RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9. RELATED PARTY TRANSACTIONS

Due to Related Parties

We have an agreement with NSO, which is 100% owned by our Chief Executive Officer, William Donovan, M.D., to provide medical services as our independent contractor. As of December 31, 2012 and 2011, we had balances payable to NSO of $4,400 and $1,020,200, respectively. This outstanding payable is non-interest bearing, due on demand and does not follow any specific repayment schedule. We do not directly pay Dr. Donovan (in his individual capacity as a physician) any fees in connection with NSO. However, Dr. Donovan is the sole owner of NSO, and we pay NSO under the terms of our agreement. In February 2012, the $1,020,200 outstanding NSO balance payable was converted to stock at the price of $1.83 per share, which was the closing market price on Friday, February 17, 2012. This resulted in the issuance of 557,486 restricted shares of common stock.

As shown in Note 6, at December 31, 2012 and 2011, we had balances of $290,699 and $310,699, respectively, due to Dr. Donovan, in his individual capacity, for working capital advances and payments made on our behalf. This outstanding payable is non-interest bearing, due on demand and does not follow any specific repayment schedule.

Also, as shown in Note 6, we have an agreement with Wellness, a company 100% owned by Eric Groteke, D.C., who became our Chief Technology Officer on May 9, 2012 (See Note 4), to provide medical services as our independent contractor in Florida. Wellness is paid for services on a monthly basis dependent upon the services provided. At December 31, 2012, $57,810 was owed to Wellness. At December 31, 2011, we owed Wellness $115,500 recorded in the accounts payable and accrued liabilities balance as a third-party medical services provider. For the year ended December 31, 2012, Wellness billed us for service costs in the amount of $459,532 as a related party and $296,299 as a third-party. For the year ended December 31, 2011, Wellness billed us $917,100 as a third-party for service costs.

Note Receivable from a Related Party

We entered into the 6% promissory note with a major stockholder (a beneficial owner of over 5% of our common stock) on June 30, 2011, as part of a transaction where we recorded a liability for legal expenses from 2008-2010 for which the stockholder and we were held jointly and severally liable. In September 2012, the legal expenses were settled with the law firm for a $200,000 cash payment. We wrote off the promissory note with the shareholder and realized a net credit to other income of approximately $66,000.