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Note 4 - Notes Payable
12 Months Ended
Dec. 31, 2013
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

4. Notes Payable


Related Party


The Company has two $1,000,000 notes payable under an unsecured loan agreement with HBL dated July 22, 1999. The annual interest rate on unpaid principal from the date of each respective note is 4.5 percent, with accrued interest being payable at the maturity. One $1,000,000 note was payable on or before June 3, 2008. The other $1,000,000 note was payable on or before August 28, 2010. Although we are currently in default of the notes, HBL has not demanded payment. During 2008, the Company paid HBL $200,000 of interest on these notes. The principal and accrued interest through October 31, 2013 is listed on Schedule F of the Summary of Schedules filed by ABI with the United States Bankruptcy Court. Schedule F is the List of Unsecured Non-priority (Creditors’) Claims. The claim is also scheduled in Class Four – General Unsecured Creditors of the Plan of Reorganization in the amount of $3,006,752.88.


In 2010, the Company entered into a verbal agreement with Paul Tibbits, a Director, to purchase 12,000,000 warrants held by him for $200,000. The agreement included interest, using the Applicable Federal Rate (“AFR”) at 0.43% per annum, with no stated maturity date, and no collateral. A promissory note in the amount of $200,000 to Paul Tibbits was executed on January 10, 2011. This note was in default at year end and now accrues interest at the default rate of 10% per annum. The note was still outstanding as of December 31, 2013. This debt is listed on Schedule F of the Summary of Schedules filed by the Company with the United States Bankruptcy Court. Schedule F is the list of Unsecured Non-priority (Creditors’) Claims. The Claim is also scheduled in Class Four – General Unsecured Creditors of the Plan of Reorganization. The debt includes $200,000 of principal and $35,055.56 of pre-petition interest accrued through October 31, 2013.


As of February 8, 2012, the Company had promissory notes totaling $85,000 to Paul Tibbits. The principal of the debt, $85,000, was paid to Mr. Tibbits with 850 shares of the Company’s Series 2010-A 10% Convertible Preferred Stock Additionally, on February 8, 2012, the Company paid $48,878 to Mr. Tibbits for unpaid Preferred Dividends, interest on Notes Payable, and interest on unpaid Preferred Dividends. This amount was paid with 489 shares of the Company’s Series 2010-A 10% Convertible Preferred Stock. The total conveyance of preferred shares on February 8, 2012, was 1,339. The Company accrued the following Dividends on Preferred Stock for Mr. Tibbits in each of the following time periods: February 9, 2012 through December 31, 2012, $30,851; January 1, 2013 through October 31, 2013, $26,992; and November 1, 2013 through December 31, 2013, $5,398. The Company also accrued interest on unpaid dividends for the same periods in 2012 and 2013 in the respective amounts $4,628 and $1,458. Interest on the $200,000 Note Payable was also accrued for February 8, 2012 through December 31, 2012, $18,167, and for January 1, 2013, through October 31, 2013, $16,889.


The Yang Group transferred cash to ABI through Dr. Stephen Chen, ABI CEO, and subsequently wired the funds to the Company for working capital loans to be used for operations; total cash received from The Yang Group 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 with no stated interest rates or any other terms.


On July 19, 2013, the unsecured funds advanced from The Yang Group 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 material, 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 December 31, 2013, $280,000 had been advanced under the secured note.


An order of the Bankruptcy Court approved a Post-Petition Financing Facility on January 15, 2014. The Facility is an unsecured, priority basis financing facility approving up to $285,000 of funds to be advanced as needed. To date, $164,972 has been advanced under the Post-Petition Financing Facility. The source of funds under the Facility continues to be The Yang Group.


Subsequent to the balance sheet date of December 31, 2013, $107,972 has been received through March 29, 2014. These funds were received as explained in the preceding paragraph.


We have a line of credit with Wells Fargo for $20,000, with an interest rate of prime rate plus 6.75 percent. There was an outstanding balance of $18,376 on October 31, 2013, when the Chapter 11 Petition was filed. This debt is listed on Schedule F of the Summary of Schedules filed by the Company with the United States Bankruptcy Court. Schedule F is the list of Unsecured Non-priority (Creditors’) Claims. The Claim is also scheduled in Class Four – General Unsecured Creditors of the Plan of Reorganization. This debt is also included on the December 31, 2013 Balance Sheet and the outstanding balance of $18,376 is included in accounts payable and accrued expenses.