Note 4 - Related Party Debt Agreements |
3 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Notes to Financial Statements | |
| Related Party Debt Agreement Disclosure [Text Block] |
NOTE 4 - RELATED PARTY DEBT AGREEMENTSEsenjay Unrestricted Line Of Credit Between October 2011 and September 2012, the Company entered into three debt agreements with Esenjay Investments, LLC (“Esenjay”). Esenjay is deemed to be a related party as Mr. Michael Johnson, the beneficial owner and director of Esenjay is a current member of our board of directors and a major shareholder of the Company (owning approximately
64% of our outstanding common shares as of September 30, 2017). The three debt agreements consisted of a Bridge Loan Promissory Note, a Secondary Revolving Promissory Note and an Unrestricted Line of Credit (collectively, the “Loan Agreements”). On December 31, 2015, the Bridge Loan Promissory Note and the Secondary Revolving Promissory Note expired leaving the Unrestricted Line of Credit, available for future draws. The Unrestricted Line of Credit has a maximum borrowing amount of $10,000,000, is convertible at a rate of $0.60 per share, bears interest at 8% per annum and matures on January 31, 2019. Advances under the Unrestricted Line of Credit are subject to Esenjay's approval.
The outstanding principal balance of the Unrestricted Line of Credit as of September 30, 2017 was $6,680,000, convertible into 11,133,333 shares of common stock, resulting in a remaining $3,320,000 available for future draws under this agreement, subject to lender’s approval. During the
three months ended September 30, 2017 and 2016, the Company recorded approximately $121,000 and $16,000, respectively of interest expense in the accompanying condensed consolidated statements of operations related to the Unrestricted Line of Credit. Subsequent to September 30, 2017, we have borrowed an additional $2,585,000 under the credit facility (see Note 9 ). Shareholder Convertible Promissory Note On
April 27, 2017, we formalized an oral agreement for advances totaling $500,000, received from a shareholder (“Shareholder”) into a written Convertible Promissory Note (the “Convertible Note”). Borrowings under the Convertible Note accrue interest at 12% per annum, with all unpaid principal and accrued interest due and payable on October 27, 2018. In addition, at any time commencing on or after the date that is six (6 ) months from the issue date, at the election of Shareholder, all or any portion of the outstanding principal, accrued but unpaid interest and/or late charges under the Convertible Note may be converted into shares of the Company’s common stock at a conversion price of
$1.20 per share; provided, however, the Shareholder shall not have the right to convert any portion of the Convertible Note to the extent that the Shareholder would beneficially own in excess of 5% of the total number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion of the Convertible Note. During the three months ended September 30, 2017, we recorded approximately $15,000 of interest expense in the accompanying condensed consolidated statements of operations related to the Convertible Note. |