SHORT-TERM NONCONVERTIBLE NOTE PAYABLE TO RELATED PARTY

9 Months Ended

Sep. 30, 2014

SHORT-TERM NONCONVERTIBLE NOTE PAYABLE TO RELATED PARTY [Abstract]

SHORT-TERM NONCONVERTIBLE NOTE PAYABLE TO RELATED PARTY

NOTE 8 – SHORT-TERM NONCONVERTIBLE NOTE PAYABLE TO RELATED PARTY

On September 29, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $85,000.  The note matures in two months (November 29, 2014) and bears interest at 14% computed based on a 365-day year.  Accrued interest is payable at maturity in cash.   The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

See “Subsequent Events” described in Note 21 below.