Debt

3 Months Ended

Mar. 31, 2016

Debt [Abstract]

DEBT

NOTE 3 - DEBT

Short-term debt

As of March 31, 2016, and December 31, 2015, the Company had a term loan with a third party financial institution for $124,000, with an outstanding balance of $51,646 and $57,844, respectively. The note is subject to annual interest of 4.5%. The term loan is collateralized by all of the assets of NAC and Conic Systems, Inc. (“Conic”), an entity owned by Vincent Genovese, the Company’s Chief Executive Officer (“CEO”), and a guarantee issued by Mr. Genovese. The Company made repayments on the term loan amounting to $6,198 during the three months ended March 31, 2016.

Debt with related parties

As of March 31, 2016 and December 31, 2015, the Company has an outstanding non-interest bearing loan from Mr. Genovese, its CEO, amounting to $10,500 and $14,500 respectively. The Company also obtained a loan from a family member of Mr. Genovese amounting to $200,000, which is subject to annual interest of 3% and has an outstanding balance of $140,000 as of March 31, 2016 and December 31, 2015. Both loans have no stated maturity dates.

As of both March 31, 2016 and December 31, 2015, the Company has outstanding loans with Conic and a director of the Company amounting to $140,000 and $25,000, respectively. The loan with Conic is non-interest bearing while the loan with the director is subject to annual interest of 12%. Both loans are currently past due.

In January and April 2014, the Company obtained two non-interest bearing loans from a shareholder of the Company, each amounting to $10,000. The loans are currently past due and have an outstanding aggregate balance of $20,000 as of March 31, 2016 and December 31, 2015. 

Convertible debt

A summary of the activity of our convertible notes for the three months ended March 31, 2016, is shown below:

Balance at December 31, 2015	$	521,033
Repayments of convertible debt		(2,329	)
Amortization of debt discount		2,090
Balance at March 31, 2016	$	520,794

On April 29, 2014, we completed a private offering of a 12% Convertible Promissory Note in the principal amount of $375,000 (the "12% Convertible Note") with an institutional investor for total net proceeds to the Company of $365,000, after deducting placement agent fees and other expenses. On September 23, 2015, the 12% Convertible Note was amended and restated to reflect certain modifications, including a modified principal amount of $438,123. As of March 31, 2016, the principal amount outstanding on the 12% Convertible Note was $420,794. In April 2016, the 12% Convertible Note was further amended to extend the maturity date to December 31, 2018, with monthly payments of $5,000, commencing in July 2017. Additionally, the note holder waived voluntary conversion rights through January 1, 2018 and the 12% Convertible Promissory Note was amended to allow prepayment in part or whole at any time without penalty.

On January 8, 2015, we completed a private offering of a 3% Original Issue Discount Convertible Promissory Note in the principal amount of $109,000 (the "January 2015 12% Convertible Note") and 21,800 warrants to purchase shares of the Company's common stock with an accredited investor, for total net proceeds to us of $91,000 after deducting placement agent fees and expenses. The January 2015 12% Convertible Note was amended and restated to modify the aggregate principal amount to $100,000.  As of March 31, 2016, the principal amount outstanding on the January 2015 12% Convertible Note was $100,000. In April 2016, the January 2015 12% Convertible Note was further amended to extend the maturity date to December 8, 2018, with monthly payments of $1,000, commencing in July 2016. Additionally, the note holder waived voluntary conversion rights through January 1, 2018 and the January 2015 12% Convertible Note was amended to allow prepayment in part or whole at any time without penalty.