| Debt Disclosure [Text Block] | NOTE 7 – NOTES PAYABLE Notes payable included the following as of June 30, 2018 and December 31, 2017: Secured June 30, December 31, 2018 2017 Notes payable: Secured note payable issued on October 15, 2010 and refinanced in January 2015 for purchase of all membership interest, bearing interest of 6% per year and due in monthly installments ending September 25, 2022 $ 208,619 $ 228,947 Secured note payable issued August 14, 2017, bearing interest of 7.25% per year, due in monthly installments ending August 1, 2021 57,382 63,752 Secured finance facility issued February 2, 2017, bearing effective interest of 6%, due monthly installments ending August 20, 2020 34,001 41,777 Secured funding advance agreement issued December 18, 2017, bearing effective interest of 29.8%, due in daily installments ending October 2018, net of deferred financing costs of $0 and$55,729, respectively - 188,500 Secured note payable issued January 2, 2018, bearing interest of 6.29% per year, due in monthly installments ending January 2023 39,184 - Secured funding advance agreement issued June 27, 2018, bearing effective interest of 20%, due in daily installments ending April 2019, net of deferred financing costs of $104,599 241,578 - 580,764 522,976 Less current maturities (328,301 ) (264,615 ) Long term debt, net of current maturities $ 252,463 $ 258,361 On October 15, 2010, the former managing member of MG Cleaners purchased MG Cleaners from the previous membership interest owners. In connection with that transaction, a $450,000 seller note was issued to the sellers. The note bears an interest rate of 8% and principal and interest payments are made monthly. The remaining principal balance of $307,391 was refinanced by the note holder in January 2015, bearing an interest rate of 6.00%, with principal and interest payments due monthly. The note is secured by the land and building originally occupied by SMG, and said property is no longer occupied. The balance of this note at June 30, 2018 and December 31, 2017 was $208,619 and $228,947, respectively. On August 14, 2017, we refinanced a note payable for $66,348. The unsecured note bears an interest rate of 7.25% per annum, has 47 monthly payments of $1,400, with a balloon payment of $12,086 at maturity on August 1, 2021. The refinanced amount is identical to the remaining principal balance under the previous loan, thus no gain or loss has been recognized. On February 2, 2017, we refinanced two truck notes existing with a community bank for one new note of $53,610. The term was principal and interest payments monthly over 42 months with an interest rate of 6%. The note is secured by certain trucks and equipment of the Company. The refinanced amount is identical to the remaining principal balance under the previous loan. On January 2, 2018, we financed a truck with a note to a bank. The $41,481 note has an interest rate of 6.29% and payments of principal and interest are paid monthly. The note is secured by the truck purchased. This note matures in January 2023. Funding Advance Agreements – included with secured notes On December 18, 2017, we received $195,000 in return for an assignment and transfer to a specialty finance company of a specified percentage of the proceeds of each collection of future receipts received by usr, collectively “Future Receipts” until the finance company has received the Purchased Amount of $278,000. This transaction is accounted for as a short term secured loan, with deferred financing costs of $83,000 recognized on the date of incurrence. On June 27, 2018, our company re-financed and paid off the above December 18, 2017 note. This was accounted for as an extinguishment of the old note. During the six months ended June 30, 2018, $80,233 of debt discount was amortized to interest expense related to the old instrument. The new facility had an original principal balance of $347,500. In conjunction with the new note we received $139,243 of proceeds, applied $103,257 towards the payoff of the old instrument and recorded deferred financing cost of $105,000 as a debt discount. Payments of principal and interest are paid daily. This note matures in April 2019. During the quarter ended June 30, 2018, $401 of debt discount was amortized to interest expense. Future maturities of the above secured notes payable are as follows: 2018 $ 192,578 2019 178,182 2020 78,913 2021 81,523 2022 48,765 2023 803 $ 580,764 Notes Payable - Unsecured June 30, December 31, 2018 2017 Notes payable: Financed insurance premium, Note Payable issued on June 8, 2018, bearing interest of 6.5% per year and due in monthly installments ending April 1, 2019 $ 45,431 $ - Financed insurance premium, Note Payable issued May 1, 2018, bearing interest of 8% per year, due in monthly installments ending March 1, 2019 27,335 - Unsecured note payable with a shareholder who 7.5% of votes. Issued on May 10, 2018, verbal agreement, due on demand and 0% interest per year 32,000 - 104,766 - Less current maturities (104,766 ) - Long term debt, net of current maturities $ - $ - Notes Payable (Related Party On February 12, 2018, the Company’s wholly-owned subsidiary, MG Cleaners LLC (“ MG Agreement In June 2018, Stephen Christian advanced $ 23,100 Capital Lease Liability During the six months ended June 30, 2018 the Company entered into a capital lease arrangement to purchase various equipment to be used in operations. Title to the equipment will be transferred to the Company at the completion of the lease payments. The Company purchased $146,354 of equipment payable through May 2020. A down payment of $20,607 was due at inception followed by 23 monthly payments of $5,972 and a final payment of $13,172. As of June 30, 2018, $111,965 remains outstanding with $53,891 included as a current liability. Accounts Receivable Financing Facility (Secured Line of Credit) On May 11, 2017, SMG Industries, Inc., formerly SMG Indium Resources Ltd., (the “Borrower”) entered into a $1 million revolving accounts receivable financing facility with Crestmark Bank. The financing facility provides for the Borrower to have access to the lesser of (i) $1 million or (ii) 85% of Net Amount of Eligible Receivables (as defined in the financing agreement). The financing facility is paid for by the assignment of the Borrower’s accounts receivable to Crestmark Bank and is secured by the Borrower’s assets. The financing facility has an interest rate of 7.25% in excess of the prime rate reported by the Wall Street Journal per annum, with a floor minimum rate of 11.5%. There were no loan origination or closing fees and we paid $1,330 to Crestmark to reimburse them for documentation, legal and audit fees. Interest and maintenance fees will be calculated on the higher of the average monthly loan balance from the prior month or a minimum average loan balance of $200,000. The financing facility is for an initial term of two-years and will renew on a year to year basis, unless terminated in accordance with the financing agreement. If the facility is terminated prior to the first anniversary, Borrower is obligated to pay Crestmark Bank a fee of $20,000 and if terminated after the first anniversary and prior to the second anniversary then Borrower shall pay a fee of $5,000. After the second anniversary of the financing facility no exit fee is due. Crestmark has a senior security interest in the Borrower’s assets. The balance of this second line of credit was $571,077 and $353,975 as of June 30, 2018 and December 31, 2017, respectively. As part of our arrangement with Crestmark Bank our customers pay accounts receivable directly to a lock-box. Crestmark Bank is then paid back for prior advances on the Company’s Eligible Receivables. During the six months ended June 30, 2018, the Company received total cash proceeds of $2,000,300 and repaid $1,819,803 of the Line of Credit via Crestmark Bank withholding amount collected in our lock-box. In addition Crestmark withheld $36,605 to pay for interest and fees. Net proceeds received during the six months ended June 30, 2018 on this facility were $217,102. |
