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Related Party Convertible Notes Payable
3 Months Ended
Mar. 31, 2015
Related Party Transactions [Abstract]  
Related Party Convertible Notes Payable

NOTE 4 — Related Party Convertible Notes Payable

 

Short Term Related Party Convertible Notes Payable

Short term related party convertible notes payable at March 31, 2015 and December 31, 2014 were $380,696. The notes were issued on September 4, 2013 to officers and directors of the Company and mature on September 4, 2017. The notes have an interest rate of 8% per annum that compounds quarterly, and contain a holder call provision that became effective on September 4, 2014. Accrued interest convertible into common stock was $50,520 and $42,179 at March 31, 2015 and December 31, 2014, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three months ended March 31, 2015 and 2014 was $8,342 and $8,200, respectively. The notes and accrued interest are convertible into common stock at the option of the holder at $2.44 per share as long as warrants issued on November 19, 2010 are outstanding (warrants expire May 20, 2016) or at $1.25 per share. The convertible notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with the Company’s bank.

 

Long Term Related Party Convertible Notes Payable

Long term related party convertible notes payable at March 31, 2014 and December 31, 2014 were $371,929. The notes were issued on September 4, 2013 to the Company’s Chairman and mature on September 4, 2017. The notes have an interest rate of 18% per annum that compounds quarterly. Accrued interest was $118,752 and $97,900 at March 31, 2015 and December 31, 2014, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three months ended March 31, 2015 and 2014 was $20,853 and $17,486, respectively. The notes and accrued interest are convertible into common stock at the option of the holder at $2.44 per share as long as warrants issued on November 19, 2010 are outstanding (warrants expire May 20, 2016) or at $1.25 per share. The convertible notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with the Company’s bank.