DEBT AND EQUITY FINANCING |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] | NOTE 4 — DEBT AND EQUITY FINANCING Credit Facility In June 2015, the Company secured an accounts receivable financing facility with Bay View Funding. The contract provides for maximum funding of $4 million and a factoring fee of 1.35% for the first 30 days and .45% for each 10-day period thereafter that the financed receivable remains outstanding. Upon the execution of this contract, the balance owed under a prior credit facility was repaid and that contract was terminated. There was no amount outstanding under this facility as of June 30, 2017 and December 31, 2016. There are no financial or similar covenants associated with this facility. Notes Payable During the three and six months ended June 30, 2017, the Company issued $340,000 in convertible Notes payable; the notes are due and payable the earlier of March 31, 2018 or at the closing of the Company’s potential merger transaction at which time they would convert, along with accrued interest, to common stock concurrent with the merger. The notes are convertible at the lesser of $0.75 or 75% of the average market price of the Company’s common stock during the five days prior to the merger closing and bear an interest rate of 15%. The Company has agreed to give one-year warrant coverage at 25% of the number of shares issued upon conversion. As of June 30, 2017, a total of $340,000 in principal of the convertible Notes remains outstanding. Subsequent to June 30, 2017, the Company issued $200,000 of additional convertible Notes under the same terms. As of June 30, 2017 and December 31, 2016, a total of $38,000 in principal of convertible Notes payable that matured in the second quarter of 2015 remains outstanding. Promissory notes From October 2015 through March 7, 2016, the Company issued promissory notes; the notes were due and payable at the earlier of one year from the date of issuance or the closing date of the Company’s initial public offering, bore an interest rate of 15% that was accrued upon issuance, irrespective of whether the promissory note was outstanding for part or full term until maturity, and had a loan origination fee of $.225 for each dollar loaned. The loan origination fee associated with the notes as of September 30, 2016 was $756,000 and was recorded as accrued interest and debt discount to the notes payable and is being amortized over the life of the notes. Debt discount amortized as interest expense in the three and nine months ended September 30, 2016 was approximately $25,000 and $389,000, respectively. All principal, fees and interest were payable on the due date. In July 2016, the Company completed the Offering whereby 90% of the outstanding promissory notes totaling $3,024,000 were converted to 672,000 shares of common stock and 672,000 warrants at the offering price of $4.50 per share. The 15% accrued interest and the 22.5% origination fee were waived as part of the conversion. The remaining, unconverted $336,000 of promissory notes were paid out of the proceeds of the Offering along with the accrued interest and origination fee attributable to those notes. No balance is due as of June 30, 2017 and December 31, 2016. Due to Monster, Inc. In addition to the issuance of shares of common stock and common stock purchase warrants, the Company agreed to pay Monster, Inc. $500,000 as consideration for use of the name Monster Digital, Inc. pursuant to Amendment No. 3 to the Trademark License Agreement between the Company and Monster, Inc. Of this total balance, the Company agreed to pay $125,000 in December 2015 and the balance from the proceeds of the planned IPO. The Company paid $50,000 of the $125,000 in December 2015 and the balance in January 2016. The remaining $375,000 was paid in September 2016. Notes payable consists of the following (in thousands):
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