Note C - Convertible Notes Payable Related Party

12 Months Ended

Dec. 31, 2016

Notes

Note C - Convertible Notes Payable Related Party

NOTE C — CONVERTIBLE NOTES PAYABLE RELATED PARTY

Notes payable consist of the following:
Schedule of Notes Payable Related Party
	December 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)	$ 144,966	$ 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)	38,286	43,037
	183,252	214,836
Less current portion	46,811	46,811
Convertible notes payable, related party - less current portion	$ 136,441	$ 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 years 2016 and 2015, the Company made principal payments totaling $26,833 and $26,564, respectively. The secured convertible promissory note had a balance of $144,966 at December 31, 2016 of which $39,608 is short-term and $105,358 is long-term. 

The Company analyzed the conversion option for derivative accounting and beneficial conversion features consideration under ASC 815-15 “Derivatives and Hedging” and ASC 470-20 “Convertible Securities with Beneficial Conversion Features” and noted none.

(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 years 2016 and 2015, the Company made principal payments of $4,751 and $4,474, respectively. The secured convertible promissory note had a balance of $38,286 at December 31, 2016 of which $7,203 is short-term and $31,083 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.

The Company analyzed the conversion option for derivative accounting and beneficial conversion features consideration under ASC 815-15 “Derivatives and Hedging” and ASC 470-20 “Convertible Securities with Beneficial Conversion Features” and noted none.

Aggregate future maturities of notes payable and accrued interest at December 31, 2016 are as follows:

2017	$ 33,418
2018	121,946
2019	5,685
2020	6,036
2021	6,408
Thereafter	9,759
	$ 183,252