Note 8 - Notes Payable

Notes payable at December 31, 2011 and 2010 consisted of the following:


		December 31, 2011		December 31, 2010
(1) Seventy units, sold in 2008, with each unit consisting of a 10% promissory note of $25,000, maturing three years from the execution date and with a 10% discount rate, and 82,000 non-dilutable (for one year) restricted shares of the Company's common stock, at market price. Per the terms of a debt purchasing agreement formalized with a consultant in September 2011, the Company sold notes for $50,000 in July 2011 and $25,000 in August 2011, including accrued interest, to the consultant (see Note 16). Per the terms of a settlement agreement that the Company executed with the estate of a deceased note holder in November 2011, the Company settled a $25,000, note for restricted shares of its common stock, in December 2011, issued to two beneficiaries of the estate (see Note 14). The Company is pursuing extensions on the remaining notes.	$	1,650,000	$	1,750,000
(2) Promissory note bearing interest at 10% per annum, maturing on January 23, 2012, with a total of 738,000 shares of common stock (see Note 14). The Company is pursuing an extension.		225,000		225,000
(3) In April 2009 for $50,000, the Company sold two units with each unit consisting of a 10% promissory note of $25,000 and 50,000 restricted shares of the Company's common stock, at market price. The shares were issued in April 2009. In April 2009, the Company signed an agreement whereby the note is to be repaid from the proceeds of sales of the Company's products sold by the note holder who is a distributor for the Company. For the years ended December 31, 2011 and 2010, sales proceeds of $19,229 and $30,771, respectively, were applied to the note balance (see Notes 13 and 14).		-		19,229
(4) In May 2009, the Company sold two units with each unit consisting of a 10% promissory note of $25,000, maturing on April 20, 2012, and 50,000 restricted shares of the Company's common stock, at market price. The 100,000 shares were issued in June 2009 (see Note 14).		50,000		50,000
(5) 10% promissory notes of $50,000 and 82,000 shares of the Company's common stock, valued at market price, for a total of 164,000 shares of common stock, issued in November 2009 (see Note 14).		50,000		50,000
(6) In June 2009, the Company sold one unit consisting of a 10% promissory note of $25,000, maturing on June 8, 2012, and 50,000 restricted shares of the Company's common stock, at market price. The shares were issued in June 2009 (see Note 14).		25,000		25,000
(7) In June 2009, the Company sold purchased three units with each unit consisting of a 10% promissory note of $25,000, maturing on June 25, 2012, and 50,000 restricted shares of the Company's common stock, at market price, for a total of 150,000 shares of common stock. The shares were issued in August 2009 (see Note 14).		75,000		75,000
(8) In July 2009, the Company sold 1.4 units with each unit consisting of a 10% promissory note of $25,000, maturing on July 14, 2012 and 50,000 restricted shares of the Company's common stock, at market price, for a total of 70,000 shares of common stock. The shares were issued in August 2009 (see Note 14).		35,000		35,000
(9) In August 2009 the Company sold one unit consisting of a 10% promissory note of $25,000, maturing on August 18, 2012 and 75,000 restricted shares of the Company's common stock, at market price (see Note 14).		25,000		25,000
(10) In September 2009 the Company sold two units with each unit consisting of a 10% promissory note of $25,000, maturing on September 2, 2012 and 50,000 restricted shares of the Company's common stock, at market price, for a total of 100,000 shares of common stock. The April 2009 agreement whereby the note shall be repaid from the proceeds of sales of the Company's products sold by the note holder who is a distributor for the Company also applies to this note. For the years ended December 31, 2011 and 2010, sales proceeds of $4,485 and $0, respectively, were applied to the note balance (see Notes 13 and 14).		45,514		50,000
(11) Promissory note executed in October 2009 for $50,000, maturing on October 20, 2012. Per the terms of the promissory note, the Company sold 3/4 unit with each unit consisting of a 10% promissory note of $25,000 and 133,333 restricted shares of the Company's common stock, at market price, for a total of 100,000 shares of common stock (see Note 14).		18,750		18,750
(12) Promissory note executed in December 2009 for $7,500, bearing interest at 10% per annum, maturing on December 4, 2012, and 150,000 restricted shares of the Company's common stock, at market price (see Note 14). Per the terms of a debt purchasing agreement formalized with a consultant in September 2011, the Company sold the note, including accrued interest, to the consultant (see Notes 13 and 14).		-		7,500
(13) Promissory note executed in April 2010 for $80,000, bearing interest at 10% per annum, which matured on July 23, 2010, and 500,000 restricted shares of the Company's common stock, at market price (see Note 10). In May 2011, the Company made a partial payment of $10,000. Per the terms of a settlement agreement that the Company executed with the note holder in January 2012, the Company settled the note, including accrued interest, for unrestricted shares of its common stock (see Note 18).		70,000		80,000
(14) Promissory note executed in May 2010 for $50,000, bearing interest at 10% per annum, maturing on May 21, 2013, and 200,000 restricted shares of the Company's common stock, at market price. The April 2009 agreement whereby the note shall be repaid from the proceeds of sales of the Company's products sold by the note holder who is a distributor for the Company also applies to this note. For the years ended December 31, 2011 and 2010, no sales proceeds were applied to the note balance (see Notes 13 and 14).		50,000		50,000
(15) Promissory notes executed in July 2011 bearing interest at 10% per annum, maturing on December 31, 2011. The Company issued 1,000,000 warrants with an exercise price of $0.50 per share and an expiration date of July 15, 2014. The fair value of the warrants issued was $26,200. For the year ended December 31, 2011, the Company recorded interest expense of $26,200 relating to the warrants). The Company is pursuing extensions.		87,500		-
(16) Promissory note executed in August 2011 bearing interest at 10% per annum, maturing on December 31, 2011. The Company is pursuing an extension.		50,000		-
		2,456,764		2,460,479
Long term portion		(50,000)		(630,479)
		2,406,764		1,830,000
Discount on notes payable		(14,915)		(44,009)
Current maturities, net of discount	$	2,391,849	$	1,785,991

Interest expense for notes payable for the years ended December 31, 2011 and 2010 was $246,578 and $252,793, respectively.

The total long term portion of all funded debt is due as follows: 2013-$50,000; 2015-$30,000.