9.	Long-Term Debt

The following table summarizes our long-term debt:

	December 31,
	2012			2011
$5M Convertible Senior Secured Promissory Notes including interest at 5% per annum payable quarterly through December 31, 2013, and an additional one time 5% interest charge payable on January 15, 2013 if not repaid by December 31, 2012, collateralized by a first priority lien shared equally with holder of the Convertible Line of Credit with Related Party in all of the patents and intellectual property owned by the Company subordinated to the Convertible Debt related to acquisition for Surgical Biologics intellectual property until repaid. (a)	$	5,313,645		$	5,007,732

Convertible Line of Credit with Related Party with 5% interest; principal and interest payable in full December 31, 2012 collateralized by a first priority lien shared equally with holders of Convertible Senior Secured Promissory Notes in all patents and intellectual property of the Company subordinated to the Convertible debt related to the acquisition for Surgical Biologics intellectual property until repaid. (b)		-			1,342,726

Convertible debt related to acquisition with 4% interest; principal and interest payable in full on July 5, 2012, collateralized by a first priority lien in all the intellectual property owned by Surgical Biologics immediately after the closing. (c)		-			1,299,315

Total debt	$	5,313,645		$	7,649,773

Less unamortized debt discount		(1,301,203	)		(2,480,400	)

Less current portion		-			(2,424,786	)

Long-term portion	$	4,012,442		$	2,744,587

(a) Investors received First Contingent Warrants (25% of amount invested) and Second Contingent Warrants (25% of amount invested) at an exercise price of $.01 per share. In March 2012 a total of 1,250,000 First Contingent Warrants were vested. In July 2012, a total of 1,250,000 Second Contingent Warrants were voided due to the Company share price trading at or above $1.75 for ten consecutive trading days. The additional interest resulting from the beneficial conversion feature, inclusive of the First Contingent Warrants, totaled $2,278,052 which has been recorded as a debt discount that has been and will continue to be charged to interest expense using the effective interest rate over the life of the note.

(b) The same terms offered to the Senior Secured Promissory note with regard to Contingent Warrants applied to the Convertible Line of Credit. In March 2012 a total of 325,000 First Contingent Warrants vested. In July 2012, a total of 325,000 Second Contingent Warrants were voided. The additional interest related to the beneficial conversion feature totaled $594,456 and was recorded as a debt discount and charged to interest expense using the effective interest rate over the life of the note. On December 7, 2012, the Chairman and CEO elected to convert his note and accrued interest resulting in the issuance of 1,403,630 shares of MiMedx common stock.

(c) Additional financing expense of $437,500 was recorded for the beneficial conversion feature of the convertible notes over the term of the note. In July, 2012, the Company settled the Convertible Promissory Notes by paying approximately $177,000 in cash and issuing 893,267 shares of MiMedx common stock.

Convertible Line of Credit with related party

On March 31, 2011, the Company and its Chairman of the Board and CEO ("the Lender") entered into a Subscription Agreement for a 5% Convertible Senior Secured Promissory Note ("Subscription Agreement") and, in connection therewith, agreed to issue a 5% Convertible Senior Secured Promissory Note ("Note") in the amount borrowed by the Company. At the option of the Lender, the Note was convertible into the number of shares of common stock of the Company equal to the quotient of the outstanding principal amount and accrued interest of the Note as of the date of such election divided by $1.00 per share.

Senior Secured Promissory Notes

From December 27 to December 31, 2011, the Company sold 5% Convertible Senior Secured Promissory Notes (the "Notes") to individual accredited investors for aggregate proceeds of $5,000,000. The aggregate proceeds included $500,000 of Notes sold to the Company's Chairman of the Board and CEO. In total, the principal of the Notes is convertible into up to 5,000,000 shares of common stock of the Company ("Common Stock") plus accrued but unpaid interest at $1.00 per share at any time upon the election of the holder of the note.

As of December 31, 2012 the Company had not repaid the Notes in full and as a result requires the Company to pay each lender an additional interest payment in the amount of five percent (5%) of the aggregate outstanding principal amount of such lender's Notes as of December 31, 2012. The additional interest was accrued on a monthly basis during the year.

In conjunction with the sale of the Convertible Senior Secured Promissory notes, the Company incurred a placement fee of $32,800 and issued 42,400 common stock warrants to the placement agents at an exercise price of $1.09 per share. The warrants expire in five years. The fair value of the warrants was determined to be approximately $15,000 using the Black-Scholes-Merton valuation technique. The total direct costs of approximately $47,800 are recorded as deferred financing costs and are being amortized over the term of the Senior Notes using the effective interest method. Further, the placement agent warrants are classified in stockholders' equity because they achieved all of the requisite conditions for equity classification in accordance with GAAP.

In January and February of 2013 all note holders elected to convert their notes including the Company's Chairman and CEO, resulting in the issuance of 5,271,963 shares of common stock which represents the face value of their respective notes plus accrued but unpaid interest. The Company's Chairman and CEO received 532,260 shares of common stock upon conversion of his note. This will also result in the acceleration of amortization of debt discount of $1,301,000 in the same period.