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Commitments
12 Months Ended
Dec. 31, 2016
Commitments [Abstract]  
COMMITMENTS

NOTE 17 – COMMITMENTS

 

Building Lease

 

The Company leases a combined research and development and office facility located in Mundelein, Illinois. The facility is approximately 44,000 square feet. 

 

Effective January 1, 2015, the Company and its landlord executed an amendment to the lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the Company delivered to the landlord 20,025 shares of its 12.5% convertible preferred stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also the Company issued a five year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share.

 

On May 1, 2015, the Company and its landlord executed an amendment to the then current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 Preferred Shares and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

 

On October 14, 2015 the lease converted to a month to month basis. Monthly rental payments are currently $17,972, inclusive of property taxes. We believe we will be successful in negotiating a new lease with the landlord. 

 

For the years ended December 31, 2016 and 2015, the Company recognized rent expense of $229,220 and $189,120 respectively. 

 

Equipment Sale and Leaseback

 

On July 17, 2015, the Company entered into an equipment purchase agreement (the “Purchase Agreement”) with Fordham Capital Partners, LLC (“Fordham”) pursuant to which the Company sold all of its right, title and interest in production equipment utilized by the Company to Fordham for a purchase price of $500,000. Concurrently with entering into the Purchase Agreement, on July 17, 2015, the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months, monthly lease payments by the Company of $15,800 and the option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no later than July 8, 2017): $325,000. The Company is accounting for the transaction as a capital lease. The future minimum lease payments under the lease are as follows:

 

2017 - $110,600