Notes Payable - Related Parties

9 Months Ended

Sep. 30, 2016

8. Notes Payable - Related Parties

On March 2, 2009, Intellinetics Ohio issued an unsecured promissory note payable to Jackie Chretien, mother of Matthew A. Chretien, a founder of the Company, 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, Intellinetics Ohio paid in full the note payable of $15,000 and accrued interest of $4,403.

On December 29, 2001, Intellinetics Ohio 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, Intellinetics Ohio paid in full the principal balance of $40,415 plus accrued interest of $7,053.

On March 29, 2012, the Company issued an unsecured promissory note payable to Ramon Shealy, a then-director of the Company, who subsequently resigned from the Company’s board of directors (“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 another promissory 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 cancelled and replaced with a $250,000 promissory note, under the same terms, with a maturity date of January 1, 2014. On December 24, 2013, the maturity date of the $250,000 promissory note was 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. On December 31, 2014, the Company and Ramon Shealy agreed to extended payment terms for the remaining total principal and interest in the amount of $193,453, payable in sixty (60) monthly installments beginning January 31, 2015, with a maturity date of January 1, 2020. As of September 30, 2016, the note payable had a principal balance of $136,380 and $0 accrued interest.

Notes payable due to related parties consist of the following:

	September 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		136,380		164,799
Total notes payable - related party		136,380		220,214
Less current portion		(37,368)		(92,805)
Long-term portion of notes payable-related party	$	99,012	$	127,409

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

For the Twelve Months Ended
September 30,	Amount
2017	$	37,368
2018		41,280
2019		45,603
2020		12,129
Total	$	136,380

As of September 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 nine months ended September 30, 2016 and 2015, interest expense in connection with notes payable – related parties were $3,556 and $11,288, and $125,274 and $268,783, respectively.