Quarterly report pursuant to Section 13 or 15(d)

Note 7 - Notes payable

Note 7 - Notes payable

6 Months Ended

Jun. 30, 2015

Note 7 – Notes payable

On September 1, 2013, the Company had a total of $615,000 of the original $650,000 in notes payable outstanding to its CEO and directors, with an additional $33,933 owed in accrued interest. This debt, previously due on September 1, 2013 through November 30, 2013, was exchanged for three new unsecured notes payable totaling $648,933. Each of these notes were to mature on April 30, 2014, bearing interest at 12% per annum, and included a three-year warrant for every $1.00 of principal amount of each note. The warrants were exercisable at $0.40 per share. The notes were subsequently extended with a due date of July 15, 2014 however, the notes payable and related accrued interest were paid off as of June 30, 2014.

Issue Date	Interest Rate			Current Due Date	Amount
September 1, 2013		12.0	%	July 15, 2014	$	543,300
September 1, 2013		12.0	%	July 15, 2014		52,983
September 1, 2013		12.0	%	July 15, 2014		52,650
Total					$	648,933

On September 1, 2013 the Company issued a note payable in the amount of $45,000 from a related party in exchange for outstanding invoices owed for engineering services provided in the first nine months of the year. The note is unsecured, bears interest at 12% per annum, was payable on April 30, 2014, and included a three-year warrant for each $1.00 of principal included in the note. The warrants are exercisable at $0.40 per share. The note was subsequently extended with a due date of July 15, 2014.

On September 18, 2013, the Company issued a note payable to the CEO and president of the Company in the amount of $50,000. The note was unsecured, bears interest at 12%, was payable on April 30, 2014, and included a three-year warrant for each $1.00 of principal included in the note. The warrants are exercisable at $0.40 per share. The note was subsequently extended with a due date of July 15, 2014.

On September 19, 2013, the Company issued a note payable to a related party in the amount of $30,000. The note was unsecured, bears interest at 12%, was payable on April 30, 2014, and included a three-year warrant for each $1.00 of principal included in the note. The warrants are exercisable at $0.40 per share. The note was subsequently extended with a due date of July 15, 2014.

On September 19, 2013, the Company issued a note payable to a related party in the amount of $250,000. The note was unsecured, bears interest at 12%, was payable on April 30, 2014, and included a three-year warrant for each $1.00 of principal included in the note. The warrants are exercisable at $0.40 per share. The note was subsequently extended with a due date of July 15, 2014.

On September 30, 2013, the Company issued a note payable in the amount of $100,000. The note was unsecured, bears interest at 12%, was payable on April 30, 2014, and included a three-year warrant for each of $1.00 of principal included in the note. The warrants are exercisable at $0.40 per share. The note was subsequently extended with a due date of July 15, 2014.

As of December 31, 2013, the Company had notes payable of $1,123,933 and accrued interest of $42,158. All amounts were due within twelve months. The Company also recognized $296,524 of loan fees associated with the notes payable issued during the year ended December 31, 2013. The loan fees were amortized over the term of the notes payable.

Issue Date	Interest Rate			Current Due Date	Amount
September 1, 2013		12.0	%	April 30, 2014	$	543,300
September 1, 2013		12.0	%	April 30, 2014		52,983
September 1, 2013		12.0	%	April 30, 2014		52,650
September 1, 2013		12.0	%	April 30, 2014		45,000
September 18, 2013		12.0	%	April 30, 2014		50,000
September 19, 2013		12.0	%	April 30, 2014		30,000
September 19, 2013		12.0	%	April 30, 2014		250,000
September 30, 2013		12.0	%	April 30, 2014		100,000
Total					$	1,123,933

These notes payable were paid with proceeds from the sale of debentures in June, 2014.

On February 12, 2014, the Company issued a note payable in the amount of $50,000 to a related party. The note was unsecured, bears interest at 12%, was payable on July 15, 2014, and included a three-year warrant for each of $1.00 of principal included in the note. The warrants are exercisable at $0.50 per share.

On February 24, 2014, the Company issued a note payable in the amount of $25,000 to a related party. The note was unsecured, bears interest at 12%, was payable on July 15, 2014, and includes a three-year warrant for each of $1.00 of principal included in the note. The warrants are exercisable at $0.50 per share.

On February 24, 2014, the Company issued a note payable in the amount of $400,000 to a related party. The note was unsecured, bears interest at 12%, was payable on July 15, 2014, and included a three-year warrant for each of $1.00 of principal included in the note. The warrants are exercisable at $0.50 per share.

On February 24, 2014, the Company issued a note payable in the amount of $25,000 to an unaffiliated Company. The note was unsecured, bears interest at 12%, was payable on July 15, 2014, and included a three-year warrant for each of $1.00 of principal included in the note. The warrants are exercisable at $0.50 per share.

On April 18, 2014, the Company issued a note payable in the amount of $90,000 to a related party. The note was unsecured, bearing interest at 12% and was payable on July 15, 2014. The note and related accrued interest were paid off in June 2014.

On May 9, 2014, the Company issued a note payable in the amount of $25,000 to a related party. The note was unsecured, bearing interest at 12% and was payable on July 15, 2014. The note and related accrued interest were paid off in June 2014.

These notes payable were paid June 2, 2014 from proceeds of the sale of debentures. Notes payable balances were $0 as of June 30, 2015 and December 31, 2014. Total interest expense on notes payable was $0 and $63,677 for the six months ended June 30, 2015 and 2014, respectively.