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Note 7 - Notes Payable | 3 Months Ended
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Mar. 31, 2020
Notes to Financial Statements |
Debt Disclosure [Text Block] | NOTE 7. NOTES PAYABLE Notes payable consist of the following:
|  | March 31, 2020 |  |  | December 31, 2019 |
RBL Capital Group, LLC |  | $ | 9,431,157 |  |  | $ | 9,431,157 |
Less: deferred loan costs |  |  | (169,444 | ) |  |  | (179,610 | )
Subtotal |  |  | 9,261,713 |  |  |  | 9,251,547 |
Less: current portion |  |  | (909,086 | ) |  |  | (909,086 | )
Long term debt |  | $ | 8,352,627 |  |  | $ | 8,342,461 |
RBL Capital Group, LLC Effective June 30, 2014, TOT Group, Inc. and its subsidiaries as co-borrowers, TOT Payments, LLC, TOT BPS, LLC, TOT FBS, LLC, Process Pink, LLC, TOT HPS, LLC and TOT New Edge, LLC (collectively, the “co-borrowers”), entered into a Loan and Security Agreement (“Credit Facility”) with RBL Capital Group, LLC (“RBL”), as lender (the “RBL Loan Agreement”). The original terms provided us with an 18 -month, $10 million credit facility with interest at the higher of 13.90% per annum or the prime rate plus 10.65%. Interest on drawn amounts outstanding after November 30, 2015 carry interest at an additional three percent per annum until repaid in full, with other amounts, obligations or payments due carrying an annual default rate not to exceed the lesser of (i) the prime rate plus 13% per annum and (ii) 18.635% per annum. On May 2, 2016, we renewed our Credit Facility with RBL, increasing the facility from $10 million to $15 million and extending the term through February 2019. At this time, this Credit Facility cannot be utilized for general working capital purposes or to support the growth of the co-borrowers, due to certain restrictive covenants on the use of proceeds which are subject to the terms and conditions, as defined. The co-borrowers’ obligations to RBL pursuant to the RBL Loan Agreement are secured by a first priority security interest in all of the co-borrowers’ tangible and intangible assets, including but not limited to their merchants, merchant contracts and proceeds thereof, and all right title and interest in co-borrowers’ processing contracts, contract rights, and portfolio cash flows with all processors of the co-borrowers. During 2018, borrowings from the Credit Facility in the amounts of $3,315,000, $400,000 and $250,000 were previously converted into RBL term notes. Effective March 20, 2018, we entered into a single note with a principal balance of $4,544,087 with RBL to effectively refinance all previously issued and outstanding RBL notes, including certain additional term notes entered into with RBL through August 2017. The refinanced and combined note provides for four ( 4 ) interest-only payments at 14.19%, with monthly interest and principal payments of $85,634 from August 2018 through July 2021, with a balloon payment of $3,170,967 in July 2021. The back-end fees from prior notes in the amount of $133,600 have been rolled into this note and were also due July 2021. On December 28, 2018, in connection with an addendum to those certain term notes made by TOT Group, Inc.in favor of RBL, the Credit Facility referred to above, we received funding of $2,131,500, bearing interest at an annual rate of 14%. On December 20, 2019, we are required to make one ( 1 ) payment of interest only for $18,804, followed by eleven ( 11 ) payments of interest only for $24,867. Effective January 20, 2020, we are required to make thirty-six ( 36 ) monthly payments, which includes principal and interest for $72,850, until December 20, 2022 the date this term note originally matured. On May 24, 2019, in connection with an addendum to those certain term notes made by TOT Group, Inc. in favor of RBL, the Credit Facility referred to above, we received funding of $1,116,500, bearing interest at an annual rate of 14%. On May 24th, 2019, we were required to make one ( 1 ) payment of interest only for $11,562, followed by eleven ( 11 ) payments of interest only for $13,025. Effective January 20, 2020, we are required to make thirty-six ( 36 ) monthly payments, which includes principal and interest for $38,159, until May 20, 2023 the date this term note originally matured. On September 25, 2019, in connection with an addendum to those certain term notes made by TOT Group, Inc. in favor of RBL, the Credit Facility referred to above, we received funding of $918,000 bearing interest at an annual rate of 14%. On September 25, 2019, we were required to make one ( 1 ) payment of interest only for $8,803, followed by eleven ( 11 ) payments of interest only for $10,710. Effective October 20, 2020, we are required to make thirty-six ( 36 ) monthly payments, which includes principal and interest for $31,375, until September 20, 2023 the date this term note originally matured. On December 19, 2019, in connection with an addendum to those certain term notes made by TOT Group, Inc.in favor of RBL, the Credit Facility referred to above, we received funding of $1,000,000 and new terms were negotiated for the total outstanding notes payable amount of $9,431,157. This total loan amount bears interest at 14.19%. On January 20, 2020, we are required to make one ( 1 ) payment of interest only for $117,329, followed by five ( 5 ) payments of interest only in the amount of $111,523. Effective July 20, 2020, we are required to make forty-eight ( 48 ) monthly payments, which includes principal and interest for $258,620, until March 20, 2024 the date this term note matures. In the event any of the installments or other payment required to be made is not received by or on behalf of RBL in full within ten ( 10 ) days after the due date thereof, and the same subsequently is received and accepted by or on behalf of RBL, the Company shall pay on demand a late charge in the amount of five percent ( 5% ) of the amount of the delinquent payment. In the event of the occurrence of an Event of Default (as defined in the Loan Agreement), the entire unpaid balance of principal and interest of the Loan shall become due and payable immediately, without notice or demand, at the election of the Note holder, provided that the holder shall endeavor (but is not required) to provide notice to the Company of any such acceleration. The Company waives demand, presentment for payment, protest, notice of protest and notice of nonpayment or dishonor of the Note. The Company shall not have any right to prepay this loan except as expressly provided in the Loan Agreement. On March 27, 2020, our Company entered into a Master Exchange Agreement, (the “Agreement”) with ESOUSA Holdings, LLC ("ESOUSA"), a related party. Prior to entering into the ESOUS Agreement, ESOUSA agreed to acquire an existing promissory note that had been previously issued by the Company, of up to $2,000,000 in principal amount outstanding plus interest due to RBL Capital Group, LLC. Pursuant to the ESOUSA Agreement, the Company has the right, at any time prior to March 27, 2021, to request ESOUSA, and ESOUSA agreed upon each such request, to exchange this promissory note in tranches on the dates when the Company instructs ESOUSA, for such number of shares of the Company’s common stock (“Common Stock”) as determined under the ESOUSA Agreement based upon the number of shares of Common Stock (already in ESOUSA’s possession) that ESOUSA sold in order to finance its purchase of such tranche of the promissory note from RBL Capital Group, LLC. ESOUSA will purchase each tranche of the promissory note equal to 88% of the gross proceeds from the shares of Common Stock sold by ESOUSA to finance the purchase of such Exchange Amount from RBL Capital Group, LLC. Each such tranche to be $148,000 unless otherwise agreed to by the Company and ESOUSA. The Company received its first tranche of $148,000 on March 27, 2020, less any fees, which is reflected in accrued expenses on the accompanying consolidated balance sheet as of March 31, 2020. Refer to Note 13. Subsequent Event, in connection with an Amendment dated April 23, 2020 to the original Master Exchange agreement dated March 27, 2020 between RBL Capital Group, LLC and ESOUSA Holdings, LLC, a related party, for the future exchange of promissory notes in the possession of RBL Group, LLC, as well as, a loan obtained through the Paycheck Protection Program. Priority Payment Systems, LLC Effective May 18, 2017, we entered into a loan agreement and security agreement with Priority Payment Systems LLC (“PPS”) and issued a promissory note dated May 18, 2017. Pursuant to the loan agreement and the note, we borrowed $2,000,000. This loan was paid-off during 2018. On June 27, 2017, we entered into an amendment to the loan agreement with PPS pursuant to which:
| (i) | The original term loan was modified into a multi - draw loan with an increase of the borrowing limit to $2,500,000 and;
| (ii) | The loan maturity was extended to May 20, 2021.
The Company may be able to draw down on the loan agreement once merchants are boarded with PPS, under the terms and conditions specified. The Company was recently advised that due to the current economic uncertainty surrounding the COVID- 19 global pandemic, we will not have access to this credit facility, at this time. Scheduled notes payable principal repayment at March 31, 2020 is as follows:
2020 (remainder of year) |  | $ | 909,086 |
2021 |  |  | 2,022,338 |
2022 |  |  | 2,328,727 |
2023 |  |  | 3,413,139 |
2024 |  |  | 757,866 |
Balance March 31, 2020 |  | $ | 9,431,157 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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