XML 32 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
Note 11 - Related Party Transactions
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
NOTE
1
1
:             
RELATED PARTY TRANSACTIONS
 
On
April
1,
2015
the Company issued a promissory note in the amount of
$20,000
to our Chairman and Chief Technology Officer, Randall G. Smith
(“Mr. Smith”), in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of
12%
and has a maturity date of
April
1,
2018.
The note was repaid in full on
December
14,
2016.
 
On
April
30,
2015,
the Company and Mr. Johnson extended the maturity date of
$25,000
of convertible debentures to our Chief Operating Officer and President, Stephen E. Johnson, originally issued in
December
2008.
The debentures carry an interest rate of
12%
and have a maturity date of
April
1,
2018.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2018.
The convertible debentures were repaid in full on
December
14,
2016.
 
On
May
1,
2015
the Company paid
$5,000
to
Mr. Smith in exchange for an outstanding convertible note in the same amount. The note carried an interest rate of
12%
and had a maturity date of
January
1,
2016.
 
As of
December
31,
2016,
the Company has an aggregate of
$5,825,000
principal amount of convertible debentures and
$450,000
of promissory notes outstanding to our Chief Executive Officer and Director, Cornelis F. With (“Mr. Wit”), and have issued certain warrants to Mr. Wit, as follows:
 
●
In
June
2008,
Mr. Wit invested
$510,000
in convertible notes. On
August
29,
2008,
Mr. Wit converted the
$510,000
and invested an additional
$1,260,000
in a private placement of convertible debentures and warrants to purchase
3,540,000
shares of our common stock. The convertible debentures, which bear interest at
10%
per annum, were due on
August
29,
2010.
The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of
$0.50
per share. On
September
30,
2009,
the Company and Mr. Wit extended the
$1,770,000
of convertible debentures until
August
29,
2013
in accordance with the terms of a Secured Convertible Debenture issued on that date. On
February
22,
2013,
the Company and Mr. Wit extended the maturity date of the
$1,770,000
of convertible debentures to
January
1,
2016.
The expiration date of the warrants associated with the debentures was also extended to
January
1,
2016.
On
January
31,
2015
the Company and Mr. Wit extended the maturity date of the
$1,770,000
of convertible debentures to
April
1,
2017.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2017.
On
June
30,
2016
the Company and Mr. Wit extended the maturity date of the
$1,770,000
of convertible debentures to
April
1,
2020.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2020.
 
●
In
February
2008,
Mr. Wit invested
$150,000
in promissory notes and from
September
2008
to
December
2008,
Mr. Wit invested
$4,200,000
in convertible notes. On
December
16,
2008,
Mr. Wit converted the
$4,350,000
into a private placement of convertible debentures and warrants to purchase
8,700,000
shares of our common stock. The convertible debentures, which bear interest at
12%
per annum, were due on
December
16,
2010.
The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of
$0.50
per share. On
September
30,
2009,
the Company and Mr. Wit extended the
$4,350,000
of convertible debentures until
December
16,
2013
in accordance with the terms of a Secured Convertible Debenture issued on that date. In a private transaction on
October
16,
2012,
Mr. Wit purchased
$125,000
of the
December
2008
convertible debentures and the related
250,000
warrants from Mr. Ronald Linares, the Company’s former Chief Financial Officer. On
February
22,
2013,
the Company and Mr. Wit extended the maturity date of the
$4,475,000
of convertible debentures to
January
1,
2016.
The expiration date of the warrants associated with the debentures was also extended to
January
1,
2016.
On
January
31,
2015
the Company and Mr. Wit extended the maturity date of the
$4,475,000
of convertible debentures to
April
1,
2017.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2017.
On
November
19,
2015
the Company and Mr. Wit agreed to cancel
$420,000
of the debentures and
1,680,000
of unrelated warrants in exchange for
1,680,000
shares of our common stock
. On
June
30,
2016
the Company and Mr. Wit extended the maturity date of the
$4,055,000
of convertible debentures to
April
1,
2020.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2020.
   
●
From
July
2009
to
September
2009,
Mr. Wit invested
$1,100,000
which amount was aggregated under the terms of
one
convertible note dated
September
30,
2009.
  On
September
30,
2009,
Mr. Wit agreed to convert this convertible note into a private placement of secured convertible debentures bearing interest at a rate of
12%
per annum with a maturity date of
March
30,
2011.
The convertible debentures were convertible into
4,400,000
shares of common stock and Mr. Wit received
4,400,000
warrants to purchase common stock of the Company at a price of
$0.25.
On
March
30,
2011,
the Company and Mr. Wit extended the maturity date of his convertible note until
April
1,
2013
in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the
4,400,000
warrants issued with convertible note by
two
years to
September
30,
2015.
On
February
22,
2013,
the Company and Mr. Wit extended the maturity date of his convertible debentures to
January
1,
2016
in accordance with the terms of Amendment Number Two To Securities Purchase Agreement. The expiration date of the warrants associated with the debentures was also extended to
January
1,
2016.
On
January
31,
2015
the Company and Mr. Wit extended the maturity date of the
$1,100,000
of convertible debentures to
April
1,
2017.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2017.
On
November
19,
2015
Mr. Wit converted
$475,000
of the convertible debentures into
1,900,000
shares of our common stock. On
November
19,
2015
the Company and Mr. Wit agreed to cancel the
1,900,000
warrants related to the
$475,000
in convertible debentures and
$475,000
of unrelated promissory notes in exchange for
1,900,000
shares of our common stock. On
November
23,
2015
Mr. Wit sold the remaining
$625,000
of convertible debentures and the related warrants to
two
unrelated non-affiliate stockholders
.
   
●
From
October
2009
to
December
2009,
Mr. Wit invested
$1,440,000,
which amount was aggregated under the terms of
one
convertible note dated
December
31,
2009.
On
December
31,
2009,
Mr. Wit agreed to convert this Convertible Note into a private placement of unsecured convertible debentures bearing interest at a rate of
12%
per annum, which Convertible Debentures were due on
June
30,
2011.
The Company and Mr. Wit extended the maturity date of his convertible note until
October
1,
2013
in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the
5,760,000
warrants issued with convertible note by
two
years to
December
31,
2015.
On
February
22,
2013,
the Company and Mr. Wit extended the maturity date of his convertible debentures to
January
1,
2016
in accordance with the terms of Amendment Number Two To Securities Purchase Agreement. The expiration date of the warrants associated with the debentures was also extended to
January
1,
2016.
On
January
31,
2015
the Company and Mr. Wit extended the maturity date of the
$1,440,000
of convertible debentures to
April
1,
2017.
The expiration date of the warrants associated with the debentures was also extended to
April
1,
2017.
On
November
19,
2015
Mr. Wit converted
$1,440,000
of the convertible debentures into
5,760,000
shares of our common stock. On
November
19,
2015
the Company and Mr. Wit agreed to cancel the
5,760,000
warrants related to the convertible debentures and
$1,440,000
of unrelated promissory notes in exchange for
5,760,000
shares of our common stock.
   
●
On
January
1,
2014,
the Company issued a promissory note in the principal amount of
$980,000
and warrants to purchase
3,920,000
shares of common stock of the Company at an exercise price of
$0.25
with an expiration date of
April
1,
2017
to Mr. Wit in exchange for accrued interest in the amount of
$980,000.
The note carries an interest rate of
12%
per annum and is due on
April
1,
2017.
On
October
15,
2015
the Company issued a promissory note in the amount of
$980,000
to Mr. Wit in exchange for the existing promissory note in the same amount. The promissory note carries an interest rate of
12%
and has a maturity date of
January
1,
2019.
The expiration date of the warrants associated with the promissory note was also extended to
January
1,
2019.
On
November
19,
2015
the promissory note and the related warrants were cancelled in exchange for
3,920,000
shares of our common stock.
 
●
On
January
31,
2015
the Company issued a promissory note in the amount of
$2,860,000
and paid
$6,879
in principal to Mr. Wit in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of
12%
and has a maturity date of
April
1,
2017.
The expiration date of the warrants associated with the promissory note was also extended to
April
1,
2017.
On
October
15,
2015
the Company issued a promissory note in the amount of
$2,860,000
to Mr. Wit in exchange for the existing promissory note in the same amount. The promissory note carries an interest rate of
12%
and has a maturity date of
January
1,
2019.
The expiration date of the warrants associated with the promissory note was also extended to
January
1,
2019.
On
November
19,
2015
the Company and Mr. Wit agreed to cancel the promissory note and
11,440,000
warrants related to the promissory note in exchange for
11,440,000
shares of our common stock
.
   
●
On
January
31,
2015
the Company issued a promissory note in the amount of
$529,000
to Mr. Wit in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of
12%
and has a maturity date of
April
1,
2017.
The expiration date of the warrants associated with the promissory note was also extended to
April
1,
2017.
On
October
15,
2015
the Company issued a promissory note in the amount of
$529,000
to Mr. Wit in exchange for the existing promissory note in the same amount. The promissory note carries an interest rate of
12%
and has a maturity date of
January
1,
2019.
The expiration date of the warrants associated with the promissory note was also extended to
January
1,
2019.
On
November
19,
2015
the promissory note and the related warrants were cancelled in exchange for
2,116,000
shares of our common stock.
   
●
On
January
31,
2015,
the Company issued a promissory note in the principal amount of
$950,000
and warrants to purchase
3,800,000
shares of common stock of the Company at an exercise price of
$0.25
per share with an expiration date of
April
1,
2017
to Mr. Wit in exchange for an existing promissory note in the amount of
$280,000
and accrued interest in the amount of
$670,000.
The note carries an interest rate of
12%
per annum and is due on
April
1,
2017.
On
October
15,
2015
the Company issued a promissory note in the amount of
$950,000
to Mr. Wit in exchange for the existing promissory note in the same amount. The promissory note carries an interest rate of
12%
and has a maturity date of
January
1,
2019.
The expiration date of the warrants associated with the promissory note was also extended to
January
1,
2019.
On
November
19,
2015
the Company and Mr. Wit agreed to cancel the promissory note and the warrants related to the promissory note in exchange for
3,800,000
shares of our common stock
.
   
●
On
November
19,
2015
the Company issued
37,023,517
restricted shares of our common stock to Mr. Wit. The shares were issued in exchange (i) for the cancellation of
$6,919,000
of outstanding
12%
promissory notes,
$420,000
of outstanding
12%
convertible notes payable and
29,363,517
outstanding warrants to purchase shares of our common stock at
$0.25
per share and (ii) the conversion of
$1,915,000
of convertible notes payable with a conversion price of
$0.25
per share.
   
●
On
February
29,
2016,
the Company issued a promissory note in the principal amount of
$450,000
and warrants to purchase
1,800,000
shares of common stock of the Company at an exercise price of
$0.25
per share with an expiration date of
April
1,
2019
to Mr. Wit in exchange for accrued interest in the amount of
$450,000.
The note carries an interest rate of
12%
per annum and has a maturity date of
April
1,
2019.
 
On
March
18,
2013,
the Company entered into a
$2,000,000
revolving line of credit with The Northern Trust Company
guaranteed by Mr. Wit. On
December
18,
2013
the Company renewed the Line of Credit and increased the available balance to
$4,000,000.
On
February
3,
2015
the Company renewed the Line of Credit and increased the available balance to
$5,000,000.
Mr. Wit receives
2.0%
interest (approximately
$9,500
per month) on the assets pledged for the Line for Credit. The Line of Credit matures on
February
2,
2018
and carries a variable interest rate based on the prime rate. At
December
31,
2016,
$2,700,000
was outstanding on the Line of Credit at an interest rate of
2.75%.
 
The Company incurred interest expense payable to related parties of
$918,189
f
or the
year ended 
December
31,
2016
and
$2,434,101
f
or the
year ended 
December
31,
2015.