Promissory Notes

9 Months Ended

Sep. 30, 2014

Promissory Notes [Abstract]

Promissory Notes

8.Promissory Notes

Principal Amount	$	7,717,317
Unamortized Debt Discount at September 30, 2014		(378,764	)
Promissory Notes, Net of Debt Discount	$	7,338,553

As of September 30, 2014, the Company has the following outstanding promissory notes:

All promissory notes bear interest at the rate of 12% per annum, with interest paid in arrears on the last day of each fiscal quarter and mature on October 31, 2015.

The Company incurred finance costs of $195,062 related to these promissory notes, which is being amortized over the term of the notes and is included in interest expense on the condensed consolidated statement of operations. The amortization recorded for each of the three and nine months ended September 30, 2014 and 2013 was $16,255 and $48,765, respectively.

Pioneer Terminal

In June 2013, Dakota Plains Transloading, LLC (Borrower), a wholly owned subsidiary of the Company, entered into a credit agreement (Credit Agreement) with World Fuel Services Corporation. The Credit Agreement provides the Borrower with a $20 million delayed draw term loan facility (the Facility) to finance the Borrowers share of improvements to be made to the Pioneer Terminal in New Town, North Dakota. The availability period for draws under the Facility expired on September 30, 2014, and the maturity date of the Facility is December 31, 2026. The Facility is secured by a mortgage on a majority of the land owned by the Company in New Town, North Dakota as well as a pledge of the equity owned by the Borrower in DPTS.

During the availability period, a loan under the Facility bore interest at a rate per annum equal to nine percent (9%). After the expiration of the availability period, a loan under the Facility bears interest at a rate per annum equal to (i) six percent (6%), at any time when the aggregate unpaid principal amount of loans outstanding is less than $5 million, (ii) nine percent (9%), at any time when the aggregate unpaid principal amount of loans outstanding is less than $10 million. There was $7.0 million and $7.5 million outstanding under the Facility at September 30, 2014 and December 31, 2013, respectively.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that restrict the right of the Borrower to incur indebtedness, merge, lease, sell or otherwise dispose of assets, make investments and grant liens on their assets.

The Credit Agreement contains customary events of default, the occurrence of which would permit World Fuel Services Corporation to terminate its commitment and accelerate loans under the Facility, including failure to make payments under the Facility, failure to comply with covenants in the Credit Agreement and other loan documents, cross default to other material indebtedness of the Company, failure of the Company or Borrower to pay or discharge material judgments, bankruptcy of the Company or the Borrower, and a change in control of the Company or the Borrower.

The Company incurred finance costs of $9,783 related to the Credit Agreement, which was amortized through June 2014 and was included in interest expense on the condensed consolidated statement of operations. The amortization recorded for the three and nine months ended September 30, 2014 was $0 and $4,076, respectively, and $2,446 and $3,261 for the three and nine months ended September 30, 2013, respectively.