4. NOTES PAYABLE	9 Months Ended
Sep. 30, 2013
Notes Payable
NOTES PAYABLE	In the first six months of 2013, the Company paid the $35,000 in principal and $851 interest due on the October 1, 2012 note payable in the original amount of $75,000. In the first six months of 2013, the Company paid the $50,000 in principal and $1,879 interest due on the December 11, 2012 note payable in the original amount of $50,000. In the first six months of 2013, the Company paid the $75,000 in principal and $2,340 interest due on the December 7, 2012 note payable in the original amount of $75,000. In January of 2013, the Company paid $5,025 in principal related to a $50,000 purchase order financing agreement. In February of 2013, the Company received a total of $500,000 from two lenders. The Company established two notes payable in the principal amount of $250,000 each. The notes accrue interest at 10% per annum and are due upon the Company’s achievement of certain revenue targets. The notes are convertible at the option of the holder into shares of the Company’s common stock at a conversion price of $0.07 per share, or into an equivalent number of shares of the Company’s Series C Preferred Stock. In June of 2013, the Company received $40,000 from a lender established a note payable in the same amount. The note accrues interest at 10% per annum and is due in five installments between July 25, 2013 and November 25, 2013. In the third quarter of 2013, the Company made principal payments totaling $10,000 to the lender according to the terms of the note agreement. In June of 2013, the Company received $50,000 from a lender established a note payable in the same amount. The note accrues interest at 9% per annum and is due in five installments between August 19, 2013 and December 19, 2013. In the third quarter of 2013, the Company made principal payments totaling $10,000 to the lender according to the terms of the loan agreement. In the first nine months of 2013, the Company received $138,160 from a lender under a note agreement which allows funding of up to $142,000. The note accrues interest at 10% per annum and has a maturity date of May 13, 2015. The note agreement requires that all proceeds generated from the sale of inventory the note financed will be paid to the lender until the note is paid in full. As of September 30, 2013, the Company has paid $10,410 of the note balance. In October of 2013, the entire remaining principal balance of $127,457 and all related accrued interest was paid in full. In July of 2013, the Company received $50,000 from a lender established a note payable in the same amount. The note accrues interest at 10% per annum and is due in four installments between October 12, 2013 and January 12, 2014. In October of 2013, the Company made payment in full on this note. In the first nine months of 2013, the Company received additional cash of $113,000 under the Note payable agreement established in May of 2012 and increased the note payable balance by $130,100, which included an approximate original issue discount of 10% and deferred loan costs. 2012 Debentures In connection with the 2012 debentures disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, the Company issued 5,970,416 shares of Common Stock to the debenture holder in conversion of $200,000 of principal. A pro rata share of the discount associated with the debentures was expensed with each issuance of Common Stock. The unamortized discount balance of the debentures outstanding at September 30, 2013 is $46,946 for a total debenture balance, net of discount, of $103,055. The unamortized balance of deferred loan costs and accrued interest payable at September 30, 2013 is $2,671 and $29,809, respectively.

4. NOTES PAYABLE

9 Months Ended

Sep. 30, 2013

In the first six months of 2013, the Company paid the $35,000 in principal and $851 interest due on the October 1, 2012 note payable in the original amount of $75,000.

In the first six months of 2013, the Company paid the $50,000 in principal and $1,879 interest due on the December 11, 2012 note payable in the original amount of $50,000.

In the first six months of 2013, the Company paid the $75,000 in principal and $2,340 interest due on the December 7, 2012 note payable in the original amount of $75,000.

In January of 2013, the Company paid $5,025 in principal related to a $50,000 purchase order financing agreement.

In February of 2013, the Company received a total of $500,000 from two lenders. The Company established two notes payable in the principal amount of $250,000 each. The notes accrue interest at 10% per annum and are due upon the Company’s achievement of certain revenue targets. The notes are convertible at the option of the holder into shares of the Company’s common stock at a conversion price of $0.07 per share, or into an equivalent number of shares of the Company’s Series C Preferred Stock.

In June of 2013, the Company received $40,000 from a lender established a note payable in the same amount. The note accrues interest at 10% per annum and is due in five installments between July 25, 2013 and November 25, 2013. In the third quarter of 2013, the Company made principal payments totaling $10,000 to the lender according to the terms of the note agreement.

In June of 2013, the Company received $50,000 from a lender established a note payable in the same amount. The note accrues interest at 9% per annum and is due in five installments between August 19, 2013 and December 19, 2013. In the third quarter of 2013, the Company made principal payments totaling $10,000 to the lender according to the terms of the loan agreement.

In the first nine months of 2013, the Company received $138,160 from a lender under a note agreement which allows funding of up to $142,000. The note accrues interest at 10% per annum and has a maturity date of May 13, 2015. The note agreement requires that all proceeds generated from the sale of inventory the note financed will be paid to the lender until the note is paid in full. As of September 30, 2013, the Company has paid $10,410 of the note balance. In October of 2013, the entire remaining principal balance of $127,457 and all related accrued interest was paid in full.

In July of 2013, the Company received $50,000 from a lender established a note payable in the same amount. The note accrues interest at 10% per annum and is due in four installments between October 12, 2013 and January 12, 2014. In October of 2013, the Company made payment in full on this note.

In the first nine months of 2013, the Company received additional cash of $113,000 under the Note payable agreement established in May of 2012 and increased the note payable balance by $130,100, which included an approximate original issue discount of 10% and deferred loan costs.

2012 Debentures

In connection with the 2012 debentures disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, the Company issued 5,970,416 shares of Common Stock to the debenture holder in conversion of $200,000 of principal. A pro rata share of the discount associated with the debentures was expensed with each issuance of Common Stock.

The unamortized discount balance of the debentures outstanding at September 30, 2013 is $46,946 for a total debenture balance, net of discount, of $103,055. The unamortized balance of deferred loan costs and accrued interest payable at September 30, 2013 is $2,671 and $29,809, respectively.