Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.5.0.2
DEBT
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
DEBT

NOTE 9 – DEBT

 

In June 2011, we issued an unsecured promissory note to a third party in the amount of $40,000 (the “June 2011 Note”) bearing interest at a rate of 10% per annum and a three year warrant to purchase 13,000 shares of our common stock at an exercise price of $1.00 per share. In addition, a second note payable, to the same third party, in the amount of $25,000 plus $3,000 of accrued interest was also converted into the June 2011 Note, resulting in a new principal balance of $68,000. We valued the warrant at $170 using the Black-Scholes model and recorded this amount as a debt discount. The debt discount was fully amortized during 2011. In August 2016, the note and all accrued interest was paid by an offset to trade accounts receivable from the note holder.

 

    September 30,
2016
    December 31,
2015
 
June 2011 Note  - In Default   $     $ 68,000  
                 
Convertible notes payable, interest at 8% per annum, $400,000 principal payment due December 31, 2016, remaining unpaid principal and interest due August 20, 2018 and September 29, 2019, convertible into common stock at the option of the lenders at a rate ranging from $.70 to $1.10 per share     1,500,000       1,250,000  
Debt discount (see Note 13)     (16,800 )     (16,600 )
                 
Note payable dated October 13, 2015, interest at 8% per annum, payable in 24 monthly installments of principal and interest $4,523, due October 1, 2017.   Secured by certain assets of SEM and guaranteed by SEER and MV     56,100       92,300  
                 
Note payable dated October 13, 2015, interest at 8% per annum, payable in 60 monthly installments of principal and interest $4,562, due October 1, 2020.   Secured by real estate and other assets of SEM and guaranteed by SEER and MV     190,200       218,900  
                 
Note payable insurance premium financing, interest at 4.25% per annum, payable in 10 installments of $28,417, due November 1, 2016     56,500        
                 
Short term note payable dated August 23, 2016 due October 23, 2016. Interest is $10,000 for the first two weeks and $1,000 per week thereafter. Note is secured by certain trade accounts receivables. (Note was paid in October 2016)     200,000        
                 
Capital lease obligations, secured by certain assets, maturing through March 2019     136,200       208,900  
Total notes payable and capital lease obligations     2,122,200       1,821,500  
Less:  current portion     (825,500 )     (660,100 )
Notes payable and capital lease obligations, long-term, including debt discount   $ 1,296,700     $ 1,161,400  

  

In May 2016, the Company borrowed $200,000 in a short term financing arrangement. As an inducement to enter into the transaction the Company issued 500,000 warrants exercisable at $.50 per share for a period of four years. The warrants were valued at $97,200 and were recorded as additional interest. The short term debt was repaid in cash in June 2016 along with interest of $12,000.

 

In connection with the issuance of convertible debt on September 30, 2016, the Company issued 50,000 warrants as an inducement to enter into the transaction. The warrants are exercisable for five years at $.85 per share and were valued at $4,900 using the Black Scholes valuation method and are being amortized over the term of the debt.