Note 9 - Convertible Notes Payable

3 Months Ended

Mar. 31, 2015

Convertible Debt Disclosure [Abstract]

Convertible Debt Disclosure [Text Block]

NOTE 9: CONVERTIBLE NOTES PAYABLE

The following table summarizes the convertible debt outstanding as of March 31, 2015.

													Discount		Carrying
							Principal at				Total		at		amount at		Carrying amount
Date of	Maturity	Interest			Original		March 31,		Allocated		discount		March 31,		March 31,		Short term				Long term
issuance	date	rate			principal		2015		discount		amortized		2015		2015		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10	%		862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000		-0-		-0-
8/29/2008	4/1/2016		10	%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		-0-		150,000
8/29/2008	4/1/2017		10	%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2016		12	%		5,000		5,000		1,350		1,350		-0-		5,000		5,000		-0-		-0-		-0-
12/16/2008	4/1/2016		12	%		100,000		100,000		27,000		27,000		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	4/1/2017		12	%		160,000		160,000		43,200		43,200		-0-		160,000		-0-		-0-		-0-		160,000
12/16/2008	4/1/2017		12	%		4,570,000		4,475,000		1,233,900		1,233,900		-0-		4,475,000		-0-		-0-		4,475,000		-0-
12/16/2008	4/1/2018		12	%		215,000		215,000		58,050		58,050		-0-		215,000		-0-		-0-		-0-		215,000
12/16/2008	4/1/2018		12	%		25,000		25,000		6,750		6,750		-0-		25,000		-0-		-0-		25,000		-0-
9/30/2009	4/1/2017		12	%		1,300,000		1,100,000		488,800		488,800		-0-		1,100,000		-0-		-0-		1,100,000		-0-
9/30/2009	4/1/2018		12	%		100,000		100,000		37,600		37,600		-0-		100,000		-0-		-0-		-0-		100,000
12/31/2009	4/1/2017		12	%		1,440,000		1,440,000		904,320		904,320		-0-		1,440,000		-0-		-0-		1,440,000		-0-
12/31/2009	4/1/2018		12	%		50,000		50,000		31,400		31,400		-0-		50,000		-0-		-0-		-0-		50,000
Total					$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	5,000	$	75,000	$	8,810,000	$	775,000

The following table summarizes the convertible debt outstanding as of December 31, 2014.

													Discount		Carrying
							Principal at				Total		at		amount at		Carrying amount
Date of	Maturity	Interest			Original		December 31,		Allocated		discount		December 31,		December 31,		Short term				Long term
issuance	date	rate			principal		2014		discount		amortized		2014		2014		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10	%		862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000		-0-		-0-
8/29/2008	1/1/2016		10	%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
8/29/2008	4/1/2016		10	%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		-0-		150,000
12/16/2008	1/1/2016		12	%		375,000		375,000		101,250		101,250		-0-		375,000		-0-		-0-		-0-		375,000
12/16/2008	1/1/2016		12	%		4,600,000		4,505,000		1,242,000		1,242,000		-0-		4,505,000		-0-		-0-		4,505,000		-0-
12/16/2008	4/1/2016		12	%		100,000		100,000		27,000		27,000		-0-		100,000		-0-		-0-		-0-		100,000
9/30/2009	1/1/2016		12	%		100,000		100,000		37,600		37,600		-0-		100,000		-0-		-0-		-0-		100,000
9/30/2009	1/1/2016		12	%		1,300,000		1,100,000		488,800		488,800		-0-		1,100,000		-0-		-0-		1,100,000		-0-
12/31/2009	1/1/2016		12	%		50,000		50,000		31,400		31,400		-0-		50,000		-0-		-0-		-0-		50,000
12/31/2009	1/1/2016		12	%		1,440,000		1,440,000		904,320		904,320		-0-		1,440,000		-0-		-0-		1,440,000		-0-
Total					$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	8,815,000	$	775,000

10% Convertible Notes

During 1999, the Company issued 10% Convertible Notes payable in the amount of $862,500 pursuant to a private offering. There were costs of $119,625 associated with this offering. The net proceeds to the Company were $742,875. The notes bear interest at ten percent annually, payable semi-annually. The notes were convertible after maturity, which was June 30, 2004, into shares of common stock of the Company at $1.25 per share. As of March 31, 2015, $787,500 of the Convertible Notes had been repaid in cash or converted into 1,495,179 shares of common stock of the Company leaving an outstanding principal balance of $75,000 that is in default. There was $119,098 of accrued interest at March 31, 2015.

Secured Convertible Debentures

On September 30, 2009, the Company sold an aggregate of $1,400,000 principal amount 12% Secured Convertible Debentures (the “Debentures”) and common stock purchase warrants (the “Warrants”) to purchase an aggregate of 5,600,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to four accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit. The Debentures, which bear interest at 12% per annum, matured on March 30, 2011. The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share. The debentures are secured by all of the assets of the Company. On March 30, 2011, the Company repaid $200,000 of the outstanding principal amounts owed and extended $1,200,000 of the convertible debentures until April 1, 2013, including $1,100,000 in convertible debentures held by our Chief Executive Officer and Director, Cornelis F. Wit. The Company also extended the expiration date of the warrants associated with the offering until September 30, 2015. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $1,200,000 of the convertible debentures including $1,100,000 due to our Chief Executive Officer and Director, Cornelis F. Wit to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. As part of Amendment Number Two to Securities Purchase Agreement, Mr. Wit agreed to waive his rights to the granted Security Interest and for the release of the Collateral. On January 31, 2015 the Company and Mr. Wit extended the maturity date of the $1,100,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

Convertible Debentures

On August 29, 2008, the Company sold $2,270,000 of convertible debentures and warrants to purchase an aggregate of 4,540,000 shares of our common stock to four accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit, and Guus van Kesteren, a Director of the Company. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, Mr. Wit and Mr. van Kesteren extended $1,920,000 of the convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to Mr. van Kesteren to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015. On April 21, 2014 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to Mr. van Kesteren to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $150,000 was reclassified from Related Party to Non-Related Party. On February 22, 2013 the Company and Mr. Wit extended the maturity date of $1,770,000 of the convertible debentures due to Mr. Wit to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On January 31, 2015 the Company and Mr. Wit extended the maturity date of $1,770,000 of the convertible debentures due to Mr. Wit to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On December 16, 2008, we sold $5,075,000 of convertible debentures and warrants to purchase an aggregate of 10,150,000 shares of our common stock to eleven accredited investors including our Chief Executive Officer and Director, Chief Operating Officer, Chairman and Chief Technology Officer, Chief Financial Officer and three of our Directors. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009 the officers, directors and an affiliate of the Company extended $4,980,000 of Convertible Notes until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $4,505,000 of the convertible debentures including $4,475,000 due to our Chief Executive Officer and Director, Cornelis F. Wit, $25,000 due to our Chief Operating Officer and President, Stephen E. Johnson, and $5,000 due to our Chairman and Chief Technology Officer, Randall G. Smith, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On February 27, 2013 the Company and Matthew Veatch, a former director of the Company, extended the maturity date of $15,000 of convertible debentures issued to Mr. Veatch to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On March 6, 2013, the Company and the lender agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2014. The expiration date of the warrants associated with the debentures was also extended to January 1, 2014. On March 12, 2013, the Company and the lender agreed to extend the maturity date of $100,000 of convertible debentures to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015. On December 5, 2013 the Company and Guus van Kesteren, a Director of the Company, extended the maturity date of $160,000 of the convertible debentures due to Mr. van Kesteren to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On December 9, 2013, the Company and the lender agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On April 28, 2014, the Company and the lender agreed to extend the maturity date of $100,000 of convertible debentures to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $160,000 was reclassified from Related Party to Non-Related Party. On January 31, 2015 the Company and Mr. Wit extended the maturity date of $4,475,000 of the convertible debentures due to Mr. Wit to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On December 31, 2009, the Company sold an aggregate of $1,490,000 principal amount 12% convertible debentures and warrants to purchase an aggregate of 5,960,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to three accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit. The debentures, which bear interest at 12% per annum, matured on June 30, 2011. The debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share. On June 30, 2011, the Company and the lenders agreed to extend all $1,490,000 of the convertible debentures until October 1, 2013, including $1,440,000 of the Debentures held by Mr. Wit. The Company also extended the expiration date of the warrants associated with the December 2009 offering until December 31, 2015. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $1,490,000 of the convertible debentures, including $1,440,000 due to Mr. Wit, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On January 31, 2015 the Company and Mr. Wit extended the maturity date of $1,440,000 of the convertible debentures due to Mr. Wit to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

The payments required at maturity under the Company’s outstanding convertible debt at March 31, 2015 are as follows:

2015	$	75,000
2016		255,000
2017		8,945,000
2018		390,000
Total	$	9,665,000