Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

Commitments and Contingencies
6 Months Ended
Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 5 – Commitments and Contingencies


Capital Lease Obligations


In the fourth quarter of 2013, the Company purchased and upgraded equipment from non-related third parties, investing approximately $3.5 million. In December 2013, the Company sold the equipment to a related party leasing company, Impact Engineering, AS. Simultaneously, the equipment package was leased back to the Company as a capital lease for a 60-month period with payments beginning in February of 2014. The Company agreed to prepay one year of payments in the amount of approximately $1.0 million and maintain a balance of no less than six months of prepayments until the final six months of the lease.


These prepayments were made prior to December 31, 2013. Further lease payments are $81,439 per month and commenced on July 1, 2014. The final six months of prepaid is shown as other non-current assets in the consolidated balance sheets with a balance of $846,044.


The minimum present value of the lease payments is $1.5 million with terms of sixty months and implied interest of 14%. The next five years of lease payments are:


    Capital Lease Payments  
2017   $ 488,633  
2018     977,267  
Total future payments     1,465,900  
Less debt discount due to warrants     (105,251 )
Less amount representing interest     (150,570 )
Less current portion of capital lease obligations     (846,044 )
Capital lease obligations, excluding current installments   $ 364,035  


Operating Leases


The Company’s operating leases correspond to equipment facilities and office space in Argentina and the United States. The combined future minimum lease payments as of June 30, 2017 are as follows:


      Operating Leases  
2017     $ 239,395  
2018       192,070  
Total     $ 431,465