Quarterly report pursuant to Section 13 or 15(d)

DEBT

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DEBT
9 Months Ended
Sep. 30, 2013
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.  Principal payments were due beginning November 2011 and the June 2011 Note is in default as of December 31, 2012, as no payments have been made to date.  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 December 2011, we issued a secured promissory note to a third party in the amount of $50,000 (the “December 2011 Note”) bearing interest at 18% per year, secured by certain assets in TCC and a five year warrant to purchase 25,000 shares of our common stock at an exercise price of $0.50 per share. We valued the warrant at $5,749 using the Black-Scholes model and recorded this amount as a debt discount.  The December 2011 Note was paid in full in June 2012.
 
The Company entered into a loan agreement evidenced by a convertible secured promissory note with Advanced Technology Materials, Inc. on February 14, 2012.  The amount of the convertible secured promissory note is $225,000.  The loan agreement allows for an additional $225,000 to be borrowed upon meeting certain defined milestones and stipulates the Company provide the lenders, among other things, a security agreement which also identifies the collateral, a registration rights agreement granting piggy-back registration rights to the lender, a development agreement and use the loan proceeds for projects and transactions contemplated in the term sheet and development agreement.  The note bears interest at 5 percent per annum.  The entire loan and/or unpaid balance of the loan and accrued interest can be converted into the Company’s common stock at $0.50 per share at any time at the option of the holder.  However, if the lender does not convert any of the principal or interest into common stock then $112,500 of principal plus accrued interest will be due on demand on or after December 31, 2014.
 

 

Debt as of September 30, 2013 and December 31, 2012, was comprised of the following:
 
   
2013
   
2012
 
             
June 2011 Note  (See above)
  $ 68,000     $ 68,000  
                 
Note payable dated February 2012, interest at 5% per annum, $112,500 is due December 31, 2014, convertible in whole or in part to common stock at $.50 per share.
      225,000         225,000  
                 
Promissory note dated April 2008, secured by certain of our assets, bearing interest at 6.65% per annum; 60 monthly payments of $14,276, maturing April 2013.
              70,200  
                 
Promissory note dated December 2009, unsecured, bearing interest at 6% per annum, six monthly payments ranging from $10,000 to $25,000 commencing February 2010, balloon payment for outstanding balance due July 2010. The promissory note is in default as of December 31, 2012 and 2011.
        104,200           104,200  
                 
Promissory note dated November 2010, unsecured, bearing interest at 8% per annum, balloon payment for outstanding balance due October 2011. The promissory note is in default as of December 31, 2012 and 2011.
      25,000         25,000  
                 
Convertible note, unsecured, dated August 2013, bearing interest at 8% per annum, due December 31, 2013 (See Note 11)
    50,000        
                 
Note payble for purchase of certain equipment, twenty-four  payments of $4,583, due August 15, 2015. The note payable is secured by the certain equipment.
    110,000        
                 
Capital lease obligations, secured by certain assets, maturing September 2011 through August 2016
    78,900       109,000  
                 
Debt discount
    (3,000 )        
  Total notes payable and capital lease obligation
    658,100       601,400  
     Less:  current portion, including debt discount
    (314,800 )     (319,800 )
     Notes payable and capital lease obligation, long-term
  $ 343,300     $ 281,600