Annual report pursuant to Section 13 and 15(d)

DEBT

v3.3.1.900
DEBT
12 Months Ended
Dec. 31, 2015
Debt Disclosure [Abstract]  
DEBT

NOTE 10 – 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, 2015 and 2014, 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.

 

The Company entered into a loan agreement evidenced by a convertible secured promissory note with Advanced Technology Materials, Inc. (“ATMI”) on February 14, 2012. The amount of the convertible secured promissory note was $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 development agreement, and use the loan proceeds for projects and transactions contemplated in the term sheet and development agreement. The registration rights agreement has not been executed by the parties to the loan. 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. In December 2014, the promissory note and accrued interest was purchased by two shareholders of the Company from ATMI. In January 2015 the convertible promissory note and accrued interest totaling $257,400 was converted into approximately 514,800 shares on common stock in accordance with the terms on the original convertible note.

 

Debt as of December 31, 2015 and 2014 was comprised of the following:

 

    2015   2014
June 2011 Note - In Default   $ 68,000     $ 68,000  
                 
Convertible note payable, interest at 8% per annum, $400,000 principal payment due December 31, 2016, remaining unpaid principal and interest due August 20, 2018, convertible into common stock at the option of the lenders at a rate of $1.10 per share     1,250,000        
Debt discount (see Note 13)     (16,600 )      
                 
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. In January 2015 this promissory note and accrued interest totaling $257,400 was converted into 514,750 shares on common stock in accordance with the terms on the original convertible note. (see Note 13)           225,000  
                 
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     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     218,900        
                 
Capital lease obligations, secured by certain assets, maturing through March 2019     208,900       130,900  
Total notes payable and capital lease obligations     1,821,500       423,900  
Less: current portion     (660,100 )     (363,000 )
Notes payable and capital lease obligations, long-term, including debt discount   $ 1,161,400     $ 60,900  

 

Debt maturities as of December 31, 2015 are as follows:

 

Year:          
2016     $ 660,100  
2017       165,800  
2018       894,000  
2019       57,600  
2020       44,000  
    $ 1,821,500  

 

Future minimum lease payments under capital leases, which include bargain purchase options, are as follows at December 31, 2015:

 

2016     $ 117,000  
2017       79,000  
2018       23,400  
2019       8,200  
Total minimum lease payments       227,600  
Amount representing interest       (18,700 )
Present value of lease payments       208,900  
Less current portion       (104,800 )
Non-current portion     $ 104,100  

 

In connection with the issuance of convertible debt in 2015 noted above, the Company issued 250,000 warrants as an inducement to enter into the transaction. The warrants exercisable for three years at $1.25 per share were valued at $18,300 using the Black Scholes valuation method.