Related Party Transactions
|6 Months Ended|
Jun. 30, 2019
|Related Party Transactions [Abstract]|
|Related Party Transactions Disclosure [Text Block]||
Note 5. Related Party Transactions
Due from Shareholder
The Company’s founder and majority stockholder had provided cash advances on an unsecured and non-interest-bearing basis, during the first few years of operation. Beginning in 2016, the founder began receiving distributions from the Company. The amounts owed to, and due from, the shareholder have been netted in the accompanying consolidated balance sheets. In January 2019, this shareholder surrendered 1,401 common shares to the Company as settlement of the balance due. As of June 30, 2019, and December 31, 2018, the net balance due from the founder was approximately $0 and $1.4 million, respectively. The balance did not carry a maturity date and there were no repayment terms.
Due to Shareholder
In October 2016, the Company entered into an unsecured loan agreement with a minority shareholder for up to $1 million of borrowings for operating expenses. In November 2016 and January 2018, the Company entered into additional note agreements to provide up to an additional $2 million of aggregate borrowings for which the Company has guaranteed payment from its subsidiary. The interest rate for the notes is 10% per annum and the notes mature in January 2021. One of the notes bore interest at 10% for the first 90 days and was then adjusted to 18% per annum.
As previously mentioned, on August 20, 2018, the Company entered into a Stock Exchange Agreement with Alliance MMA, as amended December 18, 2018, in connection therewith this minority shareholder agreed to accept Series A Convertible Preferred Stock units having a face value equal to the total amount owed to him of $2.1 million in full satisfaction of such indebtedness (including principal and accrued interest).
As of June 30, 2019, and December 31, 2018,the notes payable - related party totaled
$192,446 and $1,591,491 respectively.
The Company incurred interest expenseof approximately
$0 and $48,434 for the quarter ended June 30, 2019 and 2018, respectively, and $23,720 and $90,057, for the six months ended June 30, 2019 and 2018, respectively.The Company incurred no interest expense on the notes payable - related party since February 1, 2019 as the holder agreed to settle the principal and interest balance with Series A Convertible Preferred Stock.
As of June 30, 2019 and 2018, the accrued interest balance was $0 and $282,000, respectively.
In addition, this shareholder also provided office space to the Company at no cost through January 2019.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef