The following events occurred subsequent
to June 30, 2015:
On July 12, 2015, the Company was required
to pay $18,000 in interest per the terms of a $400,000 convertible note dated January 12, 2015. The Company failed to make this
payment. On July 27, 2015, the Company received a notice of default. The interest rate on the convertible note increased from 9.0%
to 15.0% per annum as a result of the default and the noteholder is entitled to $20,000 in legal fees. The noteholder advised the
Company that it reserves any and all rights and remedies to protect its interests under the terms of the convertible note.
On July 21, 2015, the Company and ALD entered
into Amendment No. 3 (the “Amendment”) with the sellers representative of ALD (the “Sellers”) related to
a past due principal and interest payment of $1,062,688, plus $50,000 in legal fees due to the Sellers and their legal counsel.
Under the terms of the Amendment, the Sellers agreed to discontinue its collection and collateral foreclosure efforts against the
Company and restructure the maturity dates of the obligation in return for the following payments from the Company:
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A payment of $650,000 by the Company against the past due loan balance of $1,062,688. |
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A payment of $50,000 by the Company for legal fees incurred by the Sellers. |
Going forward, the Company agreed to pay monthly
installments of $25,000 against the remaining principal and interest balance of $412,688 due to the Sellers. The outstanding obligation
will accrue interest at 5% per annum. Under the Amendment, the Seller, among other terms, retained a security interest in all of
the assets of ALD until the remaining obligation is fully satisfied. The above description of the Amendment is a summary description
only and is qualified in its entirety. It should be read in connection with the Amendment which is attached as Exhibit 10.1 to
the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2015.
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