6. Long-term Debt and Capital Lease Obligations

Capital Leases

Our capital lease obligations are included within “Deferred revenue and other current liabilities” and “Other long-term liabilities” in our consolidated balance sheets.

At December 31, 2015 and 2014, total capital lease obligations outstanding consisted of the following:

	As of December 31,
	2015			2014
Capital lease obligations, imputed interest of 2.65% to 4.87%, with monthly payments of $10,508.37 through November 2020, secured by computer, telephone and office equipment	$	402,170		$	47,250
Total		402,170			47,250
Less: current maturities		(112,125	)		(22,853	)
Long-term portion	$	290,045		$	24,397

The amount of interest expense related to our capital leases for the years ended December 31, 2015 and 2014 was $4,080 and $2,406, respectively. The following table summarizes future maturities of our capital lease obligations, as of December 31, 2015:

Year Ending December 31,	Amount
2016	$	122,375
2017		103,703
2018		87,744
2019		60,015
2020		55,014
Total minimum lease payments		428,851
Less: amount representing interest		(26,681	)
Present value of net minimum lease payments		402,170
Less: current maturities		(112,125	)
Non-current maturities	$	290,045

Convertible Secured Promissory Notes – Quest Acquisition

In connection with our acquisition of Quest from Quest Resource Group LLC (“QRG”) on July 16, 2013, we issued convertible secured promissory notes with a total principal amount of $22,000,000 to the owners of QRG who were related parties: the former Chief Executive Officer of Quest and the former President of Quest. After the close of the transaction, the Chief Executive Officer of Quest became the President, Chief Executive Officer, and a member of the Board of Directors of our company until his resignation in October 2015, and the former president of Quest became a member of the Board of Directors of our company. The convertible secured promissory notes (collectively, the “Sellers Notes”) were each secured by a first-priority security interest in a 25% membership interest held by Earth911 in Quest (comprising a total of 50% of the membership interests of Quest), as set forth in security and membership interest pledge agreements, by and between Earth911 and the sellers. The Sellers Notes accrued interest at a rate of 7% per annum and were payable on a monthly basis on the 5^th day of the month beginning on September 5, 2013. The principal amount was due and payable in one installment on July 16, 2016.

The Sellers Notes were convertible at any time, in the sole discretion of the holders, into shares of our common stock at a price of $2.00 per share. In addition, the Sellers Notes were convertible, in our sole discretion, into shares of our common stock at a price of $2.00 per share at any time after (i) the two year anniversary of the Notes, (ii) the principal amount of each Sellers Note had been paid down by $5,000,000 as a result of the first capital raise, (iii) our common stock traded on the Nasdaq Stock Market, the New York Stock Exchange, or NYSE MKT, and (iv) our common stock traded at four times the $2.00 conversion price, as adjusted for any stock splits, reverse stock splits, or both. Based on our share price at the time we entered into the Sellers Notes, we recognized a beneficial conversion feature (“BCF”) of $5,500,000 and discounted the Sellers Notes.

On September 24, 2014, we repaid $11,000,000 of the Sellers Notes using proceeds from our public offering. Additionally, the holders converted the remaining $11,000,000 of Sellers Notes, plus accrued interest through September 24, 2014 of $101,260, into 5,550,630 shares of our common stock. In accordance with FASB ASC Topic 740-20, Debt with Conversion and Other Options, for the portion of the Sellers Notes retired through conversion to our common stock, the remaining unamortized BCF of $1,658,531 at the time of conversion is reflected as “Interest expense” in our consolidated statement of operations. Additionally, for the portion of the Sellers Notes repaid in cash, we did not allocate the consideration paid to the BCF, as we determined the intrinsic value was zero as of the extinguishment date, and we recorded the $1,658,531 difference between the carrying amount of the remaining Sellers Notes and the consideration paid as “Loss on extinguishment of debt” in our consolidated statement of operations. Therefore, as of December 31, 2014, the unamortized discount on the Sellers Notes was nil. The amount of interest expense related to the Sellers Notes for the year ended December 31, 2014 was $1,126,521. The amount of interest expense related to the amortization of the discount on the Sellers Notes for the year ended December 31, 2014 was $2,998,403. There was no comparable expense for the year ended December 31, 2015.