BORROWINGS, SHAREHOLDER

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

BORROWINGS, SHAREHOLDER

5. BORROWINGS, SHAREHOLDER

Borrowings as of September 30, 2019 and December 31, 2018 were as follows:

	September 30,			December 31,
	2019			2018
Revolving credit facility and term loan, shareholder (a)	$	747,757		$	747,757
Term note, shareholder (b)		4,321,065			4,321,065
Loans from stockholders (c) (d)		2,870,484			2,870,484
Installment notes (e)		11,941			11,941
Total debt		7,951,247			7,951,247
Less current portion		(7,951,247	)		(7,951,247	)
Total long-term debt	$	—		$	—

a. The Revolving Credit Facility and Term Loan have a maturity date of July 23, 2017 and a default interest rate, which is the base rate plus the applicable margin plus 2% (6.75% and 7.75%, respectively as of December 31, 2016. The loans are secured by all the Company’s properties and assets except for its disposal wells wherein the Senior Loan Facility has a subordinated secured position with an accredited investor. As of September 30, 2019, the Company was not in compliance with its debt covenants under the Senior Loan Facility and is in default but the lender had not exercised its rights under the Senior Loan Facility. The outstanding balance of the Senior Loan Facility is included in current liabilities at September 30, 2019 and December 31, 2018 because the Company did not comply with its debt covenants, including the timely payment of interest and principal.

b. The Company and its subsidiaries entered into a Term Loan, Guaranty and Security Agreement on July 23, 2012 with ICON (the “Loan Agreement”). On December 27, 2014 an affiliate of an accredited investor who is also a stockholder purchased the note payable under the Loan Agreement. The accredited investor assumed the terms and conditions of the Loan Agreement. The Loan Agreement provides the lender with a senior secured position on the Company’s disposal wells and a subordinated position to the Senior Loan Facility on all other Company properties and assets. As of September 30, 2019, the Company did not comply with its debt covenants under the Loan Agreement and is in default but the lender had not exercised its rights under the Loan Agreement. The outstanding balance of the note pursuant to the Loan Agreement is included in current liabilities at September 30, 2019 and December 31, 2018 because that the Company was not in compliance with its debt covenants, including the timely payment of interest. On June 30, 2017, the holder of the Loan Agreement agreed to exchange the outstanding accrued interest on the Loan Agreement for common stock in the company and agreed to lower the interest rate on the Loan Agreement to 3% annually effective July 1, 2017.

c.

On May 27, 2014 an accredited investor, who is also a stockholder in the Company, entered a loan agreement with the Company for $2,783,484. As of September 30, 2019, and December 31, 2018 the principal balance of the note was $2,783,484. The note bears interest at 9% per annum. The terms of the note require the cash payment of one half of the interest cost monthly (4.5% per annum), and the remaining half is accrued as payment in kind interest. The note and all accrued interest were due and payable in November 27, 2015. The principal and interest on the note payable is past due pursuant to its terms and is in default.

d.

On March 21, 2014 the CEO of the Company, who is also a stockholder in the Company entered a promissory note agreement whereby the CEO loaned the Company $87,000. The promissory note has an interest rate of 7% per annum. The note was to be paid in installments throughout the year ended December 31, 2014 with a portion of the repayment conditioned upon the sale of certain of the Company’s disposal wells. The principal and interest on the note payable to the CEO is past due pursuant to its terms and is in default.

e. The Company has an installment loan with an outstanding principal balance of approximately $11,941 used to acquire property and equipment for use in the Company’s operations. The collateral for the loan was no longer in use in the Company’s operations and was returned to the lender May 2016. The reduction in principal from the surrender of the collateral was less than the total balance owed. The remaining principal balance of the loan is past due and is in default and is classified as a short-term liability.