XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Debt
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Debt

(7) Debt

 

In July 2012, the Company entered into a securities purchase agreement with certain institutional and private investors pursuant to which it sold 8% Convertible Notes for an aggregate of $3,069,900. The Notes carried a stated interest rate of 8%, were unsecured and matured July 2017. These Notes were convertible at any time into shares of the Company's common stock at an initial conversion price of $0.225 per share, subject to adjustment under certain conditions. Each investor also received a common stock purchase warrant to purchase common stock equal to twenty-five percent (25%) of the shares issuable upon conversion of the Notes. The warrants were immediately exercisable at a price of $0.30 per share and had a term of five years. As discussed above, on May 12, 2017, the Company completed the retirement of $1,835,000 of the Notes in early cash redemptions, and $780,000 of the Notes were converted into an aggregate of 780 shares of Series C Preferred Stock. The remaining Notes matured on July 27, 2017, at which time the Company paid $255,000 in principal and $6,623 in interest to the remaining Note holders.

 

In December 2013, the Company entered into a promissory note agreement with the Chairman of the Board and a major shareholder pursuant to which the Company borrowed $500,000. The note is unsecured and bears interest at 6% per annum and was originally due September 30, 2014. At any time, the lenders may elect to have any or all of the principal plus accrued interest under the promissory note repaid in the form of our common stock at a price per share determined based upon the average closing price of the Company’s common stock for the 20 days preceding the maturity or prepayment date. In connection with the promissory note, each of the lenders was issued 5,000,000 warrants to purchase shares of the Company’s common stock at $0.06 per share. The warrants are immediately exercisable. Pursuant to an amendment to the promissory note on June 30, 2014, the maturity date was extended to December 31, 2017 and each lender was granted an additional 7,500,000 warrants, which are immediately exercisable, to purchase shares of the Company’s common stock at $0.06 per share. In December 2016, the note was further modified to extend the maturity date to December 31, 2022, with all remaining terms unchanged. At September 30, 2017, the balance of the promissory note was $500,000 and accrued interest payable on the note was $114,234. Interest expense recorded for the three- and nine-month periods ended September 30, 2017, was $7,500 and $22,500, respectively.

 

In September 2016, the Company borrowed an aggregate of $360,000 from the Company’s former Chairman of the Board of Directors and the Company’s current Chairman of the Board of Directors. The note accrued interest at a rate of 6% per year, which was payable upon maturity of the note on June 30, 2017. The note was secured by company assets not otherwise encumbered. During February 2017, the $360,000 note plus accrued interest in the amount of $8,000, were settled in full with shares of Series C Preferred Stock. A cash payment of $520 was made for residual interest due.

 

In August 2017, the Company borrowed $60,000 from its Chairman of the Board of Directors pursuant to a promissory note. The note accrues interest at 5% per year, which is payable upon maturity of the note, and at September 30, 2017, the amount of accrued interest on the note was $250. The note is unsecured and matures on June 30, 2018.