PURADYN FILTER TECHNOLOGIES INC - FORM 10-K - XML - IDEA: XBRL DOCUMENT - April 5, 2012

8. Notes Payable to Stockholders and Capital Leases

Beginning on March 28, 2002 the Company executed a binding agreement with one of its principal stockholders, who is also the Chairman of the Board and an Executive officer, to fund up to $6.1 million. Under the terms of the agreements, the Company can draw amounts as needed to fund operations. Amounts drawn bear interest at the BBA LIBOR Daily Floating Rate plus 1.4 percentage points (1.696% per annum at December 31, 2011), payable monthly and were to become due and payable on December 31, 2005 or upon a change in control of the Company or consummation of any other financing over $7.0 million. Beginning in March 2006, annually, through February 2012, the maturity date for the agreement was extended annually from December 31, 2007, to December 31, 2013. Refer to Note 14.

At December 31, 2011 the Company had drawn the full funding amount under the agreement of $6.1 million plus an additional $1,329,017. At December 31, 2010, the Company had drawn the full funding amount of $6.1 million under the funding agreement plus an additional $261,914.

Additionally, the Company has loans outstanding from one board member, who is also a significant stockholder, totaling $100,000 and $-0- at December 31, 2011 and 2010. During 2011 and 2010 this board member loaned the Company $125,000 and $25,000 respectively and forgave $25,000 and $50,000, respectively. The forgiven obligations were reclassified to additional paid in capital, due to the related party nature,. The outstanding debt obligation at December 31, 2011 matures January 1, 2013 and is included in Current Liabilities. Refer to Notes 10 and 14.

During the years ended December 31, 2011 and 2010, the Company incurred interest expense of $165,573 and $157,866, respectively, on its draws, which is included in interest expense in the accompanying consolidated statements of operations.

Notes payable and capital leases consisted of the following at December 31, 2011 and December 31, 2010:

Maturities of Long-Term Obligations for Five Years and Beyond

The minimum annual principal payments of notes payable and capital lease obligations at December 31, 2011 were: