SHORT TERM DEBT - RELATED PARTIES, NET OF DEBT DISCOUNT

9 Months Ended

Sep. 30, 2013

SHORT TERM DEBT - RELATED PARTIES, NET OF DEBT DISCOUNT

9. SHORT TERM DEBT – RELATED PARTIES, NET OF DEBT DISCOUNT

In the first nine months of 2013, the Company realized gross proceeds of $2,776,688 in new cash. Proceeds from the sale of its 12.0% and 15.0% twelve month Unsecured Convertible Notes and Secured Promissory Notes, in the aggregate original principal amount of $2,776,688 (the “Notes”) to an accredited investor (the “Investor”). Interest on the outstanding principal balance of the Notes is payable upon maturity of the note. The Company may prepay the Notes at any time without penalty to the Investors.

The Company issued 2,093,750 shares of common stock and 4,307 shares of Series G preferred stock for origination fees during the nine months ended September 30, 2013 and recorded a debt discount of $385,349.