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Note 6. Notes Payable - Related Party
9 Months Ended
Sep. 30, 2013
Note Payable Related Party [Abstract]  
Note Payable Related Party [Text Block]

6.     Notes Payable – Related Party. Two $1,000,000 notes are payable under an unsecured loan agreement with Hayashibara Biochemical Laboratories, Inc. (“HBL”), a major stockholder, dated July 22, 1999. Although we are currently in repayment default on the notes, HBL has not demanded payment.


On January 10, 2011 a promissory note for the $200,000 was executed with Paul Tibbits, a director, which includes interest at 10% per annum, with no stated maturity date, and no collateral. As of September 30, 2013 this note is still outstanding.


The Company executed a note payable for $100,000, in exchange for accrued salaries of Martin Cummins through October 31, 2012, during the prior year ended December 31, 2012. The Company repaid $82,500 towards the outstanding note payable. The remaining principal balance is due in monthly payments of $8,500 through November 2013 and one final payment due in December 2013. The note carries no stated interest rate, and a default interest rate of 10%, and is unsecured. Although the term of the note ends with the last payment in December 2013, Martin Cummins’ employment contract expired on August 31, 2013.


Stephen Chen, ABI CEO, wired the Company money for working capital loans to be used for operations; total cash received through Dr. Chen for 2012 was $547,958. During 2013 through July 19, 2013, cash received through Dr. Chen was $428,835. The advances were short term, without due dates, and carry no stated interest rates or any other terms.


On July 19, 2013, the unsecured funds advanced through Dr. Chen ($976,793), were reduced to a promissory note made payable by Amarillo Biosciences, Inc. to the Yang Group, The note was a demand note with no certain due date with an annual interest rate of 23/100 of one percent (.23%) due on unpaid principal from the date of funding. The interest rate was based on the Applicable Federal Rate (AFR) in force for the month in which the note was executed. The note carried a 10% annual interest rate on matured, unpaid amounts. There was no penalty for prepayment of outstanding amounts.


On July 25, 2013, the Yang Group began advancing funds under a new promissory note which is secured by substantially all of the assets of the Company. The note is a revolving/advancing note for $300,000 or so much thereof as may from time to time have been advanced. The annual interest rate as to each advance thereunder, is at the short term Applicable Federal Rate (AFR) determined under Section 1274(d) of the Internal Revenue Code of 1986, for the month in which such advance was received. As of September 30, 2013, $145,000 was advanced under the secured note.