Notes Payable

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Note 4. Notes Payable

Notes payable consisted of the following at June 30, 2015 and December 31, 2014: 

	June 30, 2015			December 31, 2014
Note payable - originating July 30, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at July 29, 2015	$	6,000		$	6,000
Note payable - originating August 29, 2013; monthly interest payments required; bearing interest at 3.25%; maturing at August 28, 2015		11,250			11,250
Note payable - related party originating January 15, 2015; monthly interest payments required commencing in month 7; bearing interest at 7%; maturing at January 15, 2017 [A]		100,000			-
Total		117,250			17,250
Less: Current maturities		(17,250	)		(17,250	)
Amount due after one year	$	100,000		$	-

[A] - On January 15, 2015, the Company issued a two-year promissory note in exchange for cash proceeds of $100,000 from an entity of which 35% ownership is controlled by an individual that is a director and former Chief Executive Officer of the Company. The note is unsecured, bears interest at 7.0% and requires 18 monthly payments of interest only commencing at the beginning of month seven. The note includes a provision that in the event of default the interest rate would increase to the default interest rate of 18%. The first six months of interest is deferred until maturity. The outstanding principal balance along with all accrued and unpaid interest is due at maturity (See Note 8).  

During the three and six months ended June 30, 2015 and 2014, interest expense of $1,884, $20,129, $3,463 and $29,958, respectively, was recognized on outstanding notes payable. As of June 30, 2015, accrued interest payable was $3,204, which is included in accrued expenses on the accompanying condensed consolidated balance sheet.