Other Loans Payable

12 Months Ended

Dec. 31, 2016

5. Other Loans Payable

On April 4, 2013, SPMSA borrowed ZAR 2 million (approximately $201,000) from a lender pursuant to a note. The terms of the loan provide for interest of 2% per month on the outstanding balance which is payable together with the principal balance no later than December 31, 2013. An officer and stockholder of the Company deposited 1,000,000 shares of Common Stock with the lender as security for the repayment of the loan to SPMSA. On June 10, 2015, the repayment date was further extended to September 30, 2015. Interest on this loan was approximately $16,500 and $15,500 for the three months ended September 30, 2015 and 2014 and approximately $38,000 and $44,200 for the nine months ended September 30, 2015 and 2014. As of August 10, 2015, the loan was settled with the issuance of 1,676,000 shares of Common Stock. The Company recognized a gain of $28,951 representing the difference between the fair value of the consideration issued in the settlement transaction and the carrying value of the amounts due to the lender. This gain has been included as ‘‘Gain on settlement of debt’’ under ‘‘Other income (expense)’’ within income from continuing operations in the accompanying Consolidated Statement of Operations for the year ended December 31, 2015.

On February 11, 2016 the Company entered into a Securities Purchase Agreement with SBI Investments LLC, 2014-1, a statutory series of Delaware limited liability company (“SBI”). Under the Purchase Agreement, SBI purchased the Company’s promissory note (the “SBI Note”) in the principal amount of $330,000 for a purchase price of $300,000. The SBI Note bears interest at the rate of 0% per annum until the occurrence of an Event of Default, at which time the SBI Note bears default interest at the rate of 22% per annum. SBI has the right to convert the SBI Note into shares of the Company’s Common Stock following the occurrence of an event of default under the SBI Note, including the failure to repay the note on or before its maturity date. On August 1, 2016 the Company and SBI agreed to extend the maturity date of the SBI Note from August 9, 2016 to October 11, 2016.

On November 17, 2016 the Company and SBI agreed to extend the maturity date of the SBI Note from October 11, 2016 to January 11, 2017. As part of the agreement on November 17, 2016 to extend the maturity of the SBI Note until January 11, 2017, SBI and the Company agreed that (i) the number of shares of the Company’s Common Stock into which SBI could convert the SBI Note following the occurrence of an event of default under the SBI Note, including the failure to repay the SBI Note on or before January 11, 2017, would be based on a conversion price that is 52.5% of the market price of the Company’s shares, rather than 55%; and (ii) the principal amount to be paid to SBI to discharge the SBI Note in full is $390,000 if the Company repays the SBI Note prior to or on January 11, 2017. In connection with Amendment No. 2, the Company entered into a fee letter agreement with SBI under which the Company agreed to pay SBI a structuring fee on November 17, 2016 in the amount of $90,000 with 1,058,824 shares of its Common Stock and a loan monitoring fee of $45,000 which is due on the maturity of the SBI Note.

On March 29, 2017, the Company was advised by SBI that SBI will begin conversion of the SBI Note, with an initial conversion of $25,000. This initial conversion resulted in the issuance of 691,467 shares of Common Stock to SBI. In addition SBI has required that the Company increase the number of shares of Common Stock that are reserved for issuance upon conversion of the SBI Note by 25,000,000 shares to 30,000,000 shares based on the decline in the share price. The conversion results from the Company’s failure to pay the SBI Note on January 11, 2017.

On May 4, 2017, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of April 27, 2017, with LG Capital Funding, LLC, a New York limited liability company (“LGCF”). Under the Securities Purchase Agreement, LGCF agreed to purchase from the Company its 4% Convertible Redeemable Note (the “LGCF Note”) in the principal amount of $42,900. The LGCF Note is convertible into shares of Common Stock, at the option of its holder, at a conversion price equal to 55% of the average of the three lowest trading prices of Common Stock for the last 15 trading days prior to conversion. The LGCF Note also bears interest at 4% per annum, contains a 10% original issue discount such that the purchase price paid by LGCF is $39,000 and matures on April 27, 2018. As a condition to the obligation of LGCF to purchase the LGCF Note, the Company also amended and restated $35,000 principal amount of the SBI Note into a new promissory note in the principal amount of $35,000 payable to LGCF (the “Amended and Restated Note”). The Amended and Restated Note is convertible into shares of Common Stock at a conversion price equal to 55% of the average of the three lowest trading prices of Common Stock for the last 15 trading days prior to conversion, bears interest at 4% per annum interest and matures on April 27, 2018.

SurePure, Inc. 10-K