RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 9 - RELATED PARTY TRANSACTIONS

Related Party Management Agreement with AMHC Managed Services

Effective September 1, 2011, the Company entered into a management agreement (the "Management Agreement") with AMHC Managed Services, Inc. ("AMMS"), a subsidiary of AMAC. The Company's Chairman of the Board of Directors and officers of the Company are also officers/board members of AMAC. The significant terms of the Management Agreement provide for monthly payments to AMMS in exchange for the ability of the Company to fully utilize the management expertise, financial and accounting expertise, support staff and location of AMMS, including the expertise of the position of AMMS' Chief Financial Officer and necessary support for compliance under the securities laws with respect to any private or public reports or registration statements the Company may file. The Management Agreement term is 12 months, and requires the Company to pay AMMS a monthly fee equal to $35,000 per month ($105,000 of expense for three months ended March 31, 2013 and March 31, 2012). Additionally, under the Management Agreement, the Company granted AMMS a warrant to purchase 500,000 shares of Company's common stock exercisable at $0.0005 per share, exercisable for a three-year term. The value of the warrant was determined to be approximately $49,700. The amount was recorded as a prepaid asset and was amortized over the one-year term of the Management Agreement as services are performed. AMMS exercised the warrant in full in July 2012.

The Management Agreement was renewed in October 2012 for an additional one-year period with terms similar to those of the 2011 Management Agreement. In connection with the renewed Management Agreement, the Company issued an additional warrant in October 2012 to AMMS to purchase 500,000 shares of the Company's common stock at $0.0005 per share for a three-year term. The value of the warrant was determined to be approximately $49,700. The amount was recorded as a prepaid asset and is being amortized over the one-year term of the Management Agreement as services are performed, of which approximately $12,440 was expensed in the three months ended March 31, 2013. AMMS exercised the warrant in full in October 2012.

The Company also pays rent and rent-related expenses to AMAC on a month-to-month basis for office space at the AMAC corporate headquarters in Colorado Springs, Colorado. This arrangement began in October 2011 and is expected to continue as the Management Agreement continues. The Company expensed $14,300 and $14,500 for the three months ended March 31, 2013 and 2012, respectively.

In addition to the management fee and the rent, mentioned above, the Company paid AMMS for reimbursable expenses and payments made to third parties on behalf of the Company. During the three months ended March 31, 2013 and 2012, the Company paid reimbursable expenses of $23,711 and $16,766, respectively.