Annual report pursuant to Section 13 and 15(d)

NOTES PAYABLE RELATED PARTY

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NOTES PAYABLE RELATED PARTY
12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Note 10 - NOTES PAYABLE-RELATED PARTY

As of December 31, 2016 and 2015, the Company received advances from Kent Emry current President of the Company, Scott Carley, and Neil Muller, former President of the Company as loans from related parties. The loans are payable on demand and without interest. In addition, the Company has issued unsecured, non-interest bearing demand notes to related parties. The balance outstanding as of December 31, 2016 and 2015 were $47,980 and $106,025, respectively. (See Note 7-Settlement Payable)

 

On January 22, 2013, the Company issued a unsecured promissory note payable for $200,000 due January 1, 2018, with a stated interest rate of 12% per annum beginning three months from issuance; payable monthly. Principal payments are due starting February 1, 2015 at $6,650 per month. The lender has an option to convert the note to licensing rights for the State of Oregon. The Company currently is in default of the required interest payments initially due starting April 22, 2013. During the year ended December 31, 2014, the Company has paid $36,390 principal and accrued interest towards the promissory note.

 

In connection with the issuance of the above described promissory note, the Company issued 950,000 (as amended) of its common stock on March 31, 2014.

 

The Company recorded a debt discount of $11,250 based on the fair value of the Company's common stock at the issuance date of the promissory note. The discount is amortized ratably over the term on the notes. The note holder subsequently became an officer of the Company. The balance outstanding as of December 31, 2016 and 2015 was $163,610, with unamortized debt discount of $828 and $3,110, respectively.