NOTES PAYABLE AND ACCRUED INTEREST

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 14 - NOTES PAYABLE AND ACCRUED INTEREST

As of December 31, 2012, the Company had $193,180 of notes payable and accrued interest. During the year ended December 31, 2013, the Company eliminated all of the $193,180 of notes payable and accrued interest that it owed as of December 31, 2012. The details regarding the repayment of these notes payable during the year ended December 31, 2013 are as follows:

	Principal & Accrued Interest 12.31.12		YTD 2013 Accrued Interest		YTD 2013 Payments Made		Balance as of 12.31.13
Greners	$	153,250	$	2,750	$	156,000	$	-
Brian Sagheb		24,287		578		24,865		-
W-Net Fund I, L.P. - Revolver		15,643		-		15,643		-
	$	193,180	$	3,328	$	196,508	$	-

The $156,000 paid to Greners represents payment in full of the note payable that the Company issued in July 2012 in relation to its acquisition of Greners.com (see “NOTE 4 – ASSET PURCHASE – GRENERS.COM”). The $24,865 paid to Mr. Sagheb, a former Phototron officer, is payment in full for a loan that he made to the Company. The payment of $15,643 to W-Net Fund I, LP represents payment of the outstanding principal on a $150,000 revolving credit line. As stated above, as of December 31, 2013 the Company had repaid in full all amounts due related to the notes payable that were owed as of December 31, 2012.

On May 1, 2013, the Company entered into a Securities Purchase Agreement with a certain “accredited investor” (“Investor”), for the sale and purchase of a $280,000 original issue discount secured 0% nonconvertible promissory note due October 31, 2013 (the “OID Note”). The OID Note is secured by obligations of the Company. The Company and each of its subsidiaries has granted and pledged to the OID Note Purchaser a continuing security interest in all personal property of the Company and its subsidiaries. Except for the original issue discount, the OID Note does not carry interest unless and until there is an Event of Default, in which case the outstanding balance would carry interest at 18% per annum. The Company can prepay the OID Note, in whole or in part, at any time without penalty.

At closing, the Company received gross proceeds of $250,000 for such private placement, with the remaining $30,000 retained by the OID Note Purchaser as prepaid interest. The Company originally recorded the $30,000 as prepaid interest and subsequently expensed the entire $30,000 as interest expense during the year ended December 31, 2013. 

On October 11, 2013, the Holder of the $280,000 OID Note converted the entire amount into 8,000,000 shares of the Company’s common stock at a per share conversion price of $0.035. On the date of conversion, the Company’s shares were valued at $0.061 per share, which resulted in a beneficial conversion value of $0.026 per share ($0.061 - $0.035 = $0.026), or $208,000 in the aggregate. As a result, the Company recorded a non-cash loss on extinguishment of debt in the amount of $208,000 as of the date of conversion.

During the year ended December 31, 2013, the Company was advanced, in the aggregate, $850,000 on its revolving promissory note (see “NOTE 15 – REVOLVING PROMISSORY NOTE”). On August 29, 2013, $750,000 was converted into a 7% Convertible Note (see “NOTE 19 – 7% CONVERTIBLE NOTE”), leaving an outstanding principal balance of $100,000 as of September 30, 2013. On October 16, 2013, the Company repaid this note in full, in cash, with the total payment equaling $100,518, of which $100,000 was principal and $518 was interest.

As of December 31, 2013, the Company had zero notes payable and accrued interest owed.