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Related Party Convertible Notes Payable
6 Months Ended
Jun. 30, 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 June 30, 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 $59,121 and $42,179 at June 30, 2015 and December 31, 2014, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three and six months ended June 30, 2015 was $8,601and $16,942, respectively. Interest expense for the three and six months ended June 30, 2014 was $7,946 and $15,652, 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 June 30, 2015 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 $140,772 and $97,900 at June 30, 2015 and December 31, 2014, respectively, and was included in Accounts Payable and Accrued Expenses. Interest expense for the three and six months ended June 30, 2015 was $22,020 and $42,873, respectively. Interest expense for the three and six months ended June 30, 2014 was $18,465 and $35,952, 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.