| Loans Payable | NOTE I –LOANS PAYABLE
The Company’s consolidated notes payable consisted of the
following:
December 31, 2017 December 31,
Note 1 – Monaco 2014 $ 2,800,000 $ 2,800,000
Note 2 – Monaco 2016 1,138,441 1,535,501
Note 3 – MINOSA 14,750,001 14,750,001
Note 4 – Epsilon 1,000,000 5,981,806
Note 5 – SMOM 3,000,000
—
Note 6 – MINOSA 2 4,675,000
—
$ 27,363,442 $ 25,067,308
Note 1 – Monaco 2014
On August 14, 2014, we entered into a Loan Agreement with
Monaco Financial, LLC (“Monaco”), a strategic marketing
partner, pursuant to which Monaco agreed to lend us up to
$10.0 million. The loan was issued in three tranches: (i)
$5.0 million (the “First Tranche”) was advanced
upon execution of the Loan Agreement; (ii) $2.5 million (the
“Second Tranche”) was advanced on October 1, 2014;
and (iii) $2.5 million (the “Third Tranche”) was
advanced on December 1, 2014. The Notes bear interest at a
rate equal to 11% per annum. The Notes also contain an option
whereby Monaco can purchase shares of Oceanica held by Odyssey (the
“Share Purchase Option”) at a purchase price which is
the lower of (a) $3.15 per share or (b) the price per share of
a contemplated equity offering of Oceanica which totals
$1.0 million or more in the aggregate. The share purchase
option was not clearly and closely related to the host debt
agreement and required bifurcation.
On December 10, 2015, these promissory notes were amended as
part of the asset acquisition agreement with Monaco (See NOTE R for
further information). The amendment included the following material
changes: (i) $2.2 million of the indebtedness represented by
the Notes was extinguished, (ii) $5.0 million of the
indebtedness represented by the Notes ceased to bear interest and
is only repayable under certain circumstances from certain sources
of cash, and (iii) the maturity date on the Notes was extended
to December 31, 2017. During March 2016, the maturity date was
further extended to April 1, 2018 and the purchase price of
the Share Purchase Option was re-priced
The outstanding interest-bearing balance of these Notes was
$2.8 million at December 31, 2017 and 2016,
respectively.
Note 2 – Monaco 2016
In March 2016, Monaco agreed to lend us an additional $1,825,000.
These loan proceeds were received in full during the first quarter
of 2016. The indebtedness bears interest at 10.0% percent per year.
All principal and any unpaid interest is payable on April 15,
2018. The current outstanding balance is $1,175,000. The
indebtedness is convertible at any time until the maturity date
into shares of Oceanica held by us at a conversion price of $1.00
per share. Pursuant to this loan and as security for the
indebtedness, Monaco was granted a second priority security
interest in (a) one-half deep-tow
Accounting considerations
ASC 815 generally requires the analysis of embedded terms and
features that have characteristics of derivatives to be evaluated
for bifurcation and separate accounting in instances where their
economic risks and characteristics are not clearly and closely
related to the risks of the host contract. The option to purchase
the OMO Collateral is an embedded feature that is not clearly and
closely related to the host debt agreement and thus requires
bifurcation. Since the option is out of the money, it has no
material fair value as of the inception date or currently. The debt
agreement did not contain any additional embedded terms or features
that have characteristics of derivatives. However, we were required
to consider whether the hybrid contract embodied a beneficial
conversion feature (“BCF”). The calculation of the
effective conversion amount did result in a BCF because the
effective conversion price was less than the market price on the
date of issuance, therefore a BCF of $456,250 was recorded. At
December 31, 2017, a BCF of $36,559 remains. The BCF
represents a debt discount which will be amortized over the life of
the loan. For the twelve months ended December 31, 2017 and
2016, interest expense related to the discount in the amount of
$252,940 and $166,750, respectively, was recorded. For the twelve
months ended December 31, 2017 and 2016, accrued interest in
the amount of $134,527 and $143,774, respectively, was
recorded.
Loan modification (December 2015)
In connection with the Acquisition Agreement entered into with
Monaco on December 10, 2015, Monaco agreed to modify certain
terms of the loans as partial consideration for the purchase of
assets. For the First Tranche ($5,000,000 advanced on
August 14, 2014), Monaco agreed to cease interest as of
December 10, 2015 and reduce the loan balance by (i) the
cash or other value received from the
SS Central
America
On December 10, 2015, the Monaco call option on
$10 million of Oceanica shares held by Odyssey was maintained
for the full amount of the original loan amount and was extended
until December 31, 2017.
As further described in NOTE R, the Acquisition Agreement was
accounted for as a troubled debt restructuring in accordance with
ASC 470-60.
Loan modification (March 2016)
In connection with the $1.825 million loan agreement with
Monaco in March 2016, the existing $2.8 million notes were
modified. Of the combined total indebtedness of Monaco’s Note
1 and Note 2, Monaco can convert this debt into 3,174,603 shares of
Oceanica at a fixed conversion price of $1.00 per share, or
$3,174,603. Any remaining debt in excess of $3,174,603 is not
convertible. Additionally, the modification eliminated
Monaco’s option (“share purchase option”) to
purchase 3,174,603 shares of Oceanica stock at a price of $3.15 per
share. The modification was analyzed under ASC
480 Distinguishing Liabilities from
Equity 470-50-40-10 pre-modification pre-modification
extinguishment. ASC 470-50-40-2
Step 1 pre-modification
Monaco loans Loan one
Forward cash flows:
Principal $ 2,800,000
Interest 559,463
Total forward cash flows $ 3,359,463
Present value of forward cash flows $ 2,554,371
Fair value of equity conversion option 1,063,487
Fair value of debt $ 3,617,858
Significant inputs and results arising from the Binomial Lattice
process are as follows for the conversion option that is classified
in equity after the modification in March 2016:
Underlying price on valuation date $1.25
Contractual conversion rate $1.00
Contractual term to maturity 1.82 Years
Implied expected term to maturity 1.82 Years
Market volatility:
Range of volatilities 96.0% - 154.0%
Equivalent volatilities 120.1%
Risk free rates using zero coupon US Treasury Security rates 0.29% - 0.68%
Equivalent market risk adjusted interest rates 0.52%
Monaco loans Loan one
Forward cash flows:
Face value $ 2,800,000
Fair value 3,617,858
Difference (premium)* $ 817,858
* ASC 470-20-25-13 paid-in
Step 2 pre-modification
Allocation
Derivative liabilities (share purchase options) $ 1,456,825
Monaco Loan (Old Debt) 3,372,844
Monaco Loan (New Debt) (2,800,000 )
APIC (Premium) (817,858 )
Difference to APIC* $ 1,211,811
* The difference between the fair value
of the new debt and the sum of the pre-modification 470-50-40-2
Note 3 – MINOSA
On March 11, 2015, in connection with a Stock Purchase
Agreement, Minera del Norte, S.A. de C.V. (“MINOSA”)
agreed to lend us up to $14.75 million. The entire
$14.75 million was loaned in five advances from March 11
through June 30, 2015. The outstanding indebtedness bears
interest at 8.0% percent per annum. The Promissory Note was amended
on April 10, 2015 and on October 1, 2015 so that, unless
otherwise converted as provided in the Note, the adjusted principal
balance shall be due and payable in full upon written demand by
MINOSA; provided that MINOSA agrees that it shall not demand
payment of the adjusted principal balance earlier than the first to
occur of: (i) 30 days after the date on which
(x) SEMARNAT makes a determination with respect to the current
application for the Manifestacion de Impacto Ambiental relating to
the Don Diego Project, which determination is other than an
approval or (y) Odyssey Marine Enterprises or any of its
affiliates withdraws such application without MINOSA’s prior
written consent; (ii) termination by Odyssey of the Stock
Purchase Agreement, dated March 11, 2015 (the “Purchase
Agreement”), among Odyssey, MINOSA, and Penelope Mining, LLC
(the “Investor”); (iii) the occurrence of an event
of default under the Promissory Note; (iv) December 31, 2015;
or (v) if and only if the Investor shall have terminated the
Purchase Agreement pursuant to Section 8.1(d)(iii) thereof,
March 30, 2016. This debt is classified as short-term debt. In
connection with the loans, we granted MINOSA an option to purchase
our 54% interest in Oceanica for $40.0 million (the
“Oceanica Call Option. As of March 11, 2016, the
Oceanica Call has expired. Completion of the transaction requires
amending the Company’s articles of incorporation to
(a) effect a reverse stock split, which was done on
February 19, 2016, (b) adjusting the Company’s
authorized capitalization, which was also done on February 19,
2016, and (c) establishing a classified board of directors
(collectively, the “Amendments”). The Amendments have
been or will be set forth in certificates of amendment to the
Company’s articles of incorporation filed or to be filed with
the Nevada Secretary of State. As collateral for the loan, we
granted MINOSA a security interest in the Company’s 54%
interest in Oceanica. The outstanding principal balance of this
debt was $14.75 million at December 31, 2017 and
December 31, 2016, respectively. The maturity date of this
note has been amended and matured on March 18, 2017. Per Note
6 MINOSA 2 below, the Minosa Purchase Agreement amended the due
date of this note to a due date which may be no earlier than
December 31, 2017, that is at least 60 days subsequent to
written notice that Minosa intends to demand payment. See Note 6
– MINOSA 2 for further qualifications. During December 2017,
MINOSA transferred this debt to its parent company.
Accounting considerations
We have accounted for this transaction as a financing transaction,
wherein the net proceeds received were allocated to the financial
instruments issued. Prior to making the accounting allocation, we
evaluated for proper classification under ASC
480 Distinguishing Liabilities from
Equity Derivatives and
Hedging Property, Plant and
Equipment
This debt agreement did not contain any embedded terms or features
that have characteristics of derivatives. The Oceanica Call Option
is considered a freestanding financial instrument because it is
both (i) legally detachable and (ii) separately
exercisable. The Oceanica Call Option did not fall under the
guidance of ASC 480. Additionally, it did not meet the definition
of a derivative under ASC 815 because the option has a fixed value
of $40.0 million and does not contain an underlying variable
which is indicative of a derivative. This instrument is considered
an option contract for a sale of an asset. The guidance applied in
this case is ASC 360-20,
Based on the previous conclusions, we allocated the cash proceeds
first to the debt at its present value using a market rate of 15%,
which is management’s estimate of a market rate loan for the
Company, with the residual allocated to the Oceanica Call Option,
as follows:
Tranche 1 Tranche 2 Tranche 3 Tranche 4 Tranche 5 Total
Promissory Note $ 1,932,759 $ 5,826,341 $ 2,924,172 $ 1,960,089 $ 1,723,492 $ 14,366,853
Deferred Income (Oceanica Call Option) 67,241 173,659 75,828 39,911 26,509 383,148
Proceeds $ 2,000,000 $ 6,000,000 $ 3,000,000 $ 2,000,000 $ 1,750,0001 $ 14,750,001
The call option amount of $383,148 represented a debt discount.
This discount has been fully accreted up to face value using the
effective interest method.
Note 4 – Epsilon
On March 18, 2016 we entered into a Note Purchase Agreement
(“Purchase Agreement”) with Epsilon Acquisitions LLC
(“Epsilon”). Pursuant to the Purchase Agreement,
Epsilon loaned us $3.0 million in two installments of
$1.5 million on March 31, 2016 and April 30, 2016.
The indebtedness bears interest at a rate of 10% per annum and was
due on March 18, 2017. We were also responsible for $50,000 of
the lender’s out of pocket costs. This amount is included in
the loan balance. In pledge agreements related to the loans, we
granted security interests to Epsilon in (a) the
54 million cuotas (a unit of ownership under Panamanian law)
of Oceanica Resources S. de R.L. (“Oceanica”) held by
our wholly owned subsidiary, Odyssey Marine Enterprises, Ltd.
(“OME”), (b) all notes and other receivables from
Oceanica and its subsidiary owed to the Odyssey Pledgors, and
(c) all of the outstanding equity in OME. Epsilon has the
right to convert the outstanding indebtedness into shares of our
common stock upon 75 days’ notice to us or upon a merger,
consolidation, third party tender offer, or similar transaction
relating to us at the conversion price of $5.00 per share, which
represents the five-day
Pursuant to the Purchase Agreement (a) we agreed to waive our
rights to terminate the Stock Purchase Agreement in accordance with
the terms thereof until December 31, 2016, and (b) MINOSA
agreed to extend, until March 18, 2017, the maturity date of
the $14.75 million loan extended by MINOSA to OME pursuant to
the Stock Purchase Agreement. The indebtedness may be accelerated
upon the occurrence of specified events of default including
(a) OME’s failure to pay any amount payable on the date
due and payable; (b) OME or we fail to perform or observe any
term, covenant, or agreement in the Purchase Agreement or the
related documents, subject to a five-day
In connection with the execution and delivery of the Purchase
Agreement, we and Epsilon entered into a registration rights
agreement pursuant to which we agreed to register new shares of our
common stock with a formal registration statement with the
Securities and Exchange Commission upon the conversion of the
indebtedness.
Accounting considerations
We have accounted for this transaction as a financing transaction,
wherein the net proceeds received were allocated to the financial
instruments issued. Prior to making the accounting allocation, we
evaluated for proper classification under ASC
480 Distinguishing Liabilities from
Equity Derivatives and
Hedging Property, Plant and
Equipment
This debt agreement did not contain any embedded terms or features
that have characteristics of derivatives. However, we were required
to consider whether the hybrid contract embodied a beneficial
conversion feature (“BCF”). The calculation of the
effective conversion amount did result in a BCF because the
effective conversion price was less than the Company’s stock
price on the date of issuance, therefore a BCF of $96,000 was
recorded. The BCF represents a debt discount which was amortized
over the life of the loan.
Loan modification (October 1, 2016)
On October 1, 2016 Odyssey Marine Enterprises, Ltd.
(“OME”), entered into an Amended and Restated Note
Purchase Agreement (the “Restated Note Purchase
Agreement”) with Epsilon Acquisitions LLC
(“Epsilon”). In connection with the existing
$3.0 million loan agreement, Epsilon agreed to lend an
additional $3.0 million of secured convertible promissory
notes. The convertible promissory notes bear an interest rate of
10.0% per annum and are due and payable on March 18, 2017.
Epsilon has the right to convert all amounts outstanding under the
Restated Note into shares of our common stock upon 75 days’
notice to OME or upon a merger, consolidation, third party tender
offer, or similar transaction relating to us at the applicable
conversion price, which is (a) $5.00 per share with respect to
the $3.0 million already advanced under the Restated Note and
(b) with respect to additional advances under the Restated
Note, the five-day
As an inducement for the issuance of the additional
$3.0 million of promissory notes, we also delivered to Epsilon
a common stock purchase warrant (the “Warrant”)
pursuant to which Epsilon has the right to purchase up to 120,000
shares of our common stock at an exercise price of $3.52 per share,
which exercise price represents the five-day
Accounting considerations for additional tranches
We evaluated for proper classification under ASC
480 Distinguishing Liabilities from
Equity Derivatives and
Hedging Property, Plant and
Equipment
Tranche 3 Tranche 4 Tranche 5
Promissory Note $ 981,796 $ 939,935 $ 1,000,000
Beneficial Conversion Feature (“BCF”)* 18,204 60,065
—
Proceeds $ 1,000,000 $ 1,000,000 $ 1,000,000
A beneficial conversion feature arises when the calculation of the
effective conversion price is less than the Company’s stock
price on the date of issuance. Tranche 5 did not result in a BCF
because the effective conversion price was greater than the
company’s stock price on the date of issuance.
The warrants fair values were calculated using Black-Scholes Merton
(“BSM”). The aggregate fair value of the warrants
totaled $303,712. Since the warrants were issued as an inducement
to Epsilon to issue additional debt, we recorded an inducement
expense of $303,712. For the years of 2017 and 2016, interest
expense related to the discount in the amount of $0 and $32,641,
respectively, was recorded. For the twelve months ended
December 31, 2017 and 2016, accrued interest in the amount of
$299,294 and $259,372, respectively, was recorded.
Term Extension (March 21, 2017)
On March 21, 2017 we entered into an amendment to the Restated
Note Purchase Agreement with Epsilon. In connection with the
existing $6.0 million loan agreement, the adjusted principal
balance is due and payable in full upon the earlier of
(i) written demand by Epsilon or (ii) such time as
Odyssey or the guarantor pays any other indebtedness for borrowed
money prior to its stated maturity date. As such the Company
amortized the notes up to their face value of $6,050,000 and they
are classified as short-term. However, since Epsilon converted the
first $3.0 million into 670,455 of our common shares and
assigned $2.0 million to MINOSA, the current principal
indebtedness at December 31, 2017 is $1.0 million.
Note 5 – SMOM
On May 4, 2017, we entered into a Loan and Security Agreement
(“Loan Agreement”) with SMOM. Pursuant to the Loan
Agreement, SMOM agreed to loan us up to $3.0 million as
evidenced by a convertible promissory note. As a commitment fee, we
assigned the remaining 50% of our Neptune Minerals, LLC receivable
to SMOM. This receivable had zero carrying value on our balance
sheet (See NOTE C). The loan balance at December 31, 2017 is
$3.0 million. The indebtedness bears interest at a rate of 10%
per annum and matures on the second anniversary of this Loan
Agreement. The holder has the option to convert any unpaid
principal and interest into up to 50% of the equity interest held
by Odyssey in Aldama Mining Company, S.de R.L. de C.V. which is a
wholly owned subsidiary of ours. The conversion value of
$1.0 million equates to 10% of the equity interest in Aldama.
If the holder elects to acquire the entire 50% of the equity
interest, but the amount of debt and interest accumulated to be
converted is insufficient to acquire the entire 50% equity
interest, the Holder has to pay the deficiency in cash. As
additional consideration for the loan, the holder has the right to
purchase from Odyssey all or a portion of the equity collateral (up
to the 50% of the equity interest of Aldama) for the option
consideration ($1.0 million for each 10% of equity interests)
during the period that is the later of (i) one year after the
maturity date and (ii) one year after the loan is repaid in
full, the expiration date. The lender may also choose to extend the
expiration date annually by paying $500,000 for each year
extended.
Accounting considerations
We have accounted for this transaction as a financing transaction,
wherein the net proceeds received were allocated to the financial
instruments issued. Prior to making the accounting allocation, we
evaluated for proper classification under ASC
480 Distinguishing Liabilities from
Equity Derivatives and
Hedging Property, Plant and
Equipment
This debt agreement did not contain any embedded terms or features
that have characteristics of derivatives. However, we were required
to consider whether the hybrid contract embodied a beneficial
conversion feature (“BCF”). The calculation of the
effective conversion amount did not result in a BCF because the
effective conversion price was equal to the Company’s stock
price on the date of issuance.
Note 6 – MINOSA 2
On August 10, 2017, we entered into a Note Purchase Agreement
(the “Minosa Purchase Agreement”) with MINOSA. Pursuant
to the Minosa Purchase Agreement, MINOSA whereas MINOSA will loan
Enterprises up to $3.0 million. During 2017, we borrowed
$2.7 million against this facility and Epsilon assigned
$2.0 million of its debt to MINOSA. At December 31, 2017,
the outstanding principal balance, including the Epsilon
assignment, is $4.7 million. The indebtedness is evidenced by
a secured convertible promissory note (the “Minosa
Note”) and bears interest at a rate equal to 10.0% per
annum. Unless otherwise converted as described below, the entire
outstanding principal balance under this Minosa Note and all
accrued interest and fees are due and payable upon written demand
by MINOSA; provided, that MINOSA agreed not make a demand for
payment prior to the earlier of (a) an event of default (as
defined in the Minosa Note) or (b) a date, which may be no
earlier than December 31, 2017, that is at least 60 days
subsequent to written notice that MINOSA intends to demand payment.
MINOSA has not provided any notice they intend to issue a payment
demand notice. We unconditionally and irrevocably guaranteed all of
the obligations under the Minosa Purchase Agreement and the Minosa
Note. MINOSA has the right to convert all amounts outstanding under
the Minosa Note into shares of our common stock upon 75 days’
notice to us or upon a merger, consolidation, third party tender
offer, or similar transaction relating to us at the conversion
price of $4.41 per share. During December 2017, MINOSA
transferred this debt to its parent company.
This debt agreement did not contain any embedded terms or features
that have characteristics of derivatives. However, we were required
to consider whether the hybrid contract embodied a beneficial
conversion feature (“BCF”). The calculation of the
effective conversion amount did result in a BCF because the
effective conversion price was less than the Company’s stock
price on the date of issuance, therefore a BCF of $62,925 was
recorded. As of December 31,2017, all of the BCF has been
accreted to the income statement. The BCF represented a debt
discount that was amortized over the life of the loan.
As previously reported, Epsilon loaned us an aggregate of
$6.0 million pursuant to an amended and restated convertible
promissory Minosa Note, dated as of March 18, 2016, as further
amended and restated on October 1, 2016 (the “Epsilon
Note”). Since then, Epsilon has assigned $2.0 million of
the indebtedness under the Epsilon Note to MINOSA. Along with
Epsilon, we entered into a second amended and restated convertible
promissory note (the “Second AR Epsilon Note”), which
further amends and restates the Epsilon Note. The stated principal
amount of the Second AR Epsilon Note is $1.0 million (which
reflects the outstanding principal balance remaining after giving
effect to Epsilon’s (x) previous assignment of
$2.0 million of the indebtedness under the Epsilon Note to
MINOSA and (y) conversion of $3.0 million of the
indebtedness under the Epsilon Note into shares of our common
stock). The Second AR Epsilon Note further provides that the
outstanding principal balance under the Second AR Epsilon Note and
all accrued interest and fees are due and payable upon written
demand by Epsilon; provided, that Epsilon agreed not make a demand
for payment prior to the earlier of (a) an event of default
(as defined in the Second AR Epsilon Note) or (b) a date,
which may be no earlier than December 31, 2017, that is at
least 60 days subsequent to written notice that MINOSA intends to
demand payment.
Upon the closing of the Minosa Purchase Agreement, along with
MINOSA, and Penelope Mining LLC, an affiliate of Minosa
(“Penelope”), executed and delivered a Second Amended
and Restated Waiver and Consent and Amendment No. 5 to
Promissory Note and Amendment No. 2 to Stock Purchase
Agreement (the “Second AR Waiver”). Pursuant to
the Second AR Waiver, Minosa and Penelope consented to the
transactions contemplated by the Minosa Purchase Agreement and
waived any breach of any representation or warranty and violation
of any covenant in the Stock Purchase Agreement, dated as of
March 11, 2015, as amended April 10, 2015 (the
“SPA”), by and among us, Minosa, and Penelope, arising
out of the Company’s execution and delivery of the Minosa
Purchase Agreement and the consummation of the transactions
contemplated thereby. Pursuant to the Second AR Waiver, we
also waived, and agreed not to exercise our right to terminate the
SPA pursuant to Section 8.1(c)(ii) thereto, both
(a) until after the earlier of (i) July 1, 2018,
(ii) the date that MINOSA fails, refuses, or declines to fund
(or otherwise does not fund) any subsequent loan under the Minosa
Purchase Agreement and (iii) demand is made for repayment of
all or any part of the indebtedness outstanding under the Minosa
Note, the Second AR Epsilon Note, or the Promissory Note, dated as
of March 11, 2015, as amended (the “SPA Note”), in
the principal amount of $14.75 million that was issued by us
to MINOSA under the SPA, and (b) unless on or prior to such
termination, the Notes are paid in full.
The Second AR Waiver (x) further provides that following
any conversion of the indebtedness evidenced by the Minosa Note,
Penelope may elect to reduce its commitment to purchase our
preferred stock under the SPA by the amount of indebtedness
converted by MINOSA and (y) amends the SPA Note to provide
that the outstanding principal balance under the SPA Note and all
accrued interest and fees are due and payable upon written demand
by MINOSA; provided, that Minosa agreed not make a demand for
payment prior to the earlier of (a) an event of default (as
defined in the Minosa Note) or (b) a date, which may be no
earlier than December 31, 2017, that is at least 60 days
subsequent to written notice that Minosa intends to demand
payment.
The obligations under the Minosa Note may be accelerated upon the
occurrence of specified events of default including (a) our
failure to pay any amount payable under the Minosa Note on the date
due and payable; (b) our failure to perform or observe any
term, covenant, or agreement in the Minosa Note or the related
documents, subject to a five-day
Pursuant to second amended and restated pledge agreements (the
“Second AR Pledge Agreements”) entered into by us in
favor of MINOSA, the we pledged and granted security interests to
MINOSA in (a) the 54 million cuotas (a unit of ownership
under Panamanian law) of Oceanica held by us, (b) all notes
and other receivables from Oceanica and its subsidiary owed to us,
and (c) all of the outstanding equity in our wholly owned
subsidiary, Odyssey Marine Enterprises, Ltd.
In connection with the execution and delivery of the Minosa
Purchase Agreement, Odyssey and MINOSA entered into a second
amended and restated registration rights agreement (the
“Second AR Registration Rights Agreement”) pursuant to
which Odyssey agreed to register the offer and sale of the shares
(the “Conversion Shares”) of our common stock issuable
upon the conversion of the indebtedness evidenced by the Minosa
Note. Subject to specified limitations set forth in the Second AR
Registration Rights Agreement, including that we are eligible to
use Form S-3,
Long-Term Obligation Maturities
Total 2018 2019 2020 2021 2022 More than 5
Long term obligations $ 3,000,000 $
— $ 3,000,000 $
— $
— $
— $
—
Operating lease
—
—
—
—
—
—
—
Interest on obligations 402,329
— 402,329
—
—
—
—
Total obligations $ 3,402,329 $
— $ 3,402,329 $
— $
— $
— $
—
Long-term obligations represent the amounts due on our existing
loans as described above. We entered into a three year operating
lease commencing January 2016 for our corporate headquarters with
Monaco Financial, LLC, a related party. This is pursuant to the
acquisition agreement we entered with them on December 10,
2015 (See NOTE R for further information). The operating lease is
cancellable with a nine-month notice. |
