Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.19.3
Debt
9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
Debt

NOTE 8 – DEBT

Bank Lines of Credit

 

Bressner Technology GmbH has three revolving lines of credit with German institutions totaling €3,300,000 (US$3,599,244).  Borrowing under the lines of credit bear interest at variable rates of Euribor plus a stated rate.  Current rates are between 3.75% and 7.99%.  The lines of credit are guaranteed by the managing director for which the Company has agreed to indemnify Bressner .  Total outstanding balance as of September 30, 2019 was €202,437 (US$220,794).

Notes Payable

In connection with a note payable totaling $250,000 to a third party made in July 2016, the Company issued to the noteholder warrants to purchase shares of the Company’s common stock equal to 20% of the original principal at a price per share equal to $1.78 per share. Accordingly, the Company issued to the noteholder warrants to purchase 28,090 shares of the Company’s common stock at an exercise price of $1.78 per share in July 2016. The relative fair value of the warrants was $24,830.  The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $1.78 per share; seven year contractual term; 54% volatility; 0% dividend rate; and a risk-free interest rate of 1.42%.  

In April 2019, the Company borrowed $350,000 from three individuals for a two year period at an interest rate of 9.5% which requires the Company to make monthly principal and interest payments of $16,100 per month.  These loans are secured by the assets of the Company.  In connection with these loans, the Company issued to the noteholders warrants to purchase shares of the Company’s common stock equal to 10% of the original principal at a price per share equal to $2.15 per share.  Accordingly, the Company issued to the noteholders warrants to purchase 16,276 shares of the Company’s common stock at an exercise price of $2.15 per share. The relative fair value of each warrant was $0.90.  The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $2.15 per share; five year contractual term; 44.60% volatility; 0.0% dividend rate; and a risk-free interest rate of 2.307%.  The total relative fair value of the warrants issued is $14,037.

Bressner Technology GmbH has five term loans outstanding with a total balance outstanding of €1,465,329 (US$1,598,206) as follows:

Bressner entered into a note payable in August 2016, in the amount of €250,000 (US$272,670) which bears interest at 2.125% and matures on September 30, 2020.  The loan is guaranteed by the managing director of Bressner.  Quarterly principal payments of €15,600 (US$17,015) are due at the end of each calendar quarter with remaining balance due at maturity.  The balance outstanding as of September 30, 2019 is €47,200 (US$51,480).

Bressner entered into a note payable in September 2017, in the amount of €400,000 (US$436,272) which bears interest at 2.125% and matures on April 30, 2020.  The loan was guaranteed by the managing director of Bressner.  Quarterly principal payments of €25,000 (US$27,267) are due in January, April, July and November with remaining balance of €175,000 (US$190,869) due at maturity.  The balance outstanding as of September 30, 2019 is €225,000 (US$245,403).

Bressner entered into a note payable in April 2019, in the amount of €500,000 (US$545,340) which bears interest at 2.25% and matures on March 30, 2021 with monthly payments of principal and interest of €21,324 (US$23,258).  The balance outstanding as of September 30, 2019 is €393,129 (US$428,779).

Bressner entered into a note payable in September 2019, in the amount of €500,000 (US$545,340) which bears interest at 1.7075.% and matures on September 25, 2020 with a balloon payment of principal and interest of €508,679 (US$545,340).

Bressner entered into a note payable in September 2019, in the amount of €300,000 (US$327,204) which bears interest at 1.65.% and matures on March  24, 2020 with a balloon payment of principal and interest of €301,650 (US$327,204).

Related-Party Notes Payable

In April 2019, the Company borrowed $1,150,000 from three individuals who serve on the Company’s board of directors for a two year period at an interest rate of 9.5% which requires the Company to make monthly principal and interest payments of $52,900 per month.  These loans are secured by the assets of the Company.  In connection with these loans, the Company issued to the noteholders warrants to purchase shares of the Company’s common stock equal to 10% of the original principal at a price per share equal to $2.15 per share.  Accordingly, the Company issued to the noteholders warrants to purchase 53,490 shares of the Company’s common stock at an exercise price of $2.15 per share. The relative fair value of each warrant was $0.90.  The relative fair value of warrants was estimated using Black-Scholes with the following weighted-average assumptions: fair value of the Company’s common stock at issuance of $2.15 per share; five year contractual term; 42.60% volatility; 0.0% dividend rate; and a risk-free interest rate of 2.3067%.  The relative fair value of warrants issued is $46,121.

Debt Discount

 

The relative fair value of warrants were recorded as debt discount, decreasing notes payable and related-party notes payable and increasing additional paid-in-capital on the accompanying consolidated balance sheets.  The debt discounts are being amortized to interest expense over the term of the corresponding notes payable using the straight-line method which approximates the effective interest method.

For the three month periods ended September 30, 2019 and 2018, total debt discount amortization was $ 7,520 and $5,959, respectively, and $13,786 and $24,830 for the nine month periods ended September 30, 2019 and 2018, respectively and such amounts are included in interest expense in the accompanying consolidated statements of operations.

Total future payments under notes payable and related-party notes payable as of September 30, 2019 are as follows:

 

Period Ending September 30,

 

Related

Parties

 

 

Third

Parties

 

 

Foreign

 

 

Total

 

 

Discount

 

2020

 

$

570,873

 

 

$

173,719

 

 

$

1,461,871

 

 

$

2,206,463

 

 

$

(30,079

)

2021

 

 

358,077

 

 

 

109,262

 

 

 

136,335

 

 

 

603,674

 

 

 

(16,293

)

Total minimum payments

 

 

928,950

 

 

 

282,981

 

 

 

1,598,206

 

 

 

2,810,137

 

 

 

(46,372

)

Current portion of notes payable

 

 

(570,873

)

 

 

(173,719

)

 

 

(1,461,871

)

 

 

(2,206,463

)

 

 

30,079

 

Notes payable, net of current portion

 

$

358,077

 

 

$

109,262

 

 

$

136,335

 

 

$

603,674

 

 

$

(16,293

)