7. Notes and advances payable

Notes payable consist of the following as of December 31, 2012 and March 31, 2013:


	2012		2013
Officers, directors and affiliates:
Notes and advances payable, interest at 8.0%, due on demand	$	12,882	$	52,314
Notes and advances payable, interest at 9.7%, due on demand		85,000		85,000
Note payable, interest at 12.0%, due March 2013		150,000		150,000
Collateralized note payable (see below)		261,109		261,109

Total officers, directors and affiliates		508,991		548,423

Unrelated parties:
Notes payable, interest at 12.0%, due March 2013		250,000		250,000

Total unrelated parties		250,000		250,000

Total notes and advance payable	$	758,991	$	798,423

On September 29, 2012, the Company borrowed $425,000 from an affiliate of a stockholder and director under a note agreement that provides for interest at the stated annual rate of 12% (and an effective annual rate of 17.8%) with unpaid principal and interest due on March 29, 2013. The outstanding principal balance as of March 31, 2013 was $261,109. The Company also agreed to assign 75% of its operating income from its oil and gas operations and any lease or well sale or any other asset sales to the note holder to secure the debt.

All of the notes payable shown above are unsecured. Accrued interest on notes and advances payable amounted to $48,359 as of December 31, 2012 and $67,105 as of March 31, 2013.