| 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 and accrued interest was paid in full during August 2016 through an offset to trade accounts receivable from the note holder.
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 allowed 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
could 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, 2016 and 2015
was comprised of the following:
| |
|
2016 |
|
|
2015 |
|
| June 2011 Note - paid in full during 2016 |
|
$ |
— |
|
|
$ |
68,000 |
|
| |
|
|
|
|
|
|
|
|
|
Convertible notes payable, interest at 8% per annum, unpaid principal and interest maturing 3 years from note
date between August 2018 and October 2019, convertible into common stock at the option of the lenders at a rate of $0.70 per share;
one convertible note for $250,000 has a personal guarantee of an officer of the Company
|
|
|
1,605,000 |
|
|
|
1,250,000 |
|
| |
|
|
|
|
|
|
|
|
| Debt discount (see Note 13) |
|
|
(14,900 |
) |
|
|
(16,600 |
) |
| |
|
|
|
|
|
|
|
|
|
Secured short term note payable dated October 24, 2016 with principal and interest due 60 days from issuance.
The note requires a one-time fee in the amount of $10,000 to compensate for the first two weeks of the term and each week thereafter
(weeks 3-8) a fee of $1,000 shall be due and owing accruing on the first day of the week. A fee of 100,000 shares of restricted
common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding
for months 3 through 6, and a fee of 200,000 shares of restricted common stock shall be issued to lender for each month or prorated
for each two-week portion of any month the note is outstanding beginning in month 7 until paid in full. The note is secured by
specific customer accounts receivables and a personal guarantee of an officer of the Company. This note was paid in full in April
2017. The penalty period for shares to be issued has been reached, however, no shares have yet been issues.
|
|
|
200,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
Secured short term note payable dated December 1, 2016 with principal and interest due 60 days from issuance.
The note requires a one-time fee in the amount of $10,000 to compensate for the first two weeks of the term and each week thereafter
(weeks 3-8) a fee of $1,000 shall be due and owing accruing on the first day of the week. A fee of 100,000 shares of restricted
common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding
for months 3 through 6, and a fee of 200,000 shares of restricted common stock shall be issued to lender for each month or prorated
for each two-week portion of any month the note is outstanding beginning in month 7 until paid in full. The note is secured by
specific customer accounts receivables and a personal guarantee of an officer of the Company. The penalty period for shares to be issued has been reached, however, no shares have yet been issues.
|
|
|
200,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| 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 |
|
|
43,600 |
|
|
|
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 |
|
|
180,000 |
|
|
|
218,900 |
|
| |
|
|
|
|
|
|
|
|
Capital lease obligations, secured by certain assets, maturing through March 2019
|
|
|
109,600 |
|
|
|
208,900 |
|
| Total notes payable and capital lease obligations |
|
|
2,323,300 |
|
|
|
1,821,500 |
|
| Less: current portion |
|
|
(571,800 |
) |
|
|
(660,100 |
) |
| Notes payable and capital lease obligations, long-term, including debt discount |
|
$ |
1,751,500 |
|
|
$ |
1,161,400 |
|
Debt maturities as of December 31, 2016
are as follows:
| Year: |
|
|
|
| 2017 |
|
$ |
485,500 |
|
| 2018 |
|
|
1,634,900 |
|
| 2019 |
|
|
49,100 |
|
| 2020 |
|
|
43,800 |
|
| |
|
$ |
2,213,300 |
|
The Company issued two notes in the amount of $200,000 each in May
and August of 2016 which were paid in full in 2016.
Future minimum lease payments under capital
leases, which include bargain purchase options, are as follows at December 31, 2016:
| 2017 |
|
$ |
86,300 |
|
| 2018 |
|
|
22,900 |
|
| 2019 |
|
|
9,200 |
|
| Total minimum lease payments |
|
|
118,400 |
|
| Amount representing interest |
|
|
(8,400 |
) |
| Present value of lease payments |
|
|
110,000 |
|
| Less current portion |
|
|
(86,300 |
) |
| Non-current portion |
|
$ |
23,700 |
|
In connection with the issuance of convertible
debt in 2016 and 2015 noted above, the Company issued 71,000 and 250,000 warrants as an inducement to enter into the transactions,
respectively. The 2015 warrants exercisable for three years at $1.25 per share were valued at $18,300 using the Black Scholes
valuation method at the date of issuance. The 2016 warrants exercisable for 3 years at $0.85 per share were valued at $4,900 using
the Black Scholes valuation method at the date of issuance. During 2016, the 2015 convertible debt agreements were modified to
more closely reflect the convertible debt transactions made in 2016, including adjusting the conversion price from $1.10 per share
to $0.70 per share and the warrant exercise price from $1.25 to $0.85. The value of the convertible debt amendments will be recognized
prospectively by the Company.
|