| 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.
Debt
as of December 31, 2017 and 2016 was comprised of the following:
| |
|
2017 |
|
|
2016 |
|
| June 2011 Note - paid in full during
2016 |
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
| 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 |
|
|
|
1,605,000 |
|
| |
|
|
|
|
|
|
|
|
| Debt discount (see Note 13) |
|
|
(7,200 |
) |
|
|
(14,900 |
) |
| |
|
|
|
|
|
|
|
|
| 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. The total one time fee paid was $16,000.
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 past the original maturity 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 was reached
and the Company issued 350,000 shares of its common stock under the terms of this agreement during 2017. The shares were valued
at $245,000 recorded as interest expense. |
|
|
— |
|
|
|
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. The total one time fee paid was $16,000.
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 past the original maturity
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 August 2017. The penalty period for shares to be issued was reached
and the Company issued 800,000 shares of its common stock under the terms of this agreement during 2017. The shares were valued
at $531,000 recorded as interest expense. |
|
|
— |
|
|
|
200,000 |
|
| |
|
|
|
|
|
|
|
|
| Secured short term note payable dated January 23, 2017 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. The total one time fee paid was $16,000.
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 past the original maturity
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 August 2017. The penalty period for shares to be issued was reached
and the Company issued 150,000 shares of its common stock under revised terms of the agreement during 2017. The shares were valued
at $105,000 recorded as interest expense. No additional shares will be issued by the Company. |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Secured short term note payable dated March 20, 2017 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. The total one time fee paid was $16,000.
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 past the original maturity date 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
past the original maturity 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 August 2017. The penalty period for shares
to be issued was reached and the Company recorded 200,000 shares of its common stock under the terms of this agreement during 2017.
The shares were valued at $128,000 recorded as interest expense. No additional shares will be issued by the Company under the terms
of the agreement. |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Secured short term note payable dated September 13, 2017 with principal and interest due 60 days from
issuance. The note requires a one-time fee in the amount of $15,000 to compensate for the first two weeks of the term and each
week thereafter (weeks 3-8) a fee of $1,500 shall be due and owing accruing on the first day of the week. The total one time fee
paid was $24,000. 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 past the original maturity date 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 past the original maturity date beginning in month 7 until paid in full. The note is secured by the
future sale of CoronaLux units and a personal guarantee of an officer of the Company. The penalty period for shares to be issued
has been reached and for the year ended December 31, 2017, the Company recorded 150,000 shares of its common stock as issuable
under the terms of this agreement. The shares were valued at $100,000 recorded as interest expense. Additional shares will be issued
by the Company under the terms of the agreement (see Note 22). |
|
|
300,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Secured short term note payable dated October 13, 2017 with principal and interest due 60 days from issuance.
The note requires a one-time fee in the amount of $4,000 to compensate for the first two weeks of the term and each week thereafter
(weeks 3-8) a fee of $400 shall be due and owing accruing on the first day of the week. The total one time fee paid was $6,400.
A fee of 40,000 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 past the original maturity date for months 3 through 6, and a fee of 80,000 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
past the original maturity date beginning in month 7 until paid in full. The note is secured by the future sale of CoronaLux units
and a personal guarantee of an officer of the Company. The penalty period for shares to be issued has been reached and for the
year ended December 31, 2017, the Company recorded 40,000 shares of its common stock as issuable under the terms of this agreement.
The shares were valued at $30,000 recorded as interest expense. Additional shares will be issued by the Company under the terms
of the agreement (see Note 21). |
|
|
100,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Secured short term note payable dated November 6, 2017 with principal and interest due 60 days from issuance.
The note requires a one-time fee in the amount of $5,000 to compensate for the first two weeks of the term and each week thereafter
(weeks 3-8) a fee of $400 shall be due and owing accruing on the first day of the week. The total one time fee paid was $7,400.
A fee of 50,000 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 past the original maturity date for months 3 through 6, and a fee of 100,000 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
past the original maturity date beginning in month 7 until paid in full. The note is secured by the future sale of CoronaLux units
and a personal guarantee of an officer of the Company. The penalty period for shares to be issued had not been reached as of December
31, 2017. Shares will be issued by the Company under the terms of the agreement (see Note 22). |
|
|
125,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Note
payable dated November 20, 2017, interest at 30% per annum, principal and accrued interest due on or before February 28,
2018. Unpaid interest at December 31, 2017 is approximately $11,800. The note is unsecured. During 2018, a verbal
agreement was made to allow month-to-month extension of the due date as long as interest payments were made
monthly. |
|
|
300,000 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| 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. This note was paid in full in October 2017. |
|
|
— |
|
|
|
43,600 |
|
| |
|
|
|
|
|
|
|
|
| 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. |
|
|
137,900 |
|
|
|
180,000 |
|
| |
|
|
|
|
|
|
|
|
Capital lease obligations,
secured by certain assets, maturing through Nov 2020
|
|
|
109,900 |
|
|
|
109,600 |
|
| Total notes
payable and capital lease obligations |
|
|
2,670,600 |
|
|
|
2,323,300 |
|
| |
|
|
|
|
|
|
|
|
| Less:
current portion |
|
|
(2,166,300 |
) |
|
|
(571,800 |
) |
| Notes
payable and capital lease obligations, long-term, including debt discount |
|
$ |
504,300 |
|
|
$ |
1,751,500 |
|
Debt
maturities as of December 31, 2017 are as follows:
| Year: |
|
|
|
|
| 2018 |
|
|
$ |
2,116,800 |
|
| 2019 |
|
|
|
393,100 |
|
| 2020 |
|
|
|
49,100 |
|
| 2021 |
|
|
|
1,700 |
|
| |
|
|
$ |
2,560,700 |
|
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, 2017:
| 2018 |
|
$ |
60,100 |
|
| 2019 |
|
|
37,100 |
|
| 2020 |
|
|
28,500 |
|
| Total minimum lease payments |
|
|
125,700 |
|
| |
|
|
|
|
| Amount representing
interest |
|
|
(15,800 |
) |
| Present value of lease payments |
|
|
109,900 |
|
| |
|
|
|
|
| Less current portion |
|
|
(49,500 |
) |
| Non-current portion |
|
$ |
60,400 |
|
In
connection with the issuance of convertible debt in 2016 noted above, the Company issued 71,000 warrants as an inducement to enter
into the transactions. 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.
|