Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

Note 5. Related Party Transactions

On March 31, 2011, GEM entered into a $500,000 Line of Credit Agreement (the "LOC Agreement") with a related-party lender, pursuant to which the lender initially agreed to loan to GEM $100,000, evidenced by a promissory note of the same amount dated as of equal date.  During the second quarter ended June 30, 2011, GEM borrowed the additional $400,000 available under the LOC Agreement on the same terms evidenced by a similar promissory note. The notes bear interest at a rate of 12% per year, with interest on the note paid monthly in arrears.  The repayment of the notes was due on March 31, 2012 and June 30, 2012, respectively, and was extended to August 16, 2012.  The notes are currently in default for non-payment by GEM.  The notes constitute an unsecured obligation of GEM.  We used the proceeds from the loan for project financing and general corporate purposes.  The related-party lender is controlled by Ronald P. Ulfers, Jr., the Chairman, President and Chief Executive Officer and a director of the Company.

On April 26, 2011, we entered into a one-year consulting agreement Watz Enterprises LLC ("Watz") (the "Watz Agreement").  Watz is a greater than 5% stockholder of the Company. Under the Watz Agreement, Watz agreed to advise us on business development and marketing matters in exchange for (i) a one-time payment of $65,000 and (ii) a monthly management fee of $25,000 payable from June 16, 2011 to May 15, 2012.  Included in accrued expenses for the nine months ended September 30, 2012 are 5 payments of $25,000 each, totaling $125,000.  In April 2012 the Company gave notice of termination of the Watz Agreement effective as of May 15, 2012.  The managing member of Watz is the brother-in-law of Michael Samuel, our former Chairman, President, CEO and director.

During the nine months ended September 30, 2012, certain of our affiliates and a consultant of the Company (the "Lenders") provided us with short-term bridge loans totaling $40,000 which were subsequently repaid in April, 2012.  During the fiscal year ended December 31, 2011 there were loans made which have an outstanding principal amount of $239,400 (the "Loans") and are still outstanding as of September 30, 2012.  The Loans were not evidenced by promissory notes and do not bear interest.  We intend to repay a portion of the Loans from the proceeds of a third-party financing.  There can be no assurance as to the amount of any such financing or that any such financing will be available to us, on satisfactory terms and conditions or at all. If we do not receive such financing proceeds, we intend to proceed to negotiate terms of repayment of the Loans with the Lenders and to execute formal Loan documentation.  We used the proceeds of the Loans for project financing and general corporate purposes.