Notes Payable and Capital Lease

6 Months Ended

Jun. 30, 2012

2. Notes Payable and Capital Lease

At June 30, 2012 and December 31, 2011, the Company had the following promissory notes outstanding:

	June 30, 2012 Unaudited		December 31, 2011
18% installment note, secured by equipment, due December 2013, signed personally by a related party (Note 3)	$	26,885	$	-
14% installment note, secured by equipment, due July 1 2014, signed personally by a related party(Note 3)		22,371		-
12% line of credit payable, secured by the assets of the company,due on demand after 6/30/13.		76,213
12% line of credit payable, secured by the assets of the company,due on demand after 6/30/13.		5,000
12% promissory notes payable to individual, interest due monthly, secured by the assets of the Company, due on April 22, 2011 **		50,000		50,000
15% promissory note payable to individual, due on demand, in default		17,000		17,000
7.5% promissory note with bank, co-signed with related party (Note 3)		-		75,000
20.6% installment note, secured by equipment, due December 2012, signed personally by related party		8,204		13,382
Total notes payable and capital lease		205,673		155,382
8% convertible note, unsecured, due on September 7, 2012		30,500		42,500
Total notes payable and capital lease including convertible note		236,173		197,882
Less: Unamortized debt discount on convertible note		(10,766)		(38,791)
Total notes payable and capital lease including convertible note net of debt discount		225,407		159,091
Less: current maturities, net of unamortized debt discount		(225,407)		(155,193)
Notes payable and capital lease – Long-term	$	--	$	3,898

Maturities of notes payable and capital lease at June 30, 2012 are as follows:

Period ending June 30,	Amount ($)
2013	$	225,408
	$	225,408

Vista International Technologies, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and six months ended June 30, 2012 and 2011

(unaudited)

2. Notes Payable and Capital Lease (Continued)

** The 12% promissory notes were originally due April 22, 2011 but on May 19th, 2011 the repayment of principal was postponed until 5 days after the sale of the Hutchins facility. Interest continues to accrue.

Issuance of Lines of Credit

On April 18, 2012 the company was issued a line of credit for $5,000 at a rate of 12% interest, secured by the assets of the company. Interest on the Line began to accrue from July 1, 2012, with the balance being due on demand anytime after June 30, 2013. The company drew $5,000 against the line of credit during the second quarter.

On April 26, 2012 the company was issued a line of credit for $80,000 at a rate of 12% interest, secured by the assets of the company. Interest on the Line began to accrue on July 1, 2012, with the balance being due on demand anytime after June 30, 2013. The company drew $76,213 against this line of credit during the second quarter.

Issuance of Convertible Debt

On December 7, 2011, the Company entered into a loan agreement with an investor pursuant to which the Company sold and issued a convertible promissory note in the principal amount of $42,500. The Note is convertible into shares of common stock at a conversion price equal to 58% of the current market price of the stock, as measures by the average of the 3 lowest closes of the past 10 trading days. The Note accrues interest at a rate of 8% per annum and matures on September 7, 2012. On June 14, 2012 $12,000 note converted into 1,445,783 common stock. Current balance of $30,500 outstanding net of debt discount $10,766 as of June 30, 2012.

Embedded Derivatives

The Company identified embedded derivatives related to the Convertible Note entered into on December 7, 2011. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.

Current Value of Derivative

During the six months ended June 30, 2012, the Company amortized $28,026 of the debt discount to current operations as interest expense.

The fair value of the described embedded derivative of $42,069 at June 30, 2012 was determined using the Black-Scholes Model with the following assumptions:

(1) risk free interest rate of	10%;

(2) dividend yield of	0%; and

(3) volatility factor of	336%;

At June 30, 2012, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating gain of $32,123 for the six months ended June 30, 2012.