3. Convertible Notes Payable Related Party

3 Months Ended

Mar. 31, 2016

Notes

3. Convertible Notes Payable Related Party

3. CONVERTIBLE NOTES PAYABLE RELATED PARTY

At December 31, 2015 the Company had a secured convertible promissory note from a shareholder with a balance of $171,799.  The interest rate of this note was 6% through December 31, 2014, 7% through December 31, 2015and is 8% through December 31, 2016, 8.5% through December 31, 2017, and 9% through May 31, 2018, with fixed monthly payments of $3,301 and matures May 31, 2018, at which time the remaining balance of principal and all accrued interest shall be due and payable.  This convertible promissory note is secured by all tangible and intangible assets of the Company.  The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2016, the Company made principal and interest payments totaling $9,902.  The secured convertible promissory note had a balance of $165,290 at March 31, 2016 of which $39,608 is short-term and $125,682 is long-term.  

At December 31, 2015 the Company had a secured convertible promissory note from a shareholder with a balance of $43,037.  The interest rate of this note is 6%, required monthly installments of interest only through May 31, 2014, then requires monthly installments of $600 including principal and interest and matures May 31, 2023.  This convertible promissory note is secured by certain equipment of the Company.  The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2016, the Company made principal and interest payments totaling $1,801.  The secured convertible promissory note had a balance of $41,875 at March 31, 2016 of which $7,203 is short-term and $34,672 is long-term.

Notes payable consist of the following:
Schedule of Notes Payable Related Party
	March 31, 2016	December 31, 2015
Secured convertible promissory note from a shareholder; interest rate of 6% through December 31, 2014, 7% through December 31, 2015, 8% through December 31, 2016, 8.5% through December 31, 2017, and 9% through May 31, 2018, with fixed monthly payments of $3,301 through the Maturity Date, at which time the remaining balance of principal and all accrued interest shall be due and payable; matures May 31, 2018; secured by all tangible and intangible assets of the Company (1)	$ 165,290	$ 171,799
Secured convertible promissory note from a shareholder; interest at 6%, requires monthly installments of interest only through May 31, 2014, then requires monthly installments of $600 including principal and interest; matures May 31, 2023; secured by certain  equipment of the Company (2)	41,875	43,037
	207,165	214,836
Less current portion	46,811	46,811
Convertible notes payable, related party - less current portion	$ 160,354	$ 168,025

(1)           The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2016, the Company made principal and interest payments totaling $9,902. The secured convertible promissory note had a balance of $165,290 at March  31, 2016 of which $39,608 is short-term and $125,682 is long-term. 

(2)           The note holder has the right to convert the note, in its entirety or in part, into common stock of the Company at the rate of $1.00 per share.  During the three months ended March 31, 2016, the Company made principal and interest payments totaling $1,801. The secured convertible promissory note had a balance of $41,875 at March 31, 2016 of which $7,203 is short-term and $34,672 is long-term. 

This secured convertible promissory note is secured by certain equipment of the Company. Upon payment of the balance due on this secured convertible promissory note title of the equipment will be transferred to the Company free and clear of all liens and encumbrances.