Notes Payable to Related Parties

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Notes Payable To Related Parties

NOTE 5 – NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties consists of the following at September 30, 2016 and December 31, 2015:

	September 30, 2016			December 31, 2015
Notes payable to officers/shareholders (a)	$	195,000		$	195,000
Notes payable to officers/shareholders (b)		600,000			-
Notes payable to related parties (c)		70,000			60,000
		865,000			255,000
Less: current portion		(265,000	)		(255,000	)
Non-current portion	$	600,000		$	-

a.	On July 1, 2012, the Company entered into notes payable agreements with two of its officers/shareholders. The maximum borrowings allowed under each individual note are $200,000. Through December 31, 2013, each note bore interest at 20% per annum. Beginning on January 1, 2014, the interest rate on the notes was reduced to 8% per annum. The notes are due 30 days after demand. Amounts owed on the combined note balances were $195,000 at September 30, 2016 and December 31, 2015, respectively.
b.	In May 2016, the Company entered into two separate notes payable agreements with the aforementioned two officers/shareholders. Under each of the agreements, the Company borrowed $300,000 from each of the officers/shareholders. The notes accrue interest at 8% per annum, are unsecured and are due on or before May 31, 2018. A total of $600,000 was due on the combined notes at September 30, 2016.
c.	In November 2015, the Company borrowed $60,000 from the parents of one of the Company’s officer/shareholders. The loan accrues interest at 10% per annum, is unsecured and is due on or before December 31, 2016. A total of $60,000 was owed on the loan as of September 30, 2016 and December 31, 2015.
	In January 2016, the Company borrowed an additional $110,000 from relatives of one of the Company’s officers/shareholders. The loan accrues interest at 10% per annum, is unsecured and is currently due. In April 2016, $100,000 was repaid on the loan. A total of $10,000 was owed on the loan as of September 30, 2016.

Interest expense on the notes to related parties for the three months ended September 30, 2016 and 2015 was $17,795 and $3,932, respectively. Interest expense on the notes to related parties for the nine months ended September 30, 2016 and 2015 was $38,831 and 11,852, respectively. Interest paid to the related parties during the nine months ended September 30, 2016 amounted to $10,305. Accrued interest included in Amounts due to related parties at September 30, 2016 and December 31, 2015 was $57,496 and $28,969, respectively.