Annual report pursuant to Section 13 and 15(d)

Long-Term Debt

v3.3.1.900
Long-Term Debt
12 Months Ended
Dec. 31, 2015
Debt Disclosure [Abstract]  
Long-Term Debt
Note 10 — Long-Term Debt
 
Long-term debt consisted of the following:
 
 
 
December 31,
 
December 31,
 
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Note payable for research and development equipment. The principal is subject to a fixed semi-annual repayment schedule commencing October 31, 2013 over 48 months. The note carries a 0% interest rate.
 
$
59,917
 
$
186,131
 
The note carries a 0% interest, but imputed interest has been accrued based on a 12% discount rate and is reflected as a reduction in the principal.
 
 
(21,085)
 
 
(46,399)
 
Note payable for which the principal and interest is subject to a fixed blended repayment schedule of 36 months, commencing July 15, 2013. The loan bears interest at 12% per year and is secured by a subordinated position in all the assets of the Company.
 
 
16,958
 
 
50,874
 
Convertible, Senior Secured Notes payable. The principal is due June 3, 2017 and no principal payments are required prior to maturity. The notes carry a 5% interest, payable upon the note’s maturity. Both the interest plus accrued interest is convertible into shares of the Company’s common shares at $2.25, subject to normal adjustments. The notes are secured by a first security position in all the assets of the Company. Most of the notes are held by existing stockholders of the Company.
 
 
1,915,155
 
 
2,375,000
 
Convertible, Senior Secured Notes issued on June 3, 2014 Debt Issuance Costs of $139,340, net of accumulated amortization. The estimated aggregate annual amortization expense for each of the next fiscal years until maturity is approximately $46,000 and approximately $20,000 in the following fiscal year.
 
 
(66,074)
 
 
(112,521)
 
Unamortized debt discount related to derivative liability associated with above notes’ conversion price that is subject to adjustment in the event of subsequent equity sales at a lower purchase price (subject to certain exceptions). Upon issuance on June 3, 2014 the discount was $1,938,988 which is being amortized as interest expense over the life of the loan or sooner if the related debt is converted.
 
 
(621,531)
 
 
(1,348,185)
 
 
 
 
 
 
 
 
 
 
 
$
1,283,340
 
$
1,104,900
 
Less: Amount Due Within One Year
 
 
(55,790)
 
 
(128,425)
 
 
 
 
 
 
 
 
 
Amount Due After One Year
 
$
1,227,550
 
$
976,475
 
 
The calendar year aggregate maturities for all long-term borrowings exclusive of discounts as of December 31, 2015 are as follows:
 
Total Aggregate Maturity For Period
 
Amounts
 
 
 
 
 
2016
 
$
76,875
 
2017
 
 
1,915,155
 
Total Required Principal Payments Exclusive of Debt Discounts
 
 
1,992,030
 
Total Unamortized Debt Discounts and Deferred Costs
 
 
(708,690)
 
 
 
 
 
 
Total Net Long-Term Borrowings as of December 31, 2015
 
$
1,283,340
 
 
On June 3, 2014, we entered into and closed a securities purchase agreement (the “June 2014 Purchase Agreement”) with various accredited investors (the “June 2014 Investors”) pursuant to which we issued and sold to the June 2014 Investors a total of $3,000,000 principal amount of 5% Senior Secured Convertible Notes (the “June 2014 Notes”). The Company granted the June 2014 Investors a first priority security interest in all of the present and future assets of the Company and its subsidiaries, including the equity interests of its subsidiaries. There are no scheduled payments on the June 2014 Notes, which are due on June 3, 2017, prior to maturity. Interest on the June 2014 Notes accrues at the rate of 5% per year, compounded annually, and is payable at maturity in cash, or (provided certain conditions are met) in shares of common stock valued at the then effective conversion price. The June 2014 Notes are convertible into common stock at an initial conversion price of $2.25 per share, subject to adjustment in the event of stock splits, stock dividends, and similar transactions, and, and under their initial terms, in the event of subsequent sales of common stock or securities convertible or exercisable for common stock, at a price per share lower than the then effective conversion price, subject to certain exceptions. The Company is not permitted to prepay any portion of the principal amount of the June 2014 Notes without the prior written consent of the June 2014 Investors unless certain conditions are met.
 
Pursuant to a registration rights agreement, dated June 3, 2014, between the Company and the June 2014 Investors, the Company agreed to file a registration statement, relating to the resale of common stock issuable upon conversion of the June 2014 Notes and payable as interest on the June 2014 Notes. The Company filed such registration statement on July 2, 2014, and the registration statement was declared effective by the Securities and Exchange Commission on July 10, 2014.
 
Of these June 2014 Notes, $459,845 were converted into 204,376 shares of common stock during the year ended December 31, 2015. And $625,000 of these June 2014 Notes were converted into 277,000 shares of common stock during the year ended December 31, 2014.
 
$12,655 of accrued interest on these Notes were converted into 5,624 shares of common stock during the year ended December 31, 2015. No interest was converted during the year ended December 31, 2014.