Note 10 - Related Party Transactions

12 Months Ended

Dec. 31, 2013

Notes

Note 10 - Related Party Transactions

Note 10 – Related Party Transactions

Several of the consulting agreements discussed in Note 9 are with related parties.  Related parties consist primarily of our executive officers, directors and individuals affiliated through family relationships with our officers and directors.  Of the total compensation expense paid in common shares during the years ended December 31, 2013 and 2012, the following amounts were paid to related parties:

	Year Ended December 31
	2013	2012
Executive officers	$669,730	$-
Directors	238,370	-
Founder, stockholder	261,470	-
Family of officers and directors	126,560	110,000
Total related parties	$1,296,130	$110,000

As discussed above, the compensation expense paid in stock is calculated based on the market price of the common stock on the effective date of agreement and amortized over the period over which the services are provided to the Company.

In addition to compensation expense paid in stock, we had the following amounts paid for consulting and professional fees to related parties during the years ended December 31, 2013 and 2012:

	Year Ended December 31
	2013	2012
Founder, stockholder	$204,379	$67,861
Family of officers and directors	105,457	15,125
Total related parties	$309,836	$82,986

As of December 31, 2013 and 2012, we had convertible debentures of $5,000 and $12,500 payable to two family members of our executive officers.  The outstanding principal and interest are convertible into shares of our common stock at a conversion price of $30 per share.

As of December 31, 2012, we had a $33,000 short-term promissory note payable to one of our executive officers.  During the year ended December 31, 2013, this note was purchased by another investor and exchanged for a convertible debenture.

As of December 31, 2012, we had a $40,000long-term promissory note payable to a family member of one of our executive officers.  During the year ended December 31, 2013, this note was purchased by another investor and exchanged for a convertible debenture.

Accrued interest payable to these related parties totaled $14,821 and $14,567 at December 31, 2013 and 2012, respectively.