Notes Payable - Related Parties

3 Months Ended

Mar. 31, 2014

8. Notes Payable - Related Parties

On March 29, 2012, the Company issued an unsecured note payable to Ramon Shealy a then -director of the Company, who subsequently resigned from the Board of Directors on December 17, 2012, for personal reasons, in the amount of $238,000, bearing interest at a rate of 10 % for the term of the note. All principal and interest was due and payable on September 27, 2012, but was later extended to November 24, 2012. On April 16, 2012, the Company issued a note payable to Mr. Shealy, in the amount of $ 12,000, bearing interest at a rate of 10 % per quarter. All principal and interest was due on July 15, 2012, but was later extended to November 24, 2012 . On November 24, 2012 the two notes were combined into a $250,000 promissory note, under the same terms, with a maturity date of January 1, 2014 and was later extended to January 1, 2015. On March 13, 2013, the Company paid $100,000 of the principal amount of the $250,000 promissory note to Mr. Shealy. As of March 31, 2014, the $ 250,000 promissory note issued to Mr. Shealy had a principal balance of $150,000 and accrued interest of $ 32,747

On March 2, 2009, the Company issued an unsecured promissory note payable to Ms. Chretien, in the amount of $80,000 due January 1, 2014 and bearing interest at 5% per annum, with the principal and interest to be paid at maturity. On December 27, 2013 the $80,000 promissory note was extended under the same terms, with a maturity date of January 1, 2015. During the three months ended March 31, 2014, the Company paid $5,000 in principal to Ms. Chretien related to this note. As of March 31, 2014 the note had a principal balance of $27,500 and accrued interest of $2,882.

On December 29, 2001, the Company issued an unsecured promissory note payable to A. Michael Chretien, a Founder of the Company, in the amount of $ 55,167, with any unpaid principal and interest due on January 1, 2014. During 2013, the Company paid $11,250 in accrued interest to A. Michael Chretien. On December 27, 2013, the note was extended, under the same terms, with a maturity of January 12, 2015. As of March 31, 2014, the note had a principal balance of $40,415 and accrued interest of $3,344.

Notes payable due to related parties consist of the following:

		March 31,		December 31,
		2014		2013
The $80,000 Jackie Chretien Note	$	27,500	$	32,500
The $55,167 A. Michael Chretien Note		40,415		40,415
The $250,000 Shealy Note		150,000		150,000
Total notes payable - related party		217,915		222,915
Less current portion		(217,915)		-
Long-term portion of notes payable-related party	$	-	$	222,915

Future minimum principal payments of these notes payable as described in this Note 8 are as follows:

For the Twelve Months Ended
March 31,		Amount
2015	$	217,915
Total	$	217,915

As of March 31, 2014 and December 31, 2013, accrued interest for these notes payable-related parties amounted to $38,971 and $34,614, respectively.

For the three months ended March 31, 2014 and 2013, interest expense in connection with notes payable – related parties was $5,865 and $5,223, respectively

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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