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5. NOTES PAYABLE

12 Months Ended

Dec. 31, 2016

CONVERTIBLE NOTES PAYABLE – RELATED PARTIES

Funds are advanced to the Company from various related parties. Other shareholders fund the Company as necessary to meet working capital requirements and is a summary of outstanding convertible notes due to related parties, including accrued interest separately recorded, as of December 31, 2016 and 2015:

					Accrued Interest
Related Party	Nature of Relationship	Term of the agreement	Principal amount		2016		2015
S. Oden Howell Revocable Trust ("HRT")	Mr. S. Oden Howell, Jr. became a member of the Board of Directors in June of 2015	The note is unsecured, bears interest at 10% per annum, matures June 18, 2018, and is convertible into shares of the Company's Series C Convertible Preferred Stock at a conversion price of $70.00 per share at any time prior to maturity.	$	600,000	$	96,164	$	32,877

James W. Stuckert Revocable Trust ("SRT")	Mr. James W. Stuckert became a member of the Board of Directors in September of 2015	The note is unsecured, bears interest at 10% per annum, matures June 18, 2018, and is convertible into shares of the Company's Series C Convertible Preferred Stock at a conversion price of $70.00 per share at any time prior to maturity.	$	600,000	$	96,164	$	32,877

Total			$	1,200,000	$	192,328	$	65,754

On June 15, 2015, the Company used proceeds from the above mentioned notes (with The James W. Stuckert Revocable Trust (“SRT) and The S. Oden Howell Revocable Trust (“HRT”) to pay off the negotiated outstanding unpaid principal to $1,100,000, accrued but unpaid interest and recognized $100,000 forgiveness of related party convertible debt under the Senior Secured Convertible Promissory Note issued to Brookhaven Medical, Inc. pursuant to a loan agreement dated October 11, 2013. The gain was accounted for as a capital transaction in 2015.

NOTES PAYABLE

The following is a summary of amounts due to unrelated parties, including accrued interest separately recorded, as of December 31, 2016 and 2015:

		Principal Amount				Accrued Interest
Note Payable	Terms of the agreement	2016		2015		2016		2015
March 4, 2011 Note Payable	223,500 note payable; (i) interest accrues at 13% per annum; (ii) maturity date of September 4, 2011; (iii) $20,000 fee due at maturity date with a $1,000 per day fee for each day the principal and interest is late. This note is currently the subject of litigation (see Note 12 "Legal Proceedings")	$	223,500	$	223,500	$	147,374	$	117,915

Third Quarter 2012 Secured Subordinated Promissory Notes	Three notes in the aggregate principal amount of $110,000; (i) interest accrues at 5% per annum; (ii) maturity date of October 12, 2012; (iii) after the maturity date interest shall accrue at 18% per annum and the company shall pay to the note holders on a pro rata basis, an amount equal to twenty percent of the sales proceeds received by the Company and its subsidiary, WCI, from the sale of surgical powders, until such time as the note amounts have been paid in full. As of December 31, 2016, all of these notes remain due.	$	104,571	$	110,000	$	8,200	$	67,558

September 28, 2012 Promissory Note	$51,300 note payable (i) interest accrues at 10% per annum; (ii) original maturity date of December 31, 2012; (iii) default interest rate of 15% per annum. As of December 31, 2016, $11,300 of this note remains due.	$	11,300	$	11,300	$	19,510	$	14,748

Quest Capital Investors, LLC	Furniture purchase agreement in the original amount of $11,700 with $300 payments due each month. Secured by fixed assets of the Company.	$	300	$	3,900	$	-	$	-

May 28, 2015 Promissory Note	$96,000 note payable (i) interest accrues at 10% per annum; (ii) original maturity date of May 28, 2016; (iii) amended maturity date of June 30, 2017	$	74,667	$	96,000	$	-	$	2,420

June 26, 2015 Convertible Promissory Note	$ 200,000 note payable which accrued interest at 5% per annum. The note was due September 26, 2016. The note was convertible, into common shares of the Company at the option of the Company at a rate equal to 90% of the volume weighted average price of the company's common stock for the 5 trading days preceding the date of conversion. As of December 31, 2016, the note is paid in full.	$	-	$	170,000	$	-	$	4,674

Total		$	414,338	$	614,700	$	175,083	$	207,315

On June 26, 2015, the Company entered into an Exchange Agreement with Tonaquint, Inc., a Utah corporation (“Tonaquint”), under which Tonaquint was issued a convertible promissory note (the “Note”) in exchange for the surrender of common stock warrants originally issued by the Company to Tonaquint pursuant to a Securities Purchase Agreement dated June 21, 2011. The Note in the original principal amount of $200,000, carried a 5% rate of interest, and matured on September 26, 2016. The Note provided for an initial cash installment payment of $10,000, with subsequent monthly cash installment payments beginning in December of 2015. Each such monthly installment payment could have been made, at the Company's option, in shares of common stock. Subject to certain conditions, the number of shares issuable in lieu of cash installment payments was to be determined based on a conversion price equal to 90% of the five-day volume weighted average trading price of the Company's common stock. The surrendered warrants were accounted for as derivatives with a fair value of $1,693 on the date of the exchange.

This resulted in a loss on the issuance of debt for warrants of $198,307 during the year ended December 31, 2015. The Company paid a total of $178,552 in cash under this note during the year ended December 31, 2016. In September 2016, the Company paid the final $10,000 in principal and $8,552 in accrued interest.

During each of the years ended December 31, 2016 and 2015, the Company paid a total of $3,600 to Quest Capital as part of the furniture purchase agreement in the original amount of $11,700.

During the year ended December 31, 2015, the Company paid the final $40,620 principal and $14,861 in accrued interest due on the MAH Holding note. (MAH Holding is controlled by a former major stockholder of the Company).

During the year ended December 31, 2016, the Company paid $26,762 principal and $49,559 in accrued interest for three of the non-related party notes. In June and July of 2016, two of the parties' notes were amended and they agreed to forgive a portion of the accrued interest in the amounts of $22,943 and $7,649 for a total of $30,592.