6. NOTES PAYABLE

CONVERTIBLE AND OTHER NOTES – RELATED PARTY

During the nine months ended September 30, 2016, the Company issued convertibles notes payable in the aggregate principal amount of $600,000 to a company wholly-owned by the Company’s Executive Chairman of the Board of Directors. Notes payable with an aggregate principal amount of $495,000 are to be repaid upon the earlier of (i) the sixty (60) day anniversary of the date of issuance or (ii) the date on which the Company has received at least $1,000,000 in financing from third parties. A note payable with a principal amount of $105,000 was repaid upon the date at which the Company has received payment under an existing grant with the Pennsylvania Turnpike. Interest on the notes accrues at a rate of 18% annually and is payable at maturity. The unpaid principal and accrued interest are convertible at the election of the holder into shares of common stock at $0.70 per share. These notes are secured by substantially all of the assets of the Company. In connection with the notes issuances, the Company issued five-year immediately vested warrants to purchase an aggregate of 3,000,000 shares of common stock at an exercise price of $0.70 per share with an aggregate issuance date fair value of $204,465, which was recorded as a debt discount. In connection with the Company’s sequencing policy, the warrants were determined to be derivative liabilities and the conversion options were also determined to be a derivative liability, however, their fair value was de minimis.

During the nine months ended September 30, 2016, the Company made aggregate principal repayments of $125,000 associated with convertible and other notes payable to the same related party, of which, $20,000 was related to a note issued in 2014 that was fully repaid. As of the date of filing, convertible notes payable to a company wholly-owned by the Company’s Executive Chairman of the Board of Directors with an aggregate principal amount of $495,000 were outstanding and were past due. The Company has not satisfied this debt and is in negotiations with the Executive Chairman to extend the maturity dates of such notes. On November 14, 2016, the Company received notices of default with respect to notes payable to a company wholly-owned by the Executive Chairman with an aggregate principal balance of $410,000 which included demands for payment of the outstanding principal and interest within seven days.

CONVERTIBLE AND OTHER NOTES

As of September 30, 2016 and December 31, 2015, the secured convertible note had an outstanding principal balance of $50,000. The note is currently past due and is secured by substantially all of the assets of the Company.

During the nine months ended September 30, 2016, the Company made aggregate principal repayments of $10,428 associated with a non-convertible note payable.

INTEREST EXPENSE

Interest expense for the three and nine months ended September 30, 2016 was $57,937 and $128,489, respectively, and $26,571 and $47,590 during the three and nine months ended September 30, 2015, respectively