| Long Term Notes Payable, Net |
NOTE 6 – LONG-TERM NOTES PAYABLE,
net
The Company’s notes
payable outstanding were as follows as of:
| |
|
June 30, 2014 |
|
|
December 31, 2013 |
|
| 2008 Unsecured promissory note. Originated on November 12, 2008. Principal of $100,000 with $45,000 to be repaid by June 30, 2009, with $10,000 in monthly payments thereafter until repaid in full. Required a one-time interest payment of $15,000. This note was paid in full on February 7, 2014. |
|
$ |
- |
|
|
$ |
55,000 |
|
| |
|
|
|
|
|
|
|
|
| 2009 Non-mandatorily convertible, unsecured note. Originated on March 31, 2009, principal of $500,000 accrues interest at 8% per annum. Principal and interest were due in full on March 31, 2014 or convertible at the option of the note holder into Series B preferred stock at a rate of $0.45 per share. A warrant to purchase 222,222 shares of preferred Series B stock was issued in conjunction with this note. This note was paid in full on February 7, 2014. |
|
|
- |
|
|
|
500,000 |
|
| |
|
|
|
|
|
|
|
|
| 2013 Bridge Loan. Principal from existing notes in the amount of $3,180,806 (comprised of $2,621,195 in principal outstanding as of December 31, 2012 and $559,611 in new principal issued from January through April 2013) along with accrued interest of $467,438 were converted into a 2013 Bridge Loan along with $4,840,792 of new principal. These notes accrued interest at 10% per annum with outstanding principal and interest due in 2014. These notes converted into common shares as part of the February 7, 2014 reverse acquisition transaction. |
|
|
- |
|
|
|
8,489,036 |
|
| |
|
|
|
|
|
|
|
|
| 2014 Bridge Loan. Originated in January 2014. Principal of $2,076,000 issued in January 2014. These notes accrued interest at 10% per annum with outstanding principal and interest due in 2014. These notes converted into common shares as part of the February 7, 2014 reverse acquisition transaction. |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| Total notes payable |
|
|
- |
|
|
|
9,044,036 |
|
| |
|
|
|
|
|
|
|
|
| Current maturities of long-term, net of discount |
|
|
- |
|
|
|
9,039,444 |
|
| |
|
|
|
|
|
|
|
|
| Discount attributable to current maturities |
|
|
- |
|
|
|
4,592 |
|
| |
|
|
|
|
|
|
|
|
| Total current maturities |
|
|
- |
|
|
|
9,044,036 |
|
| |
|
|
|
|
|
|
|
|
| Long-term notes payable, less current maturities |
|
$ |
- |
|
|
$ |
- |
|
Interest
Interest expense on these
notes was $0 and $112,450, for the three and six-month periods ended June 30, 2014, respectively. Interest expense on these notes
was $136,432 and $249,847, for the three and six-month periods ended June 30, 2013, respectively.
Interest accrued on these
notes as of June 30, 2014 and December 31, 2013, was $0 and $657,092, respectively.
Note conversion
Management tested the conversion
of the 2012 short-term unsecured promissory notes and 2010 to 2012 secured promissory notes to bridge loans in 2013 for potential
extinguishment accounting. Because the fair market value of the notes prior to conversion as compared to the fair market
value of the notes subsequent the conversion was less than a 10% difference, management concluded to apply modification accounting
and are accruing interest based on the new note terms.
Discount
A discount on these notes
of $0 and $4,592, as of June 30, 2014 and December 31, 2013, respectively, was based on the fair value of detachable warrants issued
at the time of funding. This discount is being amortized straight-line over the underlying term of the note. Interest expense of
$0 and $4,592, for the three and six-month periods ended June 30, 2014, respectively, was recognized as amortization of this discount.
Interest expense of $2,669 and $34,813, for the three and six-month periods ended June 30, 2013, respectively, was recognized as
amortization of this discount.
A summary of the debt discount
activity for the six-month period ended June 30, 2014 and year ended December 31, 2013 is as follows:
| Balance January 1, 2013 |
|
$ |
65,173 |
|
| Amortization of debt discount |
|
|
(60,581 |
) |
| Balance December 31, 2013 |
|
|
4,592 |
|
| Amortization of debt discount |
|
|
(4,592 |
) |
| Balance at June 30, 2014 |
|
$ |
- |
|
|