| DEBT |
Unsecured, Convertible Debentures
The following tables set forth the components of the Company’s
unsecured, convertible debentures at December 31, 2014:
| |
|
December 31, 2014 |
|
| |
|
|
|
| 7% Convertible debentures |
|
$ |
3,210,000 |
|
| 9% Convertible debentures |
|
|
200,000 |
|
| Loan discounts |
|
|
(410,334 |
) |
| Total convertible debentures, net |
|
|
2,999,666 |
|
| Less: Current portion of convertible debentures, net |
|
|
50,000 |
|
| Noncurrent portion of convertible debentures net |
|
$ |
2,949,666 |
|
The following table summarizes the issuance of all convertible debentures
during the years ended December 31, 2014 and 2013:
| Issue Date |
|
Interest Rate |
|
Face Value |
|
Maturity Date |
|
Conversion Rate to Face Value of Common Shares |
| |
|
|
|
|
|
|
|
|
| 02/11/13 |
|
9.0% |
|
$50,000 |
|
|
02/11/16 |
|
16.7% |
| 08/01/13 |
|
9.0% |
|
$100,000 |
|
|
07/31/16 |
|
16.7% |
| 09/25/13 |
|
9.0% |
|
$50,000 |
|
|
09/24/16 |
|
16.7% |
| 10/22/13 |
|
9.0% |
|
$50,000 |
|
|
10/21/16 |
|
16.7% |
| 11/04/13 |
|
9.0% |
|
$500,000 |
|
|
11/03/16 |
|
16.7% |
| 12/05/13 |
|
7.0% |
|
$50,000 |
|
|
12/04/16 |
|
11.1% |
| 12/16/13 |
|
9.0% |
|
$250,000 |
|
|
12/15/16 |
|
16.7% |
| 12/26/13 |
|
9.0% |
|
$750,000 |
|
|
12/25/16 |
|
16.7% |
| 12/27/13 |
|
7.0% |
|
$50,000 |
|
|
12/26/16 |
|
11.1% |
| 12/27/13 |
|
7.0% |
|
$50,000 |
|
|
12/26/16 |
|
11.1% |
| 01/13/14 |
|
7.0% |
|
$50,000 |
|
|
01/12/17 |
|
14.3% |
| 02/11/14 |
|
9.0% |
|
$250,000 |
|
|
02/10/17 |
|
20.0% |
| 09/24/14 |
|
9.0% |
|
$500,000 |
|
|
09/23/17 |
|
16.7% |
| 10/31/14 |
|
9.0% |
|
$610,000 |
|
|
03/31/16 |
|
18.2% |
| 12/05/14 |
|
9.0% |
|
$100,000 |
|
|
12/04/17 |
|
16.7% |
During the year ended December 31, 2013, the Company privately placed
a series of unsecured, convertible debentures with accredited investors for gross proceeds of $1,900,000. The debentures carry
interest rates ranging between 7% and 9% per annum, payable semiannually in cash, for a three-year terms with fixed conversion
prices ranging from $5.00 to $7.00 per share if converted within the first year of issuance or fixed conversion prices ranging
from $6.00 to $9.00 if converted during the second or third year following issuance. At December 31, 2013, the underlying common
stock to these convertible debentures totaled 330,834 shares.
During the year ended December 31, 2014, the Company privately placed
a series of unsecured, convertible debentures with accredited investors for gross proceeds of $900,000 (of which $300,000 was raised
during the predecessor period of January 1 through April 25, 2014). The debentures carry interest rates ranging between 7% and
9% per annum, payable semiannually in cash, for a three-year terms with fixed conversion prices ranging from $5.00 to $7.00 per
share if converted within the first year of issuance or fixed conversion prices ranging from $6.00 to $9.00 if converted during
the second or third year following issuance.
On October 15, 2014, the Company converted, upon receiving formal
notice from a noteholder, $50,000 in note principal, plus accrued interest, into 10,450 shares of restricted common stock.
On October 31, 2014, the Company issued an unsecured, convertible
debenture for $610,000 to an accredited investor. The debenture carries an interest rate of 9% per annum for a seventeen-month
term with a fixed conversion price of $5.50 per share. The principal and interest are payable in twelve equal installments commencing
April 30, 2015. The investor received 15,000 shares of the Company’s common stock valued at $95,100 as consideration for
entering into the debenture agreement.
On November 10, 2014, the Company repaid $100,000 in principal to
a noteholder upon the convertible security’s maturity.
At December 31, 2014, the underlying common stock to these convertible
debentures totaled 604,561 shares.
All of the convertible promissory debentures issued in 2014 and 2013
were analyzed at the time of their issuance for a beneficial conversion feature. In some instances, the Company concluded that
a beneficial conversion feature existed. The beneficial conversion features were measured using the commitment-date stock price
and were determined to aggregate $524,354. This amount is recorded as a debt discount and is amortized as interest expense over
the term of the related convertible debentures. The debt discount associated with these beneficial conversion features was $410,334
and nil as of December 31, 2014 and December 31, 2013, respectively. The related amortization expense was $105,393 and nil for
the years ended December 31, 2014 and 2013, respectively.
The Company has analyzed the convertible debentures for derivative
accounting consideration and determined that derivative accounting does not apply.
Loans Payable
On September 5, 2014, the Company received $130,000 from a third
party in the form of a demand loan bearing interest at a rate of 9% per annum.
The remaining loans payable were made by several financial institutions
and are due in aggregate monthly installments of $1,950 (including interest ranging from 1.90% through 4.00%). These loans are
collateralized by ESCO’s transportation equipment.
Related Party Loans Payable
On June 10, 2014, ForceField’s executive chairman loaned the
Company $75,000 for an undefined term on an interest free basis. This loan was repaid with the issuance of 15,000 shares of the
Company’s common stock on July 30, 2014.
On October 16, 2014, ForceField’s chief financial officer loaned
the Company $15,000 for an undefined term on an interest free basis. This loan was repaid in full on October 17, 2014.
Senior, Secured Promissory Notes
The following tables set forth the components of the Company’s
senior, secured promissory notes at December 31, 2014:
| |
|
December 31, 2014 |
|
| |
|
|
|
| Promissory notes |
|
$ |
4,330,355 |
|
| Loan discounts |
|
|
(88,518 |
) |
| Total promissory notes, net |
|
|
4,241,837 |
|
| Less: Current portion of convertible debentures, net |
|
|
2,243,358 |
|
| Noncurrent portion of convertible debentures net |
|
$ |
1,998,479 |
|
On October 13, 2014, the Company received $1,000,000 in loan proceeds
from an accredited investor pursuant to the terms of a secured promissory note. The promissory note was due and payable in full
by the Company on December 5, 2014. As consideration for loaning these proceeds to the Company, the investor will receive a $40,000
interest payment along with the principal on the December 5, 2014 maturity date. This loan was secured by 1,000,000 shares of the
Company’s common stock owned by its executive chairman, Richard St Julien. On December 26, 2014, the Company repaid all principal
and accrued interest amounts associated with this promissory note.
On October 17, 2014, the Company issued two secured promissory notes
to the stockholder of ESCO Energy Services Company in connection with the acquisition. The first note totaled $2.075 million, bears
interest at 6.02% per annum and is due in April 17, 2016. The note is collateralized by 687,500 restricted shares of the Company’s
common stock which under no circumstances can become free trading prior to its maturity date. The second note totaled $1.075 million
and was due on November 16, 2014 along with an interest payment of $45,000. At December 31, 2014, all but $255,355 of the principal
balance was repaid. The note is collateralized by all of the assets of ESCO. On April 3, 2015, the Company entered into a note
amendment and security interest termination agreement with the stockholder to amend and extend the original terms (see Note 20
– Subsequent Events).
On December 21, 2014, the Company received $1,000,000 in loan proceeds
from an accredited investor pursuant to the terms of a secured promissory note. The promissory note is due and payable in full
by the Company on March 5, 2015 and is secured by 1,000,000 shares of the Company’s common stock owned by its executive chairman,
Richard St Julien. As consideration for loaning these proceeds to the Company, the investor will receive a $50,000 interest payment
along with the principal on the March 5, 2015 maturity date. On March 31, 2015, the Company agreed to exchange 181,818 shares with
an equal number of common stock purchase warrants in lieu of cash to satisfy a $1.0 million promissory note payment owed to the
noteholder (See Note 20 – Subsequent Events).
Maturities of the Company’s borrowings for each of the next
five years are as follows:
| 2015 |
|
$ |
2,905,499 |
|
| 2016 |
|
$ |
4,083,575 |
|
| 2017 |
|
$ |
904,309 |
|
| 2018 |
|
$ |
- |
|
| 2019 |
|
$ |
- |
|
|
