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Related party transactions
 12 Months Ended
Sep. 30, 2012
Related Party Transactions Disclosure [Text Block]

Note 14 – Related party transactions


For purposes of these consolidated financial statements, New Power Solutions, LLC, Summit Trading Limited (“Summit”), Green World Trust, and Sierra Trading Corp. are considered related parties for the year ended September 30, 2012, due to their beneficial ownership (shareholdings or voting rights) in excess of 5%.  Significant transactions with these investors for the year ended September 30, 2012 are as follows:


  • We issued 142,200 shares of our Series B preferred stock to Sierra Trading Corp. for $142,200 in cash proceeds that we received in our fiscal year ended September 30, 2011, which was recorded in advances on stock subscriptions in our condensed consolidated balance sheet at that date.

  • We issued 65,705 shares of our Series C preferred stock to New Power Solutions, LLC for cash proceeds of $459,935.  In addition, New Power received three-year warrants to purchase 65,705,000 shares of our common stock at an exercise price of $0.015 per share.  All of the shares of Series C preferred stock were converted to 65,705,000 shares of our common stock.

  • We issued 22,143 shares of our Series C preferred stock to Green World Trust for cash proceeds of $155,000.  In addition, Green World Trust received three-year warrants to purchase 22,143,000 shares of our common stock at an exercise price of $0.015 per share.  All of the shares of Series C preferred stock were converted to 22,143,000 shares of our common stock.

  • Green World Trust converted several convertible notes that were issued during the year ended September 30, 2011, in the aggregate principal amount of $156,000 into 37,052,294 shares of our common stock.  In addition, as additional consideration for the conversion Green World Trust received three-year warrants to purchase 5,086,439 shares of our common stock at an exercise price of $0.005 per share.  The warrants were recorded as interest at their fair value of $65,990.

For purposes of these consolidated financial statements, Summit is considered a related party for the year ended September 30, 2011, due to their beneficial ownership (shareholdings or voting rights) in excess of 5%.  Significant transactions with Summit for the year ended September 30, 2011, are as follows:


  • Summit entered into agreements with certain of our vendors whereby Summit purchased from vendors approximately $82,000 in outstanding trade debt owed those vendors by the Company.  In settlement of the purchased trade debt, we issued a total of 15,790,069 shares of common stock to certain other investors as directed by Summit.

  • In June 2010, we issued an unsecured, non-interest bearing demand note payable in the amount of $300,000.  During the year ended September 30, 2011, (1) we issued 5,747,126 shares of our common stock having a value of approximately $108,000 based on the closing market price as payment of $50,000 of the note and recorded loss on the extinguishment of debt of $58,000, and (2) Summit assigned $235,000 of the balance owed them under the note to a third-party.  At September 30, 2011 the balance outstanding was $15,000 which was assigned by Summit to a third-party in full in the year ended September 30, 2012.  The assigned note amounts were all converted into common stock by the third-party.

  • In July 2011, we issued 322,904 shares of Series B Preferred Stock to Summit in exchange for $304,500 in cash and approximately $18,000 as payment of amounts owed to Summit.  

On April 30, 2012 our board of directors approved an independent consulting agreement with Advanced Materials Advisory LLC, (“AMA”) a limited liability company solely owned by one of our board members, David Schmidt. This agreement is deemed effective as of January 1, 2012, for a period of 12 months. For his services under this agreement we will pay AMA $5,000 per month, plus reasonable out of pocket expenses, to be paid either in cash, in common stock or in warrants, based on mutual agreement. During the year ended September 30, 2012, we incurred expense of $45,000.


In June, 2012 we entered into a consulting agreement with Strategy Advisors, LLC (“SAG”) whose Managing Member is one of our board members, John Toedtman. We issued 15,000 shares of our Preferred Stock Series C (which has since been converted into 15,000,000 shares of restricted common stock) and 15,000,000 warrants for these services, and for which we recorded a fair value of $295,163. During the year ended September 30, 2012, we incurred an expense of $73,791.