Notes Payable (Tables)

3 Months Ended

Jun. 30, 2012

	June 30, 2012	December 31, 2011
Note payable from an unrelated third party bearing interest at 8% and due on September 1, 2013. The loan is convertible to Company stock at any time with a conversion price of $0.06.	$220,000	$220,000

Note payable from an unrelated third party bearing interest at 8% and due on December 31, 2014. The loan is convertible to 6,500,000 shares of Company stock at any time at the discretion of the lender. The note is secured by otherwise unencumbered equipment owned by the Company with a value of approximately $1,100,000.	550,000	0

Note payable to an unrelated third party, bearing interest at 10%, with principal and interest due on May 15, 2012. The note is secured by certain property and equipment of the Company	25,000	25,000

Note payable to an unrelated third party, bearing interest at 10%, with principal and interest due on February 29, 2012. The note is secured by certain property and equipment of the Company. The note has not been formally renewed, but installment payments have commenced and the note is expected to be retired soon without any penalty.	7,360	25,000

Note payable to an unrelated third party, bearing interest at 12.99%, and due on demand.	4,685	8,685

Note payable to Reunion Bank bearing interest at prime plus 2% per annum (3.25% at June 30, 2012), due and payable on October 28, 2015, with a monthly principal and interest payment of $6,295, secured by the assets of the Company and recorded liens on certain equipment of the Company, guaranteed by the Company’s CEO.	0	260,090

Note payable to Reunion Bank bearing interest at prime plus 2% per annum (3.25% at December 31, 2011), due and payable on February 15, 2016 with a monthly principal and interest payment of $5,920, secured by the assets of the Company and recorded liens on certain equipment of the Company, guaranteed by the Company’s CEO.	0	518,072

Note payable to Reunion Bank bearing interest at prime plus 2% per annum (3.25% at June 30, 2012), due and payable on March 30, 2014 with a monthly principal and interest payment of $8,932, secured by the assets of the Company and recorded liens on certain equipment of the Company, guaranteed by the Company’s CEO.	821,698	0

Line of credit with an unrelated third party bearing interest at prime (3.25% at June 30, 2012) plus 2% per annum, due on demand with a monthly interest payment and secured by certain accounts receivable.	0	47,046

Line of credit with an unrelated third party bearing interest at prime (3.25% at June 30, 2012) plus 2% per annum, due on demand with a monthly interest payment.	0	30,000

Line of credit with an unrelated third party bearing interest at LIBOR plus 3% and due on demand.	13,177	13,177

Note payable to OCE Copier bearing no interest rate and due on April 13, 2016	8,578	9,909

Promissory note with an unrelated third party, bearing no interest per annum, a monthly payment of $2,500 and maturing in June 2012. The Company disputes this note payable as representation of the fitness of the equipment purchased from Vac & Jet were not fully disclosed.	60,000	60,000

Note with an unrelated third party bearing no interest, a monthly payment of $1,500 and maturing in October 2012. The lawsuit was settled on May 7, 2012 and no further payments are required.	33,800	33,800

2010 note with an affiliated company bearing interest at 10% per annum and due on demand. Note was assigned to non-affiliate third party in August 2011 to default terms acceptable and agreed by the company.	417,755	417,755

On March 13, 2011, the Company entered into a contract with Dr. Scott Levine, a related party, where Dr. Levine agreed to loan $75,000 in exchange for 1,000,000 restricted shares of common stock and 1,000,000 stock warrants. The relative fair value of the common stock and warrants was $32,704 in total resulting in an initial discount. For the year ended December 31, 2011, $28,616 related to the debt discount was amortized into interest expense. The note was due on July 15, 2011, bore interest at an annualized rate of 18% and was collateralized by 10,000,000 shares of the Company’s common stock. The 10,000,000 shares were issued to Mr. Levine and are considered outstanding. Mr. Levine has verbally agreed to extend the note until the Company secures financing. Mr. Levine exercised the warrants on May 17, 2011 for $50,000 in cash proceeds.	75,000	75,000

Vehicle loan note with Ford Credit bearing interest at 5.5%, secured by a vehicle and due on February 11, 2014.	4,740	8,906

Vehicle loan note with Ford Credit bearing interest at 10.0%, secured by a vehicle and due on April 9, 2014.	22,795	27,503

Equipment loan note with CNH Capital bearing interest at 5.9%, secured by an excavator and due on August 16, 2016.	39,366	42,516

Equipment loan note with Wells Fargo Equipment Finance Inc. bearing interest at 6.95%, secured by Freightliner 4,800 gallon pumping truck and due on March 5, 2017.	146,692	0

Total Notes and Line of Credit Payable	2,450,646	1,822,459
Less: Current Portion	(726,772)	(1,542,682)
Long-Term Portion	$1,723,874	$279,777

Principal Payments

Principal payments for the long-term notes payable for each of the five succeeding years are as follows:

Twelve months ended June 30,		Amount
2013	$	731,228
2014		1,589,920
2015		45,024
2016		45,076
2017		39,396
Total	$	2,450,646

Freedom Environmental Services, Inc. 10-Q