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PROMISSORY NOTES - RELATED PARTY

12 Months Ended

Dec. 31, 2014

NOTE 6 – PROMISSORY NOTES – RELATED PARTY

Promissory notes – related party outstanding totaled $48,417 and $224,615 as of December 31, 2014 and 2013, respectively, as described below:

	December 31,		December 31,
	2014		2013

Promissory note issued to a company owned by one of the stockholders in October 2013 with a term of six months and bearing interest at a rate of 15%. In March 2014, the Company paid the balance of the note in full.	$	-	$	120,000

Promissory notes issued to two directors in October 2013 in place of expense reimbursements due by the Company. The notes have a term of six months and bearing interest at a rate of 15%. In March 2014, the Company paid the balance of the notes in full.		-		62,115

Promissory note issued to a stockholder in November 2013 with a term of six months and bearing interest at a rate of 15%. In March 2014, the Company paid the balance of the note in full.		-		20,000

Promissory note issued to a stockholder in December 2013 with a term of six months and bearing interest at a rate of 15%. In March 2014, the Company paid the balance of the note in full.		-		22,500

Short-term borrowings from a company owned by one of the stockholders. The borrowings are due on demand and are non-interest bearing. In January 2015, the amounts have been paid in full.		1,625		-

Promissory note issued to a company owned by one of the stockholders in December 2014 with a term of six months and bearing interest at a rate of 15% per annum.		46,792		-
	$	48,417	$	224,615

From March 2014 to August 2014, the Company borrowed an aggregate of $1,110,000 from Penn Investments, Inc., a related party under four promissory notes bearing interest at 15% per annum. On September 24, 2014 we entered into a Note Conversion Agreement with Penn Investments, Inc. pursuant to which an aggregate of $1,165,675 of principal and accrued interest due under these notes was converted into 2,915,000 shares of our common stock, based upon a conversion price of $0.40 per share, in full satisfaction of such notes.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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