate of 3.75% per annum plus LIBOR. As of the three months ended February 28, 2018 and February 28, 2017, the Company paid interest of $93,828 and $102,488 respectively, which is reflected in interest expense on the accompanying consolidated statements of comprehensive (loss) income.

On May 20, 2016, the Company also entered into a Subordination Agreement with TCB and CrowdOut Capital LLC (“CrowdOut”) for a subordinated loan of the principal amount of $650,000, which amount CrowdOut advanced to the Company on May 20, 2016. The proceeds of the subordinated loan were used by the Company to fund repurchases of the Company’s common stock. Per a promissory note dated May 20, 2016 between the Company and CrowdOut, interest at 12% per annum on the principal sum of $650,000 is payable monthly with a maturity date of July 2021, at which time, the principal amount of $650,000 was payable. On June 5, 2017, the principal sum of $650,000 plus interest of $867 was paid to CrowdOut and the subordinated loan was paid in full. As of the three months ended February 28, 2018 and February 28, 2017, the Company paid interest of $0 and $19,500, respectively, which is reflected in interest expense on the accompanying consolidated statements of comprehensive (loss) income.

Collateral of the term and subordinated loans includes all money, securities and property of the Company.

 

The Company incurred debt issuance costs related to the term and subordinated loans in the amount of $378,785 which is recorded as a direct reduction of the carrying amount of the note payable and amortized over the life of the loan. As of the three months ended February 28, 2018 and February 28, 2017, $26,702 and $34,153, respectively, of the debt issuance costs were amortized and are reflected in interest expense on the accompanying consolidated statements of comprehensive (loss) income.

As of February 28, 2018 and November 30, 2017, the note payable obligation was as follows:

 

     February 28, 2018      November 30, 2017  

Note payable

   $ 7,000 ,100      $ 7,500,100  

Unamortized debt issuance costs

     (178,215      (204,917
  

 

 

    

 

 

 

Net note payable

   $ 6,821,885      $ 7,295,183  
  

 

 

    

 

 

 

Current portion of note payable

   $ 2,000,000      $ 2,000,000  

Long-term note payable, net of debt issuance costs

     4,821,885        5,295,183  
  

 

 

    

 

 

 

Total

   $ 6,821,885      $ 7,295,183  
  

 

 

    

 

 

 

Interest expense on the note payable for the three months ended February 28, 2018 and February 28, 2017 was as follows:

 

     February 28, 2018      February 28, 2017  

Interest expense on notes payable

   $ 93,827      $ 121,988  

Debt issuance costs

     26,702        34,153  
  

 

 

    

 

 

 

Total interest expense

   $ 120,529      $ 156,141