Notes Payable - Related Parties

6 Months Ended

Jun. 30, 2016

8. Notes Payable - Related Parties

On March 2, 2009, the Company issued an unsecured promissory note payable to Jackie Chretien, in the amount of $80,000 due January 1, 2016, as amended, and bearing interest at 5% per annum, with the principal and interest to be paid at maturity. On January 1, 2016 the Company paid in full the note payable of $15,000 and accrued interest of $4,403.

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, 2016, as amended. On January 1, 2016 the Company paid in full the principal balance of $40,415 plus accrued interest of $7,053.

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. On December 24, 2013 the $250,000 promissory note, was extended under the same terms, with a maturity date of 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. On December 31, 2014, the Company and Ramon Shealy agreed to cancel the previous notes and extensions set forth above, and issue a new single promissory note with accrued interest of $43,453, to a total principal and interest in the amount of $193,453, payable in sixty monthly installments beginning January 31, 2015, with a maturity date of January 1, 2020. Interest will accrue at 10% on the outstanding balance until paid in full. All other provisions of the original Promissory Note shall prevail unless specifically set forth herein or otherwise agreed in writing by the parties. As of June 30, 2016, the note payable had a principal balance of $ 145,155 and $ 0 accrued interest.

Notes payable due to related parties consist of the following:

	June 30,		December 31,
	2016		2015
The $80,000 Jackie Chretien Note	$	-	$	15,000
The $55,167 A. Michael Chretien Note		-		40,415
The $250,000 Shealy Note		145,155		164,799
Total notes payable - related party		145,155		220,214
Less current portion		(36,449)		(92,805
Long-term portion of notes payable-related party	$	108,706	$	127,409

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

For the Twelve Months Ended
June 30,	Amount
2017	$	36,449
2018		40,265
2019		44,482
2020		23,959
Total	$	145,155

As of June 30, 2016 and December 31, 2015, accrued interest for these notes payable-related parties amounted to $0 and $12,852, respectively.

For the three and six months ended June 30, 2016 and 2015, interest expense in connection with notes payable – related parties were $3,772 and $7,733, and $76,258 and $143,509, respectively.