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Related Party Convertible Notes Payable
6 Months Ended
Jun. 30, 2016
Related Party Transactions [Abstract]  
Related Party Convertible Notes Payable

NOTE 4 — Related Party Convertible Notes Payable

 

Short Term Related Party Convertible Notes Payable

Short term related party convertible notes payable were $380,696 at June 30, 2016 and December 31, 2015. Issued on September 4, 2013 to officers and directors of the Company and maturing on September 4, 2017, the notes have an interest rate of 8% per annum that compounds quarterly, and contain a holder call provision that became effective on September 4, 2014. Accrued interest was $95,478 and $77,037 at June 30, 2016 and December 31, 2015, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three and six months ended June 30, 2016 was $9,312 and $18,441, respectively. Interest expense for the three and six months ended June 30, 2015 was $8,601 and $16,942, respectively. The notes and accrued interest are convertible into common stock at the option of the holder at $1.25 per share. The convertible notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with the Company’s bank.

 

Long Term Related Party Convertible Notes Payable

Long term related party convertible note payable was $371,929 at June 30, 2016 and December 31, 2015. Issued to the Company’s Chairman on September 4, 2013 and maturing on September 4, 2017, the note has an interest rate that compounds quarterly at 18% per annum through March 30, 2016 and at 12% thereafter. Accrued interest was $230,913 and $188,350 at June 30, 2016 and December 31, 2015, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three and six months ended June 30, 2016 was $17,512 and $42,563, respectively. Interest expense for the three and six months ended June 30, 2015 was $22,020 and $42,873, respectively. Principal and accrued interest on the note payable are convertible into common stock at the option of the holder at $1.25 per share. The convertible note is secured by all of the assets of the Company and is subordinated to amounts outstanding under the Company’s working capital bank line of credit with the Company’s bank.