Subordinated Convertible Notes to Related Party

12 Months Ended

Dec. 31, 2014

Subordinated Convertible Notes To Related Party

Subordinated Convertible Notes to Related Party

11. Subordinated Convertible Notes to Related Party

Subordinated convertible notes to related parties are unsecured convertible notes payable to UBA for a total value including interest (at the prime rate plus 1.5%, but not to exceed 10% per year) of $3,588,900 and $3,497,900 as of December 31, 2014 and 2013, respectively. Thirteen of the UBA notes are convertible into common stock at $1.50 per share and one UBA note is convertible at a rate of $1.44 per share. The UBA notes have been extended until June 2015 but have automatic renewals after such maturity date for successive one year terms, provided that either the Company or UBA may elect not to extend the term upon written notice given to the other party no more than 60 days and no fewer than 30 days prior to the expiration of such term. UBA may demand payment within 60 days of the end of the extension period but is precluded from doing so because the notes are subordinated to long-term debt agreements with MB Financial maturing in June 2016. Therefore, the Company will not require the use of working capital to repay any of the UBA notes until the MB Financial facilities are repaid. The UBA notes included $1,673,500 and $1,582,500 of accrued interest at December 31, 2014 and December 31, 2013, respectively.