NOTES PAYABLE - RELATED PARTIES

3 Months Ended

May 31, 2013

Notes to Financial Statements

NOTES PAYABLE – RELATED PARTIES

Notes payable – related parties consists of two separate notes:

	May 31, 2013		February 28, 2013
Purchase order (PO) financing note payable due within five days of receipt by Company, in whole or in part, portion of funds collected on collateral sales order, or, Company may submit a new collateral sales order with value equal to or in excess of principal outstanding. Interest rate is 1% per month. The note maturity date was originally May 15, 2013. On April 1, 2013, under a new simple note agreement, the maturity date was extended until October 14, 2013 at 10% interest. Under the new terms, interest is reduced to 10%, and monthly payments of $4,937 are due May 1, 2013 until October 1, 2014, when all remaining principal and interest are due. Under the note, outstanding accrued interest was added to principal as of the amendment date. The May 31, 2013 balance is shown net of a $46,062 debt discount.	$	473,938	$	520,000
Promissory note bearing a 10% annual interest rate. Unsecured. The note maturity date was originally May 1, 2013. On April 1, 2013, under a new simple note agreement, the maturity date was extended until October 14, 2013 at 10% interest. Under the note, outstanding accrued interest was added to principal as of the amendment date. The May 31, 2013 balance is shown net of a $46,554 debt discount.		123,446		170.000
Totals		597,384		690,000
Less: current maturities		0		0
Long-term portion	$	597,384	$	690,000