Quarterly report pursuant to Section 13 or 15(d)

Related Parties

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Related Parties
6 Months Ended
Jun. 30, 2017
Related Parties [Abstract]  
RELATED PARTIES

13. RELATED PARTIES

 

At June 30, 2017 and December 31, 2016, the Company had outstanding the following loans due to related parties:

 

    June 30,     December 31,  
    2017     2016  
             
Promissory note issued to CamaPlan FBO Mark Munro IRA, 3% interest, maturing on January 1, 2018, unsecured, net of debt discount of $19 and $38, respectively   $ 677     $ 658  
Promissory note issued to 1112 Third Avenue Corp, 3% interest, maturing on January 1, 2018, unsecured, net of debt discount of $19 and $36, respectively     356       339  
Promissory note issued to Mark Munro, 3% interest, maturing on January 1, 2018, unsecured, net of debt discount of $32 and $62, respectively     605       575  
Promissory note issued to Pascack Road, LLC, 3% interest, maturing on January 1, 2018, unsecured, net of debt discount of $78 and $152, respectively     2,472       2,398  
Former owner of Nottingham, unsecured, 8% interest, matured on May 30, 2016     -       225  
      4,110       4,195  
Less: current portion of debt     (4,110 )     (225 )
Long-term portion of notes payable, related parties   $ -     $ 3,970  

 

The interest expense, including amortization of debt discounts, associated with the related-party notes payable in the three months ended June 30, 2017 and 2016 was $212 and $244, respectively. The interest expense, including amortization of debt discounts, associated with the related-party notes payable in the six months ended June 30, 2017 and 2016 was $316 and $491, respectively.

 

All notes payable to related parties are subordinate to the JGB (Cayman) Waltham Ltd. and JGB (Cayman) Concord Ltd. term loan notes. 

 

Related Party Promissory Notes to Mark Munro, CamaPlan FBO Mark Munro IRA, 1112 Third Avenue Corp, and Pascack Road, LLC

 

On July 25, 2017, $4,258 of related party debt was exchanged by the debt holders into restricted equity (refer to Note 16, Subsequent Events, for further detail).

 

Convertible Promissory Note to Scott Davis, Former Owner of Nottingham

 

On July 1, 2014, the Company issued an unsecured $250 convertible promissory note to Scott Davis, who is a related party. The note bears interest at the rate of 8% per annum, matures on January 1, 2015 and is convertible into shares of the Company’s common stock at an initial conversion price of $26.36. The note is currently outstanding and payable on demand. The Company evaluated the convertible feature and determined that the value was de minimis and as such, the Company did not bifurcate the convertible feature.

 

On March 25, 2015, the Company and Mr. Davis agreed to a modification of the convertible promissory note. The term of the note was extended to May 30, 2016, the initial conversion price was amended to $8.88 per share of the Company’s common stock and, in consideration for this modification, the Company issued to Mr. Davis 5,556 shares of common stock with a fair value of $8.64 per share.

 

On May 31, 2015, Mr. Davis converted $25 of principal amount due into 2,816 shares of common stock, with a fair value of $14.12 per share and recorded a loss on debt conversion of $13 on the consolidated statement of operations.

 

On May 30, 2016, the note matured and was due on demand.

 

On April 3, 2017, Scott Davis assigned the full outstanding amount of the note to a third party (refer to Note 8, Term Loans, for additional detail).

 

Loans to Employees

 

During the year ended December 31, 2016, the Company issued loans to four employees totaling $928. As of June 30, 2017 and December 31, 2016, the Company had outstanding loans to these employees with total principal of $928. These loans are collateralized by shares of the Company’s common stock held by the employees. As of June 30, 2017 and December 31, 2016, the value of the collateral was below the principal value. As a result, the Company recorded a reserve for the balance of $891 on the unaudited condensed consolidated balance sheet as of June 30, 2017 and December 31, 2016 (refer to Note 4, Loans Receivable, for further detail).