XML 27 R16.htm IDEA: XBRL DOCUMENT v3.3.1.900
9. Notes Payable to Related Parties
12 Months Ended
Dec. 31, 2015
Notes Payable To Related Parties  
Notes Payable to Related Parties

During March 2011, the Company entered into one unsecured promissory note with a related party (a previous company director) in the amount of $250,000 (the “2011 Related Party Note”). The 2011 Related Party Note had a fixed interest amount of $50,000 and a maturity date of July 31, 2011. On September 20, 2011, the 2011 Related Party Note was amended to include the 2011 Related Party Note plus $52,426 of accrued interest for a total note balance of $302,426. The 2011 Related Party Note has a 6% interest rate and is a monthly installment note with final balloon payment at maturity in September 2014. At the time of the filing of these consolidated financial statements, the Company and the related party had not finalized an extended maturity date, and as such the entire $197,636 2011 Related Party Note balance is included in current portion of notes payable to related parties as of December 31, 2015. As of December 31, 2014, the 2011 Related Party Note was $186,154, all of which is included in current portion of notes payable to related parties.

 

On September 1, 2011, several previous related party notes totaling $370,639 were amended and consolidated (“the 2011 Consolidated Related Party Note”). This note bears interest of 6% and has a maturity date of September 15, 2016. As of December 31, 2014, the 2011 Consolidated Related Party Note balance was $267,569, of which $88,211 is included in current portion of notes payable to related parties. As of December 31, 2015, the 2011 Consolidated Related Party Note balance was $267,569 all of which is included in current portion of notes payable to related parties.

 

As of December 31, 2014, a Company director had an outstanding advance to the Company of $500,000 for short term capital. During the twelve months ended December 31, 2015, in exchange for an additional extension and renewal of the loan the director agreed to an interest penalty of $300,000 and the director further agreed to convert all accrued interest of $460,476 into a new debt agreement due October 1, 2016. As of December 31, 2015, the outstanding balance was $960,476. The entire balance is included in current portion of notes payable to related parties. The debt accrues interest at a rate of 15%.

 

As of December 31, 2014, the Company’s President and Chief Legal Officer had an outstanding advance balance of $70,000 for short term capital. During the twelve months ended December 31, 2015, the President advanced an additional $100,000 in working capital and deferred compensation of an additional $200,000 from the Company and was repaid $25,000. As of December 31, 2015, the outstanding advance balance was $345,000 and is due December 28, 2016. The entire balance is included in current portion of notes payable to related parties. The debt accrues interest at a rate of 15%.

 

As of December 31, 2013, the Company’s CEO and Director of the Board had an outstanding advance balance of $115,000 for short term capital. During the twelve months ended December 31, 2015, the CEO deferred compensation of an additional $400,000 from the Company. As of December 31, 2015, the outstanding advance balance was $515,000 and is due December 28, 2016. The entire balance is included in current portion of notes payable to related parties. The debt accrues interest at a rate of 15%.

 

During the twelve months ended December 31, 2015, the Company redeemed the remaining outstanding shares of Series X Preferred Stock in exchange for promissory notes due on December 28, 2016. The CEO was issued a promissory note from the Company of $209,000. A Company director was issued a promissory note from the Company of $267,771. A related party was issued a promissory note from the Company of $60,000. The entire balance of $537,661 is included in the current portion of notes payable to related parties. The debt accrues with an interest rate of 8%.

 

As of December 31, 2015, the notes payable to related party balance totaled $2,822,452, all of which is included in current portion of notes payable to related parties in the consolidated financial statements. As of December 31, 2014, the notes payable to related party balance totaled $1,138,723, of which $959,365 is included in current portion of notes payable to related parties in the consolidated financial statements.

 

The Company incurred $579,366 and $109,674 of interest expense to directors, officers, and other related parties during the years ended December 31, 2015 and 2014, respectively. Accrued interest due to directors and other related parties totaled $177,724 at December 31, 2015, all of which is included in accrued and other current liabilities. Accrued interest due to directors and other related parties totaled $166,992 at December 31, 2014, all of which is included in accrued and other current liabilities.