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Note 7 - Notes Payable
 3 Months Ended
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