| Note 8 -notes Payable | NOTE 8 NOTES PAYABLE Note Holder Balance September 30, 2015 Unamortized Original Issue Discount Balance, net of Discount September 30, 2015 Typenex Unsecured Short Term $ 245,000 $ (13,989) $ 231,011 Iliad Unsecured Short Term 245,000 (21,931) 223,070 B of I Bank 67,652 - 67,652 The Hartford - - - Capital Premium 42,843 - 42,843 AFCO Insurance 84,560 - 84,560 Bank of the West - short term portion 7,211 - 7,211 Total Short Term Notes Payable $ 692,266 $ (35,919) $ 656,347 Bank of the West - long term $ 27,698 $ - $ 27,698 Total Long Term Notes Payable $ 27,698 $ - $ 27,698 Bank of the West On December 29, 2014, Kyle Winther, the Companys CEO, entered into a vehicle financing agreement with the Bank of the West. Pursuant to the agreement, the amount financed was $39,275, payable in 48 monthly payments plus accrued interest at a rate of 3.9%. In January 2015, the Company agreed to assume the payments on this loan and capitalized the vehicle. As of September 30, 2015 and June 30, 2015 the outstanding balance was $34,909 and $36,400, respectively, with $7,211 classified as short term and $27,698 and $29,189, respectively, classified as long term. Facilities with B of I Federal Bank On January 2, 2015, the Company entered into a Business Loan and Security Agreement with B of I Federal Bank (the Bank). Pursuant to the agreement, the Company borrowed $ 200,000 from the Bank and received net proceeds of $ 195,000 USD after deducting an origination fee of $ 5,000 . The loan was payable in 147 payments of $ 1,728 due each business day beginning on and after January 5, 2015, with the initial total repayment amount (subject to certain exceptions) being equal to $254,000 . On June 2, 2015, the Company entered into a new Business Loan and Security Agreement with the Bank. Pursuant to the agreement, the Company borrowed $ 175,000 from the Bank and received net proceeds of $ 104,071 after deducting an origination fee of $ 1,875 and the repayment of $69,054 in full satisfaction of the Companys remaining obligations under that certain Business Loan and Security Agreement entered into with the Bank on January 2, 2015. The new loan is payable in 126 payments of $ 1,708.33 due each business day beginning on June 3, 2015, with the total repayment amount (subject to certain exceptions) being equal to $215,249.58 (the Total Repayment Amount). As of June 30, 2015 the outstanding balance was $153,655. The new loan may be prepaid in whole by the Company at any time by paying the Bank an amount equal to the Total Repayment Amount (subject to certain fees) less (i) the amount of any loan payments made prior to such prepayment and (ii) the product of 0.25 and the aggregate amount of unpaid interest remaining on the loan as of the prepayment date. The new loan is secured by all personal property of the Company and is also personally guaranteed by Lori Winther, the Companys Chief Financial Officer and a director of the Company, Kyle Winther, the Companys Chief Executive Officer and a director of the Company, and Gary Perlingos, the Companys President and a director of the Company. If an event of default occurs under the agreement, all obligations owing by the Company to the Bank under the agreement will, at the Banks election, become immediately due and payable and the Bank may exercise its rights as a secured creditor. Typenex Co-Investment Note On June 4, 2015, the Company entered into a Note Purchase Agreement (the Purchase Agreement) with Typenex Co-Investment, LLC, a Utah limited liability company, pursuant to which the Company concurrently issued to the investor an unsecured non-convertible Promissory Note in a principal amount of $ 245,000 (the June Note). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the investors legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction. The original issue discount was recorded as debt discount and amortized to interest expense over the life of the note. In consideration for the June Note, the investor paid an aggregate cash purchase price of $200,000, computed as follows: $245,000 original principal balance, less the original issue discount of $40,000, and less the transaction costs. The June Note matures on December 4, 2015. The Company may prepay all or a portion of the amount owed earlier than it is due without penalty. As of September 30, 2015 and June 30, 2015 the outstanding balance of the June Note was $245,000. Interest does not accrue on the unpaid principal balance of the June Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the June Note will bear interest at the lesser of the rate of 18% per annum or the maximum rate permitted by applicable law. In addition, if an event of default occurs under the June Note, the investor may declare all unpaid principal, plus all accrued interest and other amounts due under the June Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the June Note as of the date of the applicable event of default, plus all interest, fees and charges that may accrue on such outstanding balance thereafter. The Company paid MSC-BD, LLC $16,000 as a finders fee (equal to 8% of the net proceeds) in connection with financing from the investor. Iliad Co-Investment Note On August 12, 2015, the Company entered into a Note Purchase Agreement (the Purchase Agreement) with Iliad Research & Trading, L.P, a Utah limited liability partnership, pursuant to which the Company concurrently issued to the investor an unsecured non-convertible Promissory Note in a principal amount of $245,000 (the August Note). The principal amount includes an original issue discount of $40,000 plus an additional $5,000 to cover the investors legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the transaction. In consideration for the August Note, the investor paid an aggregate cash purchase price of $200,000, computed as follows: $245,000 original principal balance, less the original issue discount of $40,000, and less the transaction costs. The August Note matures on February 12, 2016. The Company may prepay all or a portion of the amount owed earlier than it is due without penalty. The original issue discount and issuance costs for both the June Note and the August Note were recorded as debt discount and amortized to interest expense over the life of the notes. As of September 30, 2015 and June 30, 2015 the outstanding balance of the August Note was $245,000 and zero, respectively. Interest does not accrue on the unpaid principal balance of the August Note unless an event of default occurs. Upon the occurrence of an event of default, the outstanding balance of the August Note will bear interest at the lesser of the rate of 18% per annum or the maximum rate permitted by applicable law. In addition, if an event of default occurs under the August Note, the investor may declare all unpaid principal, plus all accrued interest and other amounts due under the August Note to be immediately due and payable at an amount equal to 115% of the outstanding balance of the August Note as of the date of the applicable event of default, plus all interest, fees and charges that may accrue on such outstanding balance thereafter. Other short term facilities Effective May 29, 2015, the Company entered into an Agreement to finance its annual Workers Compensation insurance coverage. The insurance coverage is provided through The Hartford. The amount of the policy is $18,871 with $ 18,871 being financed at 2.2% over 12 months with an initial payment of $4,425 and 10 monthly payments of $1,444. The Company cancelled the policy with the Hartford Group and started the new policy as of October 1, 2015. At September 30, 2015 and June 30, 2015, the premium obligation due under the Agreement was zero and $ 13,001 and $ 13,001 , respectively. Effective July 10, 2014, the Company entered into an Agreement to finance its annual General Liability insurance coverage. The insurance coverage is provided through Lloyds of London. The amount of the policy is $52,359 with $ 43,953 being financed at 11% over 10 months with a monthly payment of $4,620. At June 30, 2015, the remaining premium obligation due under the Agreement was $ 0 . Effective July 10, 2015 the Company entered into a new agreement to finance its General Liability insurance coverage. The amount of the policy is $70,848 with $ 53,159 financed over 10 months at 9% interest with a monthly payment of $5,538. At September 30, 2015, the remaining premium obligation is $ 42,843 As of August 22, 2015, the Company entered into an insurance contract with AFCO for Directors and Officers insurance coverage. The amount of the policy is $129,000 with $ 93,750 being financed at 5.3% over 10 months with a monthly payment of $9,604. At September 30, 2015, the remaining balance is $ 84,560 . In the quarter ended September 30, 2015, the Company paid $ 17,500 in connection with the negotiation of a potential financing transaction which amount is included in deferred finance costs as of September 30, 2015 (See Note 10). Finance fees for the three months ended September 30, 2015 and 2014 were $ 9,765 and $ 0 , respectively. |
