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12. CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2015

Summary:

As of December 31, 2015, principal amounts owed under convertible notes consisted of only the Pegasus note.

As of December 31, 2014, the following summarizes principal amounts owed under convertible notes:

	Amount		Discount		Convertible Notes Payable, net of discount
Pegasus Note	$	100,000	$	–	$	100,000
Gemini Master Fund – Third Amended and Restated secured bridge Note		856,325		252,070		604,255
	$	956,325	$	252,070	$	704,255

ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014

Pegasus Note:

On December 19, 2009, the Company entered into a convertible promissory note for $100,000 to a new landlord in lieu of paying rent for one year for new office space. The interest is 10% per annum with the note principal and interest originally due December 18, 2010 and subsequently extended until December 31, 2012. However, if the Company receives greater than $1,000,000 of proceeds from debt or equity financing, 25% of the amount in excess of $1,000,000 shall be used to pay down the note. This note is subordinate to all existing senior indebtedness of the Company. This note is convertible at $0.33 per share and had no beneficial conversion feature at the note date.

Through a series of amendments, the term of the note was extended until December 31, 2014, and waived, through December 31, 2013, the requirement to pay down the note with financing proceeds received by the Company.

Effective December 31, 2014, the Company entered into an additional modification extending the term of the note to December 31, 2015, and waived, through December 31, 2014, the requirement to pay down the note with financing proceeds received by the Company in the period. This modification was treated as a debt extinguishment, but as the market price of the Company’s stock was below the conversion price at the time of the modification, there was no beneficial conversion feature that needed to be recorded.

Effective December 31, 2015, the Company entered into an additional modification extending the term of the note to December 31, 2016, and waiving, through December 31, 2015, the requirement to pay down the note with financing proceeds received by the Company in the period. There was no accounting effect for this transaction.

The balance of the note as of December 31, 2015 is $100,000 with accrued and unpaid interest amounting to $60,219.

Gemini Third Amended and Restated Secured Bridge Note

See note 10 for additional information on a Convertible Note classified as Convertible Note Payable in 2014 but became a Convertible Note Payable - Related Party in 2015.