|
Note 6 – Capital Lease Obligations
|
(1) |
The Company entered into a new lease agreement with Systems Trading, Inc. on May 1, 2014 to refinance all outstanding leases into one capital lease. This lease obligation is payable to Systems Trading, Inc. with monthly installments of $21,826 from June 1, 2014 through May 1, 2018 .This lease is secured with the computer equipment and has been capitalized. Pursuant to Accounting Standards Codification (“ASC”) 470-50-40, Debt Modifications and Extinguishments-Derecognition, the Company determined that modification accounting applied to the refinancing. The new capital lease obligation has an effective interest rate of 7.22%. |
Future minimum lease payments under the capital leases are as follows:
| As of June 30, 2014 |
|
$ |
1,004,006 |
|
| Less amount representing interest |
|
|
(109,084 |
) |
| Total obligations under capital leases |
|
|
894,922 |
|
| Less current portion of obligations under capital leases |
|
|
(214,042 |
) |
| Long-term obligations under capital leases |
|
$ |
680,880 |
|
Long-term obligations under capital leases at June 30, 2014 mature as follows:
| For the twelve months ending June 30, |
|
|
|
| 2015 |
|
$ |
214,042 |
|
| 2016 |
|
|
227,243 |
|
| 2017 |
|
|
241,259 |
|
| 2018 |
|
|
212,378 |
|
| |
|
$ |
894,922 |
|
The assets held under the capital leases are included in property and equipment as follows:
| Equipment |
|
$ |
1,603,461 |
| Less: accumulated depreciation |
|
|
(1,053,367 |
) |
| |
|
$ |
550,094 |
|
|