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Subordinated Convertible Notes Payable To Related Party
12 Months Ended
Dec. 31, 2015
Subordinated Convertible Notes Payable To Related Party  
Subordinated Convertible Notes Payable To Related Party

7. 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 $3,680,100 and $3,588,900 as of December 31, 2015 and 2014, 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 2016 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. The Company expects the UBA notes to be continued to be subordinated to any new financing facility obtained after maturity of MB Financial facility. The Company will also attempt to induce conversion of UBA notes to equity. Therefore, the Company will not require the use of working capital to repay any of the UBA notes. The UBA notes included $1,764,700 and $1,673,500 of accrued interest at December 31, 2015 and December 31, 2014, respectively.