Long term debt |
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long term debt |
Long term debt:
Long term debt consists of the following:
On December 17, 2014, the Company entered into a Term Loan Agreement with BankUnited in the amount of $7,475,000 maturing December 1, 2019 (the "Term Loan Agreement"). The Term Loan Agreement replaced the existing Credit Agreement which was terminated and the aggregate principal amount of the existing loans outstanding of $6,395,071 was converted into the Term Loan Agreement. Commencing on January 1, 2015, the Company will make sixty (60) consecutive monthly installments of $124,583 plus interest that will accrue at an annual rate of 5.0%. Our obligations under the Term Loan Agreement are secured by substantially all of our assets. The outstanding balance under the Term Loan agreement at December 31, 2016 and 2015 was $4,485,000 and $5,980,000, respectively.
On June 2, 2015, the Company entered into a second term loan agreement (the "Second Term Loan Agreement") with BankUnited, N.A., wherein BankUnited, N.A. agreed to make multiple advances to the Company in the aggregate principal amount of up to $6,000,000. Commencing on April 1, 2016 the Company will pay fifty-four (54) consecutive equal monthly installments, with each such installment to be in the principal amount of $111,111 or such lesser amount as shall be equal to the quotient of (x) the outstanding principal amount of all advances on March 31, 2016, divided by (y) fifty-four (54); provided, however, that the final principal installment shall be in an amount equal to the aggregate principal amount of all advances outstanding on September 1, 2020, or such earlier date on which all outstanding advances shall become due and payable, whether by acceleration or otherwise. This second term loan bears interest at a rate per annum equal to 5.0%. Our obligations under the Second Term Loan Agreement are secured by substantially all of our assets. The outstanding balance under the Second Term Loan Agreement at December 31, 2016 and December 31, 2015 was $5,000,000 and $6,000,000, respectively.
The Term Loan Agreement and the Second Term Loan Agreement contain certain affirmative and negative covenants, including negative covenants that limit or restrict, among other things, liens and encumbrances, indebtedness, mergers, asset sales, investments, assumptions and guaranties of indebtedness of other persons, change in nature of operations, changes in fiscal year and other matters customarily restricted in such agreements. The financial covenants contained in these agreements require the borrowers to maintain a certain adjusted tangible net worth and a debt service coverage ratio. We were in compliance with all of our financial covenants under the Term Loan Agreement and the Second Term Loan Agreement as of December 31, 2016, except for the tangible net worth covenant. On March 30, 2017, we were issued a waiver for this covenant as of December 31, 2016. In addition, BankUnited, N.A. agreed to adjust the definition of the covenant to exclude deferred tax valuation allowance increases or decreases until the maturity dates of the Term Loans. We believe based on current projections and the adjusted covenant definition that we will continue to comply with such covenants in 2017.
On June 5, 2015, the Company entered into a $1,000,000 Equipment Finance Agreement (the "Agreement") with Sterling National Bank. The Agreement covers certain equipment in our STKs in Orlando and Chicago and bears interest at a rate of 5% per annum. Our obligations under the Agreement are secured by the equipment purchased with proceeds of the Agreement. The Agreement calls for sixty (60) monthly payments of $19,686 including interest commencing July 1, 2015. At December 31, 2016, the amount outstanding under the Agreement was approximately $751,000 and payments of $185,000 were made for the twelve months ended December 31, 2016.
On June 27, 2016 the Company entered into a $1,000,000 loan agreement with the Ontario Noteholder through the Ontario Note. In consideration of the loan amount, the Ontario Noteholder received the Ontario Warrant to purchase 100,000 shares of common stock of the Company at an exercise price of $2.61. The Warrant is exercisable at any time through June 27, 2026, in whole or in part. The Ontario Note bears interest at a rate of 10.0% per annum, payable quarterly commencing on September 30, 2016. The entire balance of the Ontario Note is due on its maturity date of June 27, 2021. The fair value of the Ontario Warrant of $125,000 is treated as a reduction of the principal balance of the Ontario Note and is amortized in interest expense over the term of the Ontario Note. The Company used the Black-Scholes option pricing model to calculate the fair value of the warrant as of the grant date. At December 31, 2016, the amount outstanding under the Ontario Note was $1.0 million.
On August 11, 2016 the Company entered into a $3,000,000 loan agreement with Anson though the Anson August Note. In consideration of the loan amount, Anson received the Anson August Warrant to purchase 300,000 shares of common stock of the Company at an exercise price of $2.61. The Anson August Warrant is exercisable at any time through August 11, 2026, in whole or in part. The Anson August Note bears interest at a rate of 10% per annum, payable quarterly commencing on September 30, 2016. The entire balance of the Anson August Note is due on its maturity date of August 11, 2021. The fair value of the Anson August Warrant of $380,000 is treated as a reduction of the principal balance of the Anson August Note and is amortized in interest expense over the term of the Anson August Note. The Company used the Black-Scholes option pricing model to calculate the fair value of the warrant as of the grant date. At December 31, 2016, the amount outstanding under the Anson August Note was $3.0 million.
On August 16, 2016, the Company entered into a $712,187 Equipment Finance Agreement (the " 2nd Agreement") with Sterling National Bank. The 2nd Agreement covers certain equipment at our STKs that are under construction in San Diego, Denver and at our STK in Orlando. This 2nd Agreement bears interest at a rate per annum equal to 5.0%. Our obligations under the 2nd Agreement are secured by the equipment purchased with proceeds of the 2nd Agreement. The 2nd Agreement calls for sixty (60) monthly payments of $13,769 including interest commencing September 1, 2016. At December 31, 2016, the amount outstanding under the 2nd Agreement was approximately $670,000 and payments of $42,000 were made for the twelve months ended December 31, 2016.
On October 24, 2016, the Company entered into a $2,250,000 loan agreement with Anson through the Anson October Note. In consideration of the loan amount, the Company also issued to Anson the Anson October Warrant to purchase 340,000 shares of the Company’s common stock at an exercise price of $2.39 per share.
The Anson October Warrant is exercisable at any time through October 24, 2026, in whole or in part. The Anson October Warrant contains limitations that prevent Anson from acquiring shares of the Company’s common stock upon exercise of the Anson October Warrant that would result in the number of shares beneficially owned by it and its affiliates exceeding 9.99% of the total number of shares of the Company’s common stock then issued and outstanding.
The Anson October Note bears interest at a rate of 10% per annum, payable quarterly commencing December 31, 2016. The entire balance of the Anson October Note is due on its maturity date of October 24, 2021. The fair value of the Anson October Warrant of $400,000 is treated as a reduction of the principal balance of the Anson August Note and is amortized in interest expense over the term of the Anson October Note. The Company used the Black-Scholes option pricing model to calculate the fair value of the warrant as of the grant date.
Interest expense incurred related to these agreements, excluding the amortization of debt discount, amounted to $833,000 and $416,000 for the years December 31, 2016 and 2015, respectively. Capitalized interest amounted to $466,000 and $381,000 for the years ended December 31, 2016 and 2015, respectively.
As of December 31, 2016, the issued letters of credit in the total amount of approximately $1.4 million for our STK locations in Orlando, Florida, Chicago, Illinois and Westwood, California remain outstanding for security deposits.
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