3. Convertible Notes Payable Related Party

6 Months Ended

Jun. 30, 2017

Notes

3. Convertible Notes Payable Related Party

3. CONVERTIBLE NOTES PAYABLE RELATED PARTY

At December 31, 2016 the Company had a secured convertible promissory note from a shareholder with a balance of $144,966.  The interest rate of this note was 6% through December 31, 2014 and is 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 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 six months ended June 30, 2017, the Company made principal and interest payments totaling $19,804.  The secured convertible promissory note had a balance of $131,079 at June 30, 2017 which is all short-term.  

At December 31, 2016 the Company had a secured convertible promissory note from a shareholder with a balance of $38,286.  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 six months ended June 30, 2017, the Company made principal and interest payments totaling $3,602.  The secured convertible promissory note had a balance of $35,802 at June 30, 2017 of which $7,203 is short-term and $28,599 is long-term.