25.

SUBSEQUENT EVENTS

On August 5, 2013, the Company issued 2,058 shares of restricted common stock, to the non-employee Board of Director in payment of $2,500 Board of Director Fee for July 2013 at the weighted average price during the month.

On August 5, 2013, the Company issued 33,333 shares of restricted common stock to satisfy $4,500 in accrued payroll at the weighted average price for the period earned.

On July 16, 2013, the Company issued 462,963 shares of restricted common stock representing 50%, or $125,000, of the commitment fee as discussed in NOTE. 25. SECURITIES PURCHASE AGREEEMENT. Prior to the reverse stock split, which become effective on July 15, 2013, as discussed in Note 19. CHANGE IN CAPITAL STRUCTURE, the Company did not have enough authorized shares remaining to satisfy the commitment fee. As a result, the investor waited until after the effective date of the reverse stock split to request payment of the first tranche of commitment fee. After issuance of the restricted shares of stock to the investor, The Company noted that the issuance of the shares violated terms of the agreement in that the number of shares issued exceeded 9.99% of the outstanding shares of common stock of the Company rendering the investor an affiliate. As a result, the Company in consultation with legal counsel is determining best course of action to resolve.

On July 7, 2013, the Company borrowed $200,000 from a lender. The loan is due upon demand, and further terms may be defined at a later date. The loan was granted to facilitate satisfaction and cancellation of some debentures. Toward that end the Company is currently in negotiation with one lender on settlement of all outstanding debt with them. The Company believes settlement is imminent and terms and conditions will be in the best interest of the Company.