| Notes Payable |
The Company
and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At March 31, 2016 and December 31,
2015, notes payable consisted of the following:
Notes
Payable – Third Parties
| |
|
March
31, 2016 |
|
| |
|
Face Value |
|
|
Unamortized |
|
|
Fair Value of |
|
|
Net Value |
|
| |
|
of Note |
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|
Discount |
|
|
Derivatives |
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|
of Note |
|
| Loan payable under prepaid forward purchase contract
in the amount of $5,000,000, at 20% interest, with no payments of interest or principal through March 30, 2017. All outstanding
amounts are due March 30, 2017. |
|
$ |
5,000,000 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
5,000,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to TCA Global Master Fund, LP in the amount of $3,000,000,
at 16% interest, with interest only payments monthly through September 11, 2016. Principal and interest payments are due monthly
from October 11, 2016 through September 11, 2017. |
|
|
3,000,000 |
|
|
|
(305,188 |
) |
|
|
130,849 |
|
|
|
2,825,661 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to CommerceNet in the amount of $250,000 at 1.06% interest,
increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July 12, 2017. |
|
|
170,806 |
|
|
|
– |
|
|
|
– |
|
|
|
170,806 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to Jay Tenebaum in the amount of $250,000 at 1.06%
interest, increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July
12, 2017. |
|
|
170,806 |
|
|
|
– |
|
|
|
– |
|
|
|
170,806 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
8,341,612 |
|
|
$ |
(305,188 |
) |
|
$ |
130,849 |
|
|
|
8,167,273 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,269,031 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes payable, net of
current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,898,242 |
|
| |
|
December
31, 2015 |
|
| |
|
Face Value |
|
|
Unamortized |
|
|
Fair Value of |
|
|
Net Value |
|
| |
|
of Note |
|
|
Discount |
|
|
Derivatives |
|
|
of Note |
|
| Loan payable to former shareholder of Epinex Diagnostics
Laboratories, Inc. in the amount of $400,000, at 0% interest, with principal payments of $100,000 due in periodic installments
from November 26, 2014 through February 26, 2016. Amount recorded is net of imputed discount of $1,775 at December 31, 2015. |
|
$ |
100,000 |
|
|
$ |
(1,775 |
) |
|
$ |
– |
|
|
$ |
98,225 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to TCA Global Master Fund, LP in the amount of $3,000,000,
at 16% interest, with interest only payments monthly through September 11, 2016. Principal and interest payments are due monthly
from October 11, 2016 through September 11, 2017. |
|
|
3,000,000 |
|
|
|
(453,025 |
) |
|
|
186,117 |
|
|
|
2,733,092 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to CommerceNet in the amount of $250,000 at 1.06% interest,
increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July 12, 2017. |
|
|
170,806 |
|
|
|
– |
|
|
|
– |
|
|
|
170,806 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to Jay Tenebaum in the amount of $250,000 at 1.06%
interest, increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July
12, 2017. |
|
|
170,806 |
|
|
|
– |
|
|
|
– |
|
|
|
170,806 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
3,441,612 |
|
|
$ |
(454,800 |
) |
|
$ |
186,117 |
|
|
|
3,172,929 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(269,031 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes payable, net of
current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,903,898 |
|
Notes Payable – Related
Parties
| |
|
March
31, 2016 |
|
| |
|
Face Value |
|
|
Unamortized |
|
|
Fair Value of |
|
|
Net Value |
|
| |
|
of Note |
|
|
Discount |
|
|
Derivatives |
|
|
of Note |
|
| Convertible debenture dated December 31, 2014 in the
amount of $3,000,000 which bears interest at 10% and is due December 31, 2016. The note provides the lender, D&D Funding
II, LLC, the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as
defined in the note agreement) for the ten consecutive trading days prior to the conversion date. |
|
$ |
3,000,000 |
|
|
$ |
(1,588,495 |
) |
|
$ |
2,263,237 |
|
|
$ |
3,674,742 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to Alcimede, LLC in the amount of $3,000,000, at 6%
interest, with one payment of $3,000,000, plus interest, due on February 2, 2017. (On June 29, 2015, Alcimede exercised options
to purchase 1,000,000 shares for $2,500,000, which reduced the loan.) |
|
$ |
500,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
500,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current portion of notes payable, related
party |
|
$ |
3,500,000 |
|
|
$ |
(1,588,495 |
) |
|
$ |
2,263,237 |
|
|
$ |
4,174,742 |
|
| |
|
December
31, 2015 |
|
| |
|
Face Value |
|
|
Unamortized |
|
|
Fair Value of |
|
|
Net Value |
|
| |
|
of Note |
|
|
Discount |
|
|
Derivatives |
|
|
of Note |
|
| Convertible debenture dated December 31, 2014 in the
amount of $3,000,000 which bears interest at 10% and is due December 31, 2016. The note provides the lender, D&D Funding
II, LLC, the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as
defined in the note agreement) for the ten consecutive trading days prior to the conversion date. |
|
$ |
3,000,000 |
|
|
$ |
(2,236,112 |
) |
|
$ |
2,270,000 |
|
|
$ |
3,033,888 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to Alcimede, LLC in the amount of $3,000,000, at 6%
interest, with one payment of $3,000,000, plus interest, due on February 2, 2016. (On June 29, 2015, Alcimede exercised options
to purchase 1,000,000 shares for $2,500,000, which reduced the loan.) |
|
$ |
500,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
500,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan payable to Christopher Diamantis in the amount of $1,600,000.
One payment of $1,600,000 due January 7, 2016 plus $100,000 of interest. |
|
$ |
1,600,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
1,600,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current portion of notes payable, related
party |
|
$ |
5,100,000 |
|
|
$ |
(2,236,112 |
) |
|
$ |
2,270,000 |
|
|
$ |
5,133,888 |
|
Convertible
Debenture Dated December 31, 2014
On December 31,
2014, the Company borrowed $3,000,000 from D&D Funding II, LLC (“D&D”), Christopher Diamantis, a director
of the Company, is the manager and 50% owner of D&D. In January 2016, the Company temporarily repaid $3,000,000 of the amounts
due under the D&D note. In addition to the principal amount, the Company paid $300,000 in cash for interest for 2015. In March
2016, the Company re-borrowed 100% of the principal amount repaid in January 2016. This note is convertible into the Company’s
Common Stock at a 25% discount to the trailing ten day average closing price at any time prior to the repayment. In the event
of conversion, the holder of the note is also entitled to receive a number of warrants to purchase the Company’s Common
Stock equal to the number of shares issued upon conversion with exercise prices equal to the trailing ten day average closing
price of our Common Stock. These two features are derivative instruments that are re-valued quarterly and are reflected in the
table above.
Prepaid
Forward Purchase Contract
On March 31,
2016, the Company entered into an agreement to pledge certain of its accounts receivable as collateral against a prepaid forward
purchase contract. The receivables had an estimated collectable value of $8,700,000 and have been adjusted down to approximately
$4,300,000 in our books and records. The consideration received was $5,000,000. In exchange for the consideration received, the
counterparty received the right to: (i) a 20% per annum investment return from the Company on the consideration, with a minimum
repayment term of six months and minimum return of $500,000, (ii) all payments recovered from the accounts receivable up to $5,250,000,
if paid in full within six months, or $5,500,000, if not paid in full within six months, and (iii) 20% of all payments of the
accounts receivable in excess of amounts received in (i) and (ii). On March 31, 2017, to the extent that the counterparty
has not been paid $6,000,000, the Company is required to pay the difference. Christopher Diamantis, a director of the Company,
guaranteed the Company's payment obligation of up to $6,000,000. For providing the guarantee, and to the extent that the counterparty
receives amounts payable under clause (ii) above exceeding $5,000,000, Mr. Diamantis will be paid a fee by the counterparty
equal to the amount by which the amount received under clause (ii) above exceeds $5,000,000 ($250,000 or $500,000, depending on
the timing of payment).
|