Here is their language from their 2014 10-K where ECOS notes they are in default of the convertible debt to Tonaquint and Ascher. They are the two principal debt holders other than management.
During the years ended December 31, 2014 and 2013, the Company received the proceeds of various loans which are convertible at amounts ranging from 40% to 60% of the market price of the common shares of the Company at the time of conversion and bear interest at 8% per annum. The amounts received during the years ended December 31, 2014 and 2013 are $86,500 in cash, $140,000 in non-cash borrowings related to the default on Tonaquint loans in 2014 and $668,983, respectively.
The convertible feature of these loans, due to their potential settlement in an indeterminable number of shares of the Company's common stock has been identified as a derivative. The derivative component is fair value at the date of issuance of the obligation and this amount is allocated between the derivative and the underlying obligation. The difference is recorded as a debt discount and amortized over the life of the debt. The Redwood Management, LLC, Asher Enterprises Inc. and Tonaquint notes are in default as of December 31, 2014.
