5. Related party transactions

3 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

Related party transactions

On February 15, 2013, the Company issued a promissory note to Michael Durden, a director of the Company, in the amount of $100,000. On February 22, 2013, the Company issued a promissory note to James Liang, a director of the Company, in the amount of $100,000 and a promissory note to Pablo Enterprises in the amount of $200,000. On February 27, 2013, the Company issued a promissory note to Derace Schaffer, a director of the Company, in the amount of $200,000 (collectively, the "Bridge Notes").

The Bridge Notes were issued in connection with loans made to the Company. The Bridge Notes mature on the earlier of (a) the date on which the Company closes a preferred stock financing of at least $1,000,000, and (b) the date that is 90 days after the note was issued. The Bridge Notes require the Company to pay the original principal amount of the Bridge Notes plus a 10% financing fee on the maturity date. The Bridge Notes are secured by a security interest in certain assets of the Company.

During the three months ending March 31, 2013, Matthew Harris elected to convert $0.6 million of his retention for Series A Preferred stock pursuant to the amended retention bonus agreements.