23.

INTEREST EXPENSE AND OTHER EXPENSE (INCOME), NET

For the three months ended September 30, 2013, non-related party interest expense of $55,532 is comprised of $55,239 interest on convertible debentures, and $293 interest on notes payable. For the three months ended September 30, 2012, non-related party interest expense of $25,086 is comprised of $46,230 interest on convertible debentures net $19,546 accrued interest written off and reclassified to other expense as part of foreclosure liability, and net $1,598 accrued interest written off on restructured note payable due vendor. See Note 11. NOTES PAYABLE and Note 12. CONVERTIBLE DEBENTURES for more information on note payable due vender and the convertible debentures, respectively.

For the three months ended September 30, 2013, $68,110 other income, net is comprised primarily of approximately $56,000 in sales commission, approximately $7,000 adjustment downward of foreclosure liability resulting from Final Judgment (See Note 25. SUBSEQUENT EVENTS), approximately $3,200 recovery of security deposit written off in prior period, approximately $5,700 individually insignificant, net other income transactions, and partially offset by approximately $4,000 loss on extinguishment of debentures [See Note 12. CONVERTIBLE DEBENTURES, ref. (13)]. For the three months ended September 30, 2012, $287,639 other expense, net is primarily comprised of approximately $307,000 loss on foreclosure of real estate, approximately $13,000 loss on extinguishment of convertible debentures, and partially offset by approximately $19,000 in royalty income, and $13,000 individually insignificant, net other income transactions.

For the nine months ended September 30, 2013, non-related party interest expense of $180,582 is comprised of approximately $178,000 interest on convertible debentures, and approximately $3,000 interest on notes payable and other interest. For the nine months ended September 30, 2012, non-related party interest expense of $210,615 is comprised of approximately $185,000 interest on convertible debentures, and $26,000 interest on notes payable.

For the nine months ended September 30, 2013, $96,734 other income, net is comprised primarily of $106,000 in sales commissions, approximately $22,000 royalty income on licensed patents, $47,500 return and retirement of year end 2012 stock bonuses granted to certain consultants, approximately $7,000 adjustment downward of foreclosure liability resulting from Final Judgment (See Note 25. SUBSEQUENT EVENTS) patented, approximately $12,000 other income, net of individually insignificant items, and partially offset by approximately $98,000 loss on extinguishment of convertible debentures. For the nine months ended September 30, 2012, $288,617 other expense, net is primarily comprised of approximately $307,000 loss on foreclosure of real estate, approximately $93,000 loss on extinguishment of convertible debentures, $34,730 write-off as obsolete or down to fair market value some of the merchandise acquired in asset purchase discussed in Note 8. ASSET PURCHASE, and partially offset by $95,054 gain on forgiveness of legal accrual, approximately $19,000 in royalty income, and approximately $32,000 individually insignificant, net other income transactions.