7. Related Party Transactions

12 Months Ended

Dec. 31, 2014

Notes

7. Related Party Transactions

7.         Related Party Transactions

In July 2013, a Company vehicle with no book value was transferred to Mr. Collord in satisfaction of $10,000 of the Note (See Note 4), which resulted in a $10,000 gain on the disposal of the asset. During August 2013, Mr. Collord advanced an additional $15,000 to the Company under a new note.  The total amount of $25,000 was due on February 28, 2014.  The note and related accrued interest was paid in full the first quarter of 2014. 

On December 9, 2014 the Company executed two convertible notes payable to directors, Eric Jones, and Jim Collard. The amount of the notes was $25,000 each for a total of $50,000. The interest rate on these notes is 10% per month of the principle balance. The notes are due in full no later than July 1, 2015, and have a minimum amount due of 5 months of interest if the loan is paid back earlier. The interest of $3,920 was recognized in the year ending December 31, 2014.

The convertible note contained a beneficial conversion feature of $13,492 which was recognized as a discount on the note on the date of issuance. The discount was amortized over the note term using the straight-line method, which approximates the effective interest method. For the year ended December 31, 2014, the Company recorded $1,927 in interest expense related to the amortization of the discount.