NOTE 7 – NOTE RECEIVABLE

On September 23, 2014, the Company was issued a $150,000 convertible promissory note from an unrelated party. The note accrues interest at 8% per annum on the outstanding principal amount. The note matures on the earlier of (a) the date on which the unrelated party has secured a total of $500,000 or more in additional financing from any source or (b) December 31, 2016, and is classified as “Note receivable” in the financial statements. If at the maturity date the note and accrued interest has not been paid in full, the Company may convert the principal and interest outstanding into shares of the unrelated party’s convertible preferred stock at the then-current valuation. On January 27, 2017 the Company negotiated new repayment terms with the borrower and extended the maturity date to the earlier of the date on which the borrower has secured a total of $500,000 or more in additional financing from any source and December 31, 2022. To date no such reserve is required.