11.

Notes Payable and advances from related parties

On January 17, 2012, the Company assumed from MIT a note payable with Los Alamos National Bank (“LANB”) in the amount of $700,000. On February 10, 2012, MIT refinanced with LANB the principal and accrued interest of this note payable with a promissory note of $708,000, maturing on February 10, 2015. The monthly payment to LANB on the promissory note is $11,105 and a balloon payment of $453,433 due in February 2015, with the interest rate of 10.0% at March 31, 2015. The promissory note is guaranteed by the Company and secured by all assets of the Company. Total interest paid on the promissory note was $14,000 during the three months ended March 31, 2015. The note’s outstanding amount was $451,000 at March 31, 2014. The Company is currently in default on the note with LANB and has received a demand letter for the unpaid principal and interest.

As of March 31, 2015, the Company had outstanding advances of $600,000. These advances are short term notes from their CFO and former CEO to help fund operations. The notes are unsecured and non-interest bearing.

The Company has entered into a capital lease for equipment at interest rates of 7.25%, payable through 2018. The asset and liability under the capital lease is recorded at the present value of the minimum lease payments and are depreciated over their estimated useful lives. The gross amount of assets held under capital leases for the three months ended March 31, 2015 and year ended December 31, 2014 was $16,300, respectively, with accumulated depreciation of $4,075 and $2,300, respectively. Depreciation expense for this equipment for the three months ended March 31, 2015 and 2014 was $1,775 and $1,135, respectively.

Future maturities of notes payable, advances and capital leases are as follows:

March 31,
2015	$	1,019,000
2016		4,000
2017		3,000
2018		1,000
Total		1,027,000
Less: current portion		(1,019,000)
Note payable – noncurrent portion	$	8,000