SHORT-TERM DEBT

3 Months Ended

Dec. 31, 2012

SHORT-TERM DEBT DISCLOSURE [Abstract]

SHORT-TERM DEBT

NOTE 9 – SHORT-TERM DEBT

From November 10, 2009 to December 31, 2012 we borrowed $4,117,041 in the aggregate from 16 unaffiliated third party investors.

In November 2009, we borrowed a total of $237,500 from four private investors pursuant to short-term promissory notes.  These notes were due and payable in the amount of principal plus 20% premium, so that the total amount due was $285,000.  In addition, we issued to the investors 70 shares of restricted common stock for each $1 lent so that a total of 16,625,000 shares of stock were issued to the investors.  The aggregate fair market value of the 16,625,000 shares of stock when issued was $465,500.  $30,000 principal on one of the notes was sold to OTC Global Partners in September 2012.  As of December 31, 2012, we have repaid an aggregate principal and premium in the amount of $148,500 on these short-term notes and owe a balance of $196,300 of which $70,000 is the principal remaining.  The original due date of December 21, 2009, was first extended to February 28, 2010, with a second extension to June 15, 2010, a third extension to September 30, 2010 and a fourth extension to October 31, 2010.  Further extensions of the $100,000 note were made through June 30, 2012 for 3% additional premium per month.  However, as of June 30, 2012, we are accruing this 3% additional premium per month but have not yet received an extension of maturity date and are in technical default of the note.  We are negotiating with the lender to extend the maturity date.  In connection with all of the extensions, a total of $89,800 of additional premium was accrued as of December 31, 2012.

In December 2009, we borrowed a total of $400,000 from a private investor pursuant to three short-term promissory notes.  These notes were payable from March 10 through March 15, 2010 in the amount of principal plus 15% premium, so that the total amount due was $460,000.  In addition, we issued to the investor 48,000 shares of restricted common stock as collateral.  These shares are to be returned and cancelled upon payment of the notes.  The original due date of March 15, 2010 was first extended to June 15, 2010, with a second extension to September 30, 2010 and a third extension to October 31, 2010.  Further extensions of the notes were made through June 30, 2012 for 3% additional premium per month on each note.  We have not yet received an extension of maturity date and are in technical default of the note.  We are negotiating with the lender to extend the maturity date.  In connection with these extensions a total of $284,420 of additional premium was accrued for the December 2009 notes as the date of this report.  In April 2011, Southridge purchased a total of $200,000 in principal value of promissory notes from the private investor.  All conversions before December 10, 2012, were adjusted to reflect a 1 for 500 reverse split effective that date.  As of December 31, 2012, Southridge has converted $180,515 principal and $55,600 premium into 2,257,052 shares of which 41,493 shares of our common stock that was previously issued as collateral.

On December 12, 2012, the private investor sold $180,769 of a promissory note originally dated December 15, 2009 to ASC Recap.  The terms of the original note remain the same except that the holder may elect at an Event of Default to convert any part or all of the $180,769 into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 18,000,000 shares of our common stock in connection with this transaction.

On January 8, 2010, we borrowed a total of $600,000 from a private investor pursuant to two short-term promissory notes.  These notes were payable April 6, 2010 in the amount of principal plus 15% premium, so that the total amount due was $690,000.  In addition, we issued to the investor 62,727 shares of restricted common stock as collateral.  These shares are to be returned and cancelled upon payment of the notes. The original due date of April 6, 2010 was first extended to June 15, 2010, with a second extension to September 30, 2010 and a third extension to October 31, 2010.  Further extensions of the notes were made through July 31, 2011 for 3% additional premium per month on each note.  In January 2011, Southridge purchased a total of $600,000 in principal value of promissory notes from the private investor.  As of the date of this report, Southridge has fully converted $600,000 principal and

$340,099 premium into 768,912 shares of our common stock of which 62,112 shares were collateral shares and 706,800 new shares were issued pursuant to Rule 144.  Although we were in technical default of these two notes, the holder, Southridge elected to convert these notes into common shares.  In connection with these prior extensions through June 30, 2012 and the accrual of the additional premiums through May 31, 2012, a total of $255,647 of additional premium was accrued for the January 2010 notes as of June 30, 2012.

On February 25, 2010, we borrowed $350,000 from a private investor pursuant to a short-term promissory note.  We issued to the investor 35 shares of Series L Convertible Preferred Stock as collateral.  This note had a maturity date of April 30, 2010; however, the investor gave us notice of conversion to the collateral shares on March 31, 2010.  The Note was cancelled upon this conversion.  The 35 shares of Series L Convertible Preferred Stock accrue dividends at an annual rate of 9% and are convertible into an aggregate of 16,587,690 shares of common stock (473,934 shares of common stock for each share of preferred stock).  Pursuant to the Certificate of Designation, Rights and Preferences for the Series L Convertible Preferred Stock, we are obligated to reduce the conversion price and reserve additional shares for conversion if we sold or issued common shares below the price of $.0211 per share (the market price on the date of issuance of the Preferred Stock).  In October 2010, we obtained a waiver from the private investor holding the 35 shares of Series L Convertible Preferred Stock in which the investor agreed to convert no more than the 16,587,690 common shares currently reserved as we do not have sufficient authorized common shares to reserve for further conversions pursuant to the Certificate of Designation, Rights and Preferences.  The investor agreed to a conversion floor price of $.015, which required us to reserve an additional 13,491 common shares.

On January 6, 2011, the investor converted 15 shares of the Series L Convertible Preferred Stock into 20,000 shares of common stock.  As of the date of this report, the investor holds 20 shares of the Series L Convertible Preferred Stock.

On December 13, 2010, we borrowed a total of $60,000 from a private investor pursuant to a short-term promissory note.  The note is payable on or before January 31, 2011.  As consideration for this loan, we were obligated to pay back his principal, $26,400 in premium and issue 6,000 restricted shares of common stock upon the approval by our shareholders of an increase in authorized common stock at our annual meeting to be held on July 12, 2011.  On September 9, 2011, we issued the 6,000 common shares pursuant to Rule 144.  We received an extension of maturity date to December 31, 2012 for this note.  On September 5, 2012, the private investor sold $40,000 principal of the note to SGI Group.  On December 17, 2012, the private investor sold the balance of his note totaling $46,400 ($20,000 principal and $26,400 premium) to WHC Capital LLC.

In November and December 2010, we received a total of $145,000 from Southridge pursuant to three short-term promissory notes.  All three notes provide for a redemption premium of 15% of the principal amount on or before March 31, 2011.  Interest will accrue at 8% per annum until maturity.  Southridge may elect at an Event of Default to convert any part or all of the $145,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In January 2011, we received a total of $157,000 from Southridge pursuant to three short-term promissory notes.  All three notes provide for a redemption premium of 15% of the principal amount on or before May 31, 2011.  Interest will accrue at 8% per annum until maturity.  Southridge may elect at an Event of Default to convert any part or all of the $157,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In February 2011, we received a total of $115,000 from Southridge pursuant to two short-term promissory notes.  Both notes provide for a redemption premium of 15% of the principal amount on or before May 31, 2011.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of

Default to convert any part or all of the $115,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In March 2011, we received $60,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before May 31, 2011.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $60,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In April 2011, we received $165,000 from Southridge pursuant to two short-term promissory notes.  The notes provide for a redemption premium of 15% of the principal amount on or before July 31, 2011.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $165,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In May 2011, we received $80,000 from Southridge pursuant to two short-term promissory notes.  The notes provide for a redemption premium of 15% of the principal amount on or before July 31, 2011.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $80,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In July 2011, we received $150,000 from Southridge pursuant to a short-term promissory note.  The note provided for a redemption premium of 15% of the principal amount on or before December 31, 2011.  We received an extension of maturity date to February 29, 2012 for these notes.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $150,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In August 2011, we received $82,500 from Southridge pursuant to two short-term promissory notes of which the principal on these notes was $100,000 and $7,500, respectively.  The $100,000 note provided for a $25,000 original issue discount and both notes provided for a redemption premium of 15% of the principal amount on or before December 31, 2011.  We received an extension of maturity date to February 23, 2013 for these notes.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $107,500 principal amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  The $7,500 note has been paid in full through the conversion to common stock pursuant to Rule 144.

In August 2011, we received $50,000 from OTC Global Partners, LLC pursuant to a short-term promissory note.  The note provided for a redemption premium of 15% of the principal amount on or before March 1, 2012.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  OTC Global Partners, LLC may elect at an Event of Default to convert any part or all of the $50,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.014 or (b) 65% of the average of the

three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In September 2011, we received $133,000 from Southridge pursuant to two short-term promissory notes of which the principal on these notes was $100,000 and $100,000, respectively.  One of the $100,000 notes provided for a $33,000 original issue discount and the other $100,000 note provided a $34,000 original issue discount.  The notes provided for a redemption premium of 15% of the principal amount on or before December 31, 2011.  We received an extension of maturity date to December 31, 2012 for these notes.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $200,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.0075 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  The $100,000 note has been paid in full through the conversion to common stock pursuant to Rule 144.

In October 2011, we received $67,000 from Southridge pursuant to a short-term promissory note of which the principal on the note was $100,000.  The note provides for a $33,000 original issue discount.  The note provided for a redemption premium of 15% of the principal amount on or before January 12, 2012.  We received an extension of maturity date to December 31, 2012 for this note.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $100,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.0075 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.

In October 2011, we received $67,000 from Southridge pursuant to a short-term promissory note of which the principal on the note was $100,000.  The note provides for a $33,000 original issue discount.  The note provided for a redemption premium of 15% of the principal amount on or before January 26, 2012.  We received an extension of maturity date to December 31, 2012 for this note.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $100,000 Principal Amount of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.005 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.

In October 2011, we received $78,500 from Asher Enterprises pursuant to a short-term promissory note due on or before July 26, 2012.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Asher Enterprises may elect at an Event of Default to convert any part or all of the $78,500 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 58% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In November 2011, we received $20,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before December 31, 2012.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $20,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 62% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

On November 21, 2011, Southridge sold their May 12, 2011 $60,000 short-term promissory note to Panache Capital, LLC ("Panache").  The terms of the original note remain the same except that the maturity date is now November 21, 2012 and interest will accrue at 10% per annum until maturity above and beyond the premium.

In November 2011, we received $40,000 from Panache pursuant to a short-term promissory note.  The note provides a maturity date of November 21, 2012.  Interest will accrue at 10% per annum until maturity.  Panache may elect at an Event of Default to convert any part or all of the $40,000 Principal Amount of the Note plus accrued interest into

shares of our common stock at a conversion price equal to 62% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In November 2011, we received $53,000 from Asher Enterprises pursuant to a short-term promissory note due on or before September 5, 2012.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Asher Enterprises may elect at an Event of Default to convert any part or all of the $53,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 58% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice.  This note has been paid in full through the conversion to common stock pursuant to Rule 144.

In December 2011, we received $17,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before December 18, 2012.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $17,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 62% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In December 2011, we received $12,000 from an unaffiliated third party investor pursuant to a short-term promissory note.  The note provided for a redemption premium of 15% of the principal amount on or before March 8, 2012.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  On January 6, 2012, we amended a promissory note in the principal amount of $12,000 dated December 9, 2011 held by an unaffiliated third-party investor.  The note provided for a redemption premium of 15% of the principal amount on or before March 8, 2012.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  The amendment provided for the issuance of three (3) restricted shares of Series P Preferred Stock having a stated value of $5,000 per share.  These shares, having a total value of $15,000, will be used as collateral for the note held by the investor.  We received an extension of maturity to June 4, 2012 for this note.  Thereafter, a late fee premium of 1% per month will be due if unpaid.  We have not yet received an extension of maturity date and are in technical default of the note.  We are negotiating with the lender to extend the maturity date.

In December 2011, we borrowed a total of $21,604 from a private investor pursuant to two short-term promissory notes.  The notes provided for a 2% premium per month.  One of the notes was payable on or before December 16, 2011 and the other on or before January 6, 2012.  We received an extension of maturity date to August 31, 2012 for these notes for 3% additional premium per month on each note.

In January 2012, we received a total of $175,200 from an unaffiliated third party investor pursuant to five short-term promissory notes with a maturity date ranging from March 5, 2012 to March 20, 2012.  The notes provided for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  We issued a total of 38 Series P Preferred Stock to the investor as collateral with a total stated value of $190,000.  We received an extension of maturity to June 4, 2012 for these notes.  Thereafter, a late fee premium of 1% per month will be due if unpaid.  We have not yet received an extension of maturity date and are in technical default of the note.  We are negotiating with the lender to extend the maturity date.

In February 2012, we received a total of $42,000 from an unaffiliated third party investor pursuant to two short-term promissory notes with a maturity date ranging from April 13, 2012 to April 30, 2012.  The notes provided for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  We issued a total of 9 Series P Preferred Stock to the investor as collateral with a total stated value of $45,000.  We received an extension of maturity to June 4, 2012 for these notes.  Thereafter, a late fee premium of 1% per month will be due if unpaid.  We have not yet received an extension of maturity date and are in technical default of the note.  We are negotiating with the lender to extend the maturity date.

On February 23, 2012, Southridge sold their $100,000 short-term promissory note to Panache Capital, LLC ("Panache") of which a balance of $70,000 principal was remaining after Southridge converted $30,000 principal in a debt to equity conversion on February 17, 2012.  The terms of the original note remain the same except that the

maturity date is now November 21, 2012 and interest will accrue at 10% per annum until maturity above and beyond the premium.

In February 2012, we received $25,000 from Panache pursuant to a short-term promissory note.  The note provides a maturity date of February 28, 2013.  Interest will accrue at 10% per annum until maturity.  Panache may elect at an Event of Default to convert any part or all of the $25,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 55% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In March 2012, we received $30,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before March 18, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $30,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 62% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In April 2012, we received $11,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before December 31, 2012.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $11,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In April 2012, we received $2,500 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before April 25, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $2,500 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In May 2012, we received a total of $25,000 from an unaffiliated third party investor pursuant to a short-term promissory note with a maturity date of August 2, 2012.  The note provides for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  We issued a total of 5 Series P Preferred Stock to the investor as collateral with a total stated value of $25,000.  We have not yet received an extension of maturity date and are in technical default of the note.  We are negotiating with the lender to extend the maturity date.

In May 2012, we received $8,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before May 14, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $8,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In May 2012, we received $13,000 from Linda Grable pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before May 21, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Ms. Grable may elect at an Event of Default to convert any part or all of the $13,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In May 2012, we received $32,000 from a private investor pursuant to two short-term promissory notes with a maturity date ranging from May 17, 2013 to May 20, 2013.  The notes provides for a redemption premium of 15% of

the principal amount upon maturity.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $32,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In June 2012, we received $6,672 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before June 17, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $6,672 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In June 2012, we received $14,000 from a private investor pursuant to two short-term promissory notes with a maturity date ranging from June 6, 2013 to June 20, 2013.  The notes provides for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $14,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In May 2012, we received $8,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before May 14, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $8,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In July 2012, we received $20,100 from a private investor pursuant to four short-term promissory notes with a maturity date ranging from July 9, 2013 to July 24, 2013.  The notes provide for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $20,100 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the two lowest closing bid prices during the five trading days immediately prior to the date of the conversion notice.

In August 2012, we received $25,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before December 31, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $25,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice.  We reserved 50,000,000 shares of our common stock in connection with this loan.

In August 2012, we received $95,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 15% of the principal amount on or before December 31, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $95,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date. We reserved 400,000,000 shares of our common stock in connection with this loan.

On August 20, 2012, Southridge sold $70,000 of their original $100,000 short-term promissory note dated October 12, 2011 to Levin Consulting Group.  The terms of the original note remain the same except that the holder may elect at an Event of Default to convert any part or all of the $70,000 Principal Amount of the Note plus accrued

interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the five trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

In August 2012, we received $35,000 from Levin Consulting Group pursuant to a short-term promissory note with a maturity date of August 20, 2013.  The note provides for a redemption premium of 15% of the principal amount on or before November 18, 2012; 20% on or before December 18, 2012; 25% on or before January 17, 2013; and 30% on or before February 16, 2013.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $35,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the five trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

On August 20, 2012, Southridge sold $30,000 of their original $100,000 short-term promissory note dated October 12, 2011 to SGI Group LLC ("SGI").  The terms of the original note remain the same except that the holder may elect at an Event of Default to convert any part or all of the $30,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the five trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

In August 2012, we received $15,000 from SGI pursuant to a short-term promissory note with a maturity date of August 20, 2013.  The note provides for a redemption premium of 15% of the principal amount on or before November 18, 2012; 20% on or before December 18, 2012; 25% on or before January 17, 2013; and 30% on or before February 16, 2013.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $15,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the five trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

In September 2012, we received $29,000 from Southridge pursuant to a short-term promissory note of which the principal on the note was $30,000.  The note provides for a $1,000 original issue discount.  The note provides for a redemption premium of 15% of the principal amount on or before December 31, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Southridge may elect at an Event of Default to convert any part or all of the $30,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 150,000,000 shares of our common stock in connection with this loan.

In September 2012, we received $25,000 from Panache pursuant to a short-term promissory note of which the principal on the note was $30,000.  The note provides for a $5,000 original issue discount.  The note provides for a redemption premium of 15% of the principal amount on or before December 31, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  Panache may elect at an Event of Default to convert any part or all of the $30,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken

from the Closing Bid Price on the clearing date.  We reserved 200,000,000 shares of our common stock in connection with this loan.

In September 2012, we received $30,000 from Southridge pursuant to a short-term promissory note.  The note provides for a redemption premium of 20% on or before December 17, 2012; 25% on or before March 17, 2013; and 30% on or before June 15, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $30,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 700,000,000 shares of our common stock in connection with this loan.

On September 26, 2012, a private investor sold $30,000 of its original $100,000 short-term promissory note dated November 23, 2009 to OTC Global Partners.  The terms of the original note remain the same except that the new note provides for a new redemption premium of 15% of the principal amount on or before September 25, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  OTC Global Partners may elect at an Event of Default to convert any part or all of the $30,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the five trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Initial closing bid price, then the Purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

In October 2012, we received $20,000 from Panache pursuant to a short-term promissory note.  The note provides a maturity date of September 28, 2013.  Interest will accrue at 10% per annum until maturity.  Any amount on principal or interest that remains unpaid when due, shall bear an interest rate of 22% from the due date until paid.  Panache may elect at an Event of Default to convert any part or all of the $20,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

In October 2012, we received $38,500 from FLUX Carbon Starter pursuant to a short-term promissory note.  The note provides a maturity date of October 3, 2013.  We received net proceeds of $33,250 after deductions of $3,500 for legal fees and $1,750 for a finder's fee.  Interest will accrue at 10% per annum until maturity.  FLUX Carbon Starter may elect at an Event of Default to convert any part or all of the $38,500 principal amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the five trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.

In October 2012, we received $27,000 from Southridge pursuant to a short-term promissory note of which the principal on the note was $40,000 and the maturity date of the note is March 31, 2013.  The note provides for a $13,000 original issue discount.  The note provides for a redemption premium of 20% on or before January 7, 2013; 25% on or before April 7, 2013; and 30% on or before July 15, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $40,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 300,000,000 shares of our common stock in connection with this loan.

In October 2012, we received $1,000 from Southridge pursuant to a short-term promissory note.   The note provides a maturity date of April 30, 2013.  The note provides for a redemption premium of 20% on or before January 22, 2013; 25% on or before April 24, 2013; and 30% after April 24, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $40,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 300,000,000 shares of our common stock in connection with this loan.

In November 2012, we received $6,250 from SGI Group pursuant to a short-term promissory note of which the principal on the note was $12,500 and the maturity date of the note is May 31, 2013.  The note provides for a $6,250 original issue discount.  The note provides for a redemption premium of 20% of the principal amount on or before February 10, 2013; 25% on or before May 11, 2013; and 30% after May 11, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $12,500 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 125,000,000 shares of our common stock in connection with this loan.

In November 2012, we received $6,250 from Star City Capital pursuant to a short-term promissory note of which the principal on the note was $12,500 and the maturity date of the note is May 31, 2013.  The note provides for a $6,250 original issue discount.  The note provides for a redemption premium of 20% of the principal amount on or before February 10, 2013; 25% on or before May 11, 2013; and 30% after May 11, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $12,500 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 125,000,000 shares of our common stock in connection with this loan.

In November 2012, we received $20,000 from Southridge pursuant to a short-term promissory note of which the principal on the note was $40,000 and the maturity date of the note is May 31, 2013.  The note provides for a $20,000 original issue discount.  The note provides for a redemption premium of 20% on or before March 27, 2013; 25% on or before June 25, 2013; and 30% after June 25, 2013.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $40,000 Principal Amount of the Note plus accrued interest into shares of our common stock at an Initial Conversion Price equal to 50% of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice; provided that if the closing bid price for the common stock on the Clearing Date is lower than the initial closing bid price, then the purchase price shall be adjusted such that the discount shall be taken from the Closing Bid Price on the clearing date.  We reserved 400,000,000 shares of our common stock in connection with this loan.

In December 2012, we received $3,000 from a private investor pursuant to two short-term promissory notes with a maturity date ranging from December 5, 2013 to December 9, 2013.  The notes provide for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $3,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice.

In December 2012, we received $20,000 from a private investor pursuant to a short-term promissory note with a maturity date of December 19, 2013.  The notes provide for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 8% per annum until maturity above and beyond the premium.  The holder may elect at an Event of Default to convert any part or all of the $20,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice.

In December 2012, we received $12,000 from an unaffiliated third party investor pursuant to a short-term promissory note with a maturity date of June 13, 2013.  The note provides for a redemption premium of 15% of the principal amount upon maturity.  Interest will accrue at 10% per annum until maturity above and beyond the premium.  We issued a total of 3 Series P Preferred Stock to the investor as collateral with a total stated value of $15,000.

In December 2012, we received $15,000 from WHC Capital, LLC pursuant to a short-term promissory note with a maturity date of October 6, 2013.  Interest will accrue at 12% per annum until maturity above and beyond the premium.  Any amount on principal or interest that remains unpaid when due, shall bear an interest rate of 22% from the due date until paid.  The holder may elect at an Event of Default to convert any part or all of the $15,000 Principal Amount of the Note plus accrued interest into shares of our common stock at a conversion price equal to 50% of the average of the lowest closing bid price during the ten trading days immediately prior to the date of the conversion notice.

OID (Original Issue Discount) is included in debt discount and amortized ratably to interest expense over the term of the respective notes to which they relate.

Debt to Equity Conversions:

On May 11, 2011, Southridge executed a debt to equity conversion of a $80,000 short-term promissory note dated November 11, 2010 plus accrued interest of $3,174.  We issued Southridge 22,180 common shares pursuant to Rule 144 based on an agreed exchange price of $3.75 per share.  We canceled the $12,000 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On July 13, 2011, Southridge executed a debt to equity conversion of a $14,000 short-term promissory note dated December 16, 2010 plus accrued interest of $641.  We issued Southridge 2,928 common shares pursuant to Rule 144 based on an agreed exchange price of $5 per share.  We canceled the $2,100 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On July 13, 2011, Southridge executed a debt to equity conversion of a $51,000 short-term promissory note dated December 22, 2010 plus accrued interest of $2,269.  We issued Southridge 10,654 common shares pursuant to Rule 144 based on an agreed exchange price of $5per share.  We canceled the $7,650 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On July 21, 2011, Southridge executed a debt to equity conversion of a $55,000 short-term promissory note dated January 13, 2011 plus accrued interest of $2,278.  We issued Southridge 11,456 common shares pursuant to Rule 144 based on an agreed exchange price of $5 per share.  We canceled the $8,250 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On July 21, 2011, Southridge executed a debt to equity conversion of a $22,000 short-term promissory note dated January 19, 2011 plus accrued interest of $882.  We issued Southridge 4,576 common shares pursuant to Rule 144 based on an agreed exchange price of $5 per share.  We canceled the $3,300 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On August 24, 2011, Southridge executed a debt to equity conversion of a $80,000 short-term promissory note dated January 28, 2011 plus accrued interest of $3,647.  We issued Southridge 16,729 common shares pursuant to Rule 144 based on an agreed exchange price of $5 per share.  We canceled the $12,000 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On August 24, 2011, Southridge executed a partial debt to equity conversion of a $80,000 short-term promissory note dated February 7, 2011 in which they converted $20,000 principal plus accrued interest of $868.  We issued Southridge 4,174 common shares pursuant to Rule 144 based on an agreed exchange price of $5 per share.

On September 27, 2011, Southridge executed a final debt to equity conversion of a $80,000 short-term promissory note dated February 7, 2011 in which they converted the remaining $60,000 principal plus accrued interest of $868.  We issued Southridge 16,780 common shares pursuant to Rule 144 based on an agreed conversion price of $3.75 per share.  We canceled the $12,000 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On September 27, 2011, Southridge executed a debt to equity conversion of a $35,000 short-term promissory note dated February 15, 2011 plus accrued interest of $1,688.  We issued Southridge 9,783 common shares pursuant to Rule 144 based on an agreed conversion price of $3.75 per share.  We canceled the $5,250 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On September 27, 2011, Southridge executed a debt to equity conversion of a $60,000 short-term promissory note dated March 31, 2011 plus accrued interest of $2,315.  We issued Southridge 16,617 common shares pursuant to Rule 144 based on an agreed conversion price of $3.75 per share.  We canceled the $9,000 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On September 28, 2011, we amended the terms of all debt agreements with Southridge Partners II, LP and agreed to amend the conversion terms of the Notes such that the principal portion of the Notes, plus accrued interest, shall be convertible into shares of our common stock at a conversion price per share equal to the lesser of (a) $3.75 or (b) ninety percent (90%) of the average of the three (3) lowest closing bid prices during the ten (10) trading days immediately prior to the date of the conversion notice.

On October 13, 2011, Southridge executed a debt to equity conversion of a $100,000 short-term promissory note dated April 14, 2011 plus accrued interest of $3,989.  We issued Southridge 41,596 common shares pursuant to Rule 144 based on an agreed conversion price of $2.50 per share.  We canceled the $15,000 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On November 3, 2011, Southridge executed a debt to equity conversion of a $65,000 short-term promissory note dated April 26, 2011 plus accrued interest of $2,721.  We issued Southridge 27,088 common shares pursuant to Rule 144 based on an agreed conversion price of $2.50 per share.  We canceled the $9,750 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On November 16, 2011, Southridge executed a debt to equity conversion of a $20,000 short-term promissory note dated May 6, 2011 plus accrued interest of $850.  We issued Southridge 13,452 common shares pursuant to Rule 144 based on an agreed conversion price of $1.55 per share.  We canceled the $3,000 in premium associated with this note because the note was fully converted into common stock and was not redeemed for cash.

On December 15, 2011, Panache executed a partial debt to equity conversion of a $60,000 short-term promissory note dated May 12, 2011 in which they converted $14,415 principal.  We issued Panache 10,000 common shares pursuant to Rule 144 based on an agreed conversion price of $1.4415 per share.

On January 3, 2012, Panache executed a partial debt to equity conversion of a $60,000 short-term promissory note dated May 12, 2011 in which they converted $12,896 principal.  We issued Panache 16,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.806 per share.

On January 10, 2012, Panache executed a partial debt to equity conversion of a $60,000 short-term promissory note dated May 12, 2011 in which they converted $12,896 principal.  We issued Panache 16,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.806 per share.

On January 18, 2012, Panache executed a partial debt to equity conversion of a $60,000 short-term promissory note dated May 12, 2011 in which they converted $12,710 principal.  We issued Panache 20,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.6355 per share.

On January 27, 2012, Panache executed a debt to equity conversion of a $60,000 short-term promissory note dated May 12, 2011 in which they converted the final $7,083 in principal.  We issued Panache 11,424 common shares pursuant to Rule 144 based on an agreed conversion price of $0.612 per share.  We still owe Panache $3,139 in accrued interest associated with this note.

On January 23, 2012, Southridge executed a partial debt to equity conversion of a $150,000 short-term promissory note dated July 27, 2011 in which they converted $85,000 principal.  We issued Southridge 132,781 common shares with a restrictive legend based on an agreed conversion price of $0.65 per share. The restrictive legend was removed on February 2, 2012 pursuant to Rule 144.

On January 27, 2012, Southridge executed a partial debt to equity conversion of a $150,000 short-term promissory note dated July 27, 2011 in which they converted $30,000 principal.  We issued Southridge 48,387 common shares pursuant to Rule 144 based on an agreed conversion price of $0.60 per share.

On February 7, 2012, Southridge executed a partial debt to equity conversion of a $150,000 short-term promissory note dated July 27, 2011 in which they converted $18,500 principal and $6,411 interest.  We issued Southridge 48,555 common shares pursuant to Rule 144 based on an agreed conversion price of $0.515 per share.

On February 10, 2012, Southridge executed a partial debt to equity conversion of a $150,000 short-term promissory note dated July 27, 2011 in which they converted $16,500 principal and $99 interest.  We issued Southridge 34,544 common shares pursuant to Rule 144 based on an agreed conversion price of $0.48 per share.

On February 17, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $30,000 principal and $3,858 interest.  We issued Southridge 68,475 common shares on February 27, 2012 pursuant to Rule 144 based on an agreed conversion price of $0.495 per share.

On February 23, 2012, Southridge executed a debt to equity conversion of a $7,500 short-term promissory note dated August 23, 2011 in which they converted $7,500 principal and $289 interest.  We issued Southridge 15,091 common shares pursuant to Rule 144 based on an agreed conversion price of $0.515 per share.

On February 28, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated September 12, 2012 in which they converted $51,000 principal and $3,595 interest.  We issued Southridge 121,456 restricted common shares pursuant to Rule 144 based on an agreed conversion price of $0.45 per share.

On March 5, 2012, OTC Global Partners executed a debt to equity conversion of a $50,000 short-term promissory note dated August 30, 2011 in which they converted $50,000 principal and $2,027 interest.  We issued OTC Global Partners 145,530 common shares pursuant to Rule 144 based on an agreed conversion price of $0.3575 per share.

On April 13, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated September 12, 2012 in which they converted $49,000 principal and $1,096 interest.  We issued Southridge 247,387 restricted common shares on April 24, 2012 pursuant to Rule 144 based on an agreed conversion price of $0.205 per share.

On April 13, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated September 28, 2012 in which they converted $4,000 principal and $4,340 interest.  We issued Southridge 41,184 restricted common shares on April 24, 2012 pursuant to Rule 144 based on an agreed conversion price of $0.205 per share.

On May 1, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $9,765 principal.  We issued Panache 42,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.2325 per share.

On May 1, 2012, Asher executed a partial debt to equity conversion of a $78,500 short-term promissory note dated October 24, 2011 in which they converted $12,000 principal.  We issued Asher 52,174 common shares pursuant to Rule 144 based on an agreed conversion price of $0.23 per share.

On May 2, 2012, Asher executed a partial debt to equity conversion of a $78,500 short-term promissory note dated October 24, 2011 in which they converted $15,000 principal.  We issued Asher 88,235 common shares pursuant to Rule 144 based on an agreed conversion price of $0.17 per share.

On May 10, 2012, Asher executed a partial debt to equity conversion of a $78,500 short-term promissory note dated October 24, 2011 in which they converted $13,000 principal.  We issued Asher 136,842 common shares pursuant to Rule 144 based on an agreed conversion price of $0.095 per share.

On May 10, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $7,440 principal.  We issued Panache 60,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.124 per share.

On May 15, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $9,330 principal.  We issued Panache 100,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0933 per share.

On May 21, 2012, Asher executed a partial debt to equity conversion of a $78,500 short-term promissory note dated October 24, 2011 in which they converted $18,500 principal.  We issued Asher 205,556 common shares pursuant to Rule 144 based on an agreed conversion price of $0.09 per share.

On May 22, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $9,330 principal.  We issued Panache 100,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.093 per share.

On May 29, 2012, Asher executed a partial debt to equity conversion of a $78,500 short-term promissory note dated October 24, 2011 in which they converted $12,000 principal.  We issued Asher 133,333 common shares pursuant to Rule 144 based on an agreed conversion price of $0.09 per share.

On May 30, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $9,330 principal.  We issued Panache 100,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.093 per share.

On June 4, 2012, Asher executed a partial debt to equity conversion of a $78,500 short-term promissory note dated October 24, 2011 in which they converted $8,000 principal and $3,140 in interest.  We issued Asher 171,385 common shares pursuant to Rule 144 based on an agreed conversion price of $0.065 per share.

On June 5, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $9,920 principal.  We issued Panache 160,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.062 per share.

On June 8, 2012, Asher executed a partial debt to equity conversion of a $53,000 short-term promissory note dated November 29, 2011 in which they converted $12,000 principal.  We issued Asher 171,385 common shares pursuant to Rule 144 based on an agreed conversion price of $0.07 per share.

On June 12, 2012, Asher executed a partial debt to equity conversion of a $53,000 short-term promissory note dated November 29, 2011 in which they converted $14,000 principal.  We issued Asher 200,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.07 per share.

On June 15, 2012, Asher executed a partial debt to equity conversion of a $53,000 short-term promissory note dated November 29, 2011 in which they converted $13,000 principal.  We issued Asher 136,842 common shares pursuant to Rule 144 based on an agreed conversion price of $0.095 per share.

On June 20, 2012, Asher executed a partial debt to equity conversion of a $53,000 short-term promissory note dated November 29, 2011 in which they converted $14,000 principal and $2,120 in interest.  We issued Asher 189,647 common shares pursuant to Rule 144 based on an agreed conversion price of $0.085 per share.

On July 17, 2012, Ms. Grable executed a full debt to equity conversion of a $13,000 short-term promissory note in which she converted $13,000 principal and $148 in interest.  We issued Ms. Grable 87,654 restricted common shares pursuant to Rule 144 based on an agreed conversion price of $0.15 per share.

On July 17, 2012, a private investor executed a partial debt to equity conversion of five of her notes in which she converted $19,583 principal into 200,000 restricted common shares pursuant to Rule 144 based on an agreed conversion price of $0.0885 per share.

On July 25, 2012, a private investor executed a full debt to equity conversion of a $3,000 short-term promissory note in which she converted $3,000 principal into 20,000 restricted common shares pursuant to Rule 144 based on an agreed conversion price of $0.15 per share.

On July 30, 2012, a private investor executed a partial debt to equity conversion of a $10,000 short-term promissory note in which she converted $6,900 principal into 46,000 restricted common shares pursuant to Rule 144 based on an agreed conversion price of $0.15 per share.

On August 7, 2012, a private investor sold their December 2011 short-term promissory notes totaling $21,604 in principal and $5,334 in premium to OTC Global Partners.  A new short-term promissory note was issued to OTC Global Partners dated August 7, 2012 with a taking period back to December 7, 2011.  OTC Global Partners may elect at an Event of Default to convert any part or all of the $21,604 Principal Amount of the Note plus accrued premium into shares of our common stock at a conversion price $0.16.

On August 7, 2012, OTC Global Partners executed a partial debt to equity conversion of the $21,604 short-term promissory note in which they converted $21,604 principal and $2,396 in premium.  We issued OTC Global Partners 150,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.16 per share.

On September 5, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated September 28, 2011 in which they converted $85,582 principal.  We issued Southridge 760,727 common shares pursuant to Rule 144 based on an agreed conversion price of $0.115 per share.

On September 10, 2012, Levin Consulting Group executed a partial debt to equity conversion of the $70,000 short-term promissory note originally dated August 25, 2011 and purchased on August 20, 2012 from Southridge, in which they converted $20,000 principal.  We issued Levin Consulting Group 160,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.125 per share.  On September 21, 2012 we issued Levin Consulting Group an additional 240,000 shares because the closing bid price on the clearing date fell below the Initial closing bid price.

On September 10, 2012, Panache executed a partial debt to equity conversion of a $100,000 short-term promissory note dated August 25, 2011 in which they converted $14,885 principal.  We issued Panache 160,054 common shares pursuant to Rule 144 based on an agreed conversion price of $0.093 per share.

On September 11, 2012, Southridge executed a final debt to equity conversion of a $100,000 short-term promissory note dated September 28, 2011 in which they converted $10,418 principal and $3,004 in interest.  We issued Southridge 178,958 common shares pursuant to Rule 144 based on an agreed conversion price of $0.075 per share.

On September 11, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated October 26, 2011 in which they converted $32,500 principal and $7,036 in interest.  We issued Southridge 527,142 common shares pursuant to Rule 144 based on an agreed conversion price of $0.075 per share.

On September 12, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated October 26, 2011 in which they converted $4,150 principal.  We issued Southridge 55,333 common shares pursuant to Rule 144 based on an agreed conversion price of $0.075 per share.

On September 12, 2012, Panache executed a partial debt to equity conversion of a $40,000 short-term promissory note dated November 21, 2011 in which they converted $23,250 principal.  We issued Panache 250,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.093 per share.

On September 19, 2012, Panache executed a final debt to equity conversion of a $40,000 short-term promissory note dated November 21, 2011 in which they converted $16,750 principal and $3,244 in interest.  We issued Panache 257,983 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0775 per share.

On September 20, 2012, Southridge executed a partial debt to equity conversion of a $100,000 short-term promissory note dated October 26, 2011 in which they converted $47,300 principal and $153 in interest.  We issued Southridge 759,255 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0625 per share.

On September 27, 2012, OTC Global Partners executed a partial debt to equity conversion of the $30,000 short-term promissory note in which they converted $18,000 in principal.  We issued OTC Global Partners 360,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.05 per share.

On September 28, 2012, Panache executed a partial debt to equity conversion of a $25,000 short-term promissory note dated February 28, 2012 in which they converted $13,200 principal.  We issued Panache 240,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.055 per share.

On October 1, 2012, Southridge executed a final debt to equity conversion of a $100,000 short-term promissory note dated October 26, 2011 in which they converted $16,050 principal and $219 in interest.  We issued Southridge 325,384 common shares pursuant to Rule 144 based on an agreed conversion price of $0.05 per share.

On October 1, 2012, Southridge executed a partial debt to equity conversion of a $20,000 short-term promissory note dated November 14, 2011 in which they converted $10,900 principal and $1,398 in interest.  We issued Southridge 245,967 common shares pursuant to Rule 144 based on an agreed conversion price of $0.05 per share.

On October 2, 2012, Southridge executed a final debt to equity conversion of a $20,000 short-term promissory note dated November 14, 2011 in which they converted $9,100 principal and $18 in interest.  We issued Southridge 182,351 common shares pursuant to Rule 144 based on an agreed conversion price of $0.05 per share.

On October 3, 2012, SGI Group executed a partial debt to equity conversion of the $30,000 short-term promissory note originally dated August 25, 2011 and purchased on August 20, 2012 from Southridge, in which they converted $9,000 principal and $106 in interest.  We issued SGI Group 364,248 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On October 4, 2012, Panache executed a partial debt to equity conversion of a $25,000 short-term promissory note dated February 28, 2012 in which they converted $6,600 principal.  We issued Panache 240,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0275 per share.

On October 10, 2012, FLUX Carbon Starter Fund executed a partial debt to equity conversion of a $38,500 short-term promissory note dated October 4, 2012 in which they converted $15,000 principal.  We issued FLUX Carbon Starter 300,000 restricted common shares pursuant to Rule 144 based on an agreed conversion price of $0.05 per share.

On October 11, 2012, OTC Global Partners executed a final debt to equity conversion of the $30,000 short-term promissory note in which they converted $18,000 in principal.  We issued OTC Global Partners 240,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.05 per share.

On October 18, 2012, Southridge executed a partial debt to equity conversion of a $17,000 short-term promissory note dated December 19, 2011 in which they converted $15,900 principal and $1,125 in interest.  We issued Southridge 681,010 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On October 23, 2012, Panache executed a final debt to equity conversion of a $25,000 short-term promissory note dated February 28, 2012 in which they converted $5,200 principal and $1,512 in interest.  We issued Panache 244,061 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0275 per share.

On October 24, 2012, Levin Consulting Group executed a partial debt to equity conversion of the $70,000 short-term promissory note originally dated August 25, 2011 and purchased on August 20, 2012 from Southridge, in which they converted $12,200 principal and $214 in interest.  We issued Levin Consulting Group 496,417 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On October 24, 2012, SGI Group executed a partial debt to equity conversion of the $30,000 short-term promissory note originally dated August 25, 2011 and purchased on August 20, 2012 from Southridge, in which they converted $5,100 principal and $88 in interest.  We issued SGI Group 207,528 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On November 6, 2012, Southridge executed a final debt to equity conversion of a $17,000 short-term promissory note dated December 19, 2011 in which they converted $1,100 principal and $26 in interest.  We issued Southridge 45,043 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On November 6, 2012, Southridge executed a debt to equity conversion of a $30,000 short-term promissory note dated March 19, 2012 in which they converted $30,000 principal and $1,433 in interest.  We issued Southridge 1,257,337 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On November 6, 2012, Southridge executed a partial debt to equity conversion of an $11,000 short-term promissory note dated April 9, 2012 in which they converted $2,750 principal and $475 in interest.  We issued Southridge 128,998 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On November 21, 2012, Southridge executed a final debt to equity conversion of an $11,000 short-term promissory note dated April 9, 2012 in which they converted $8,250 principal and $53 in interest.  We issued Southridge 332,122 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On November 21, 2012, Southridge executed a debt to equity conversion of a $2,500 short-term promissory note dated April 26, 2012 in which they converted $2,500 principal and $111 in interest.  We issued Southridge 1,104,427 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On November 21, 2012, Southridge executed a debt to equity conversion of an $8,000 short-term promissory note dated May 15, 2012 in which they converted $8,000 principal and $321 in interest.  We issued Southridge 332,835 common shares pursuant to Rule 144 based on an agreed conversion price of $0.025 per share.

On December 18, 2012, Levin Consulting Group executed a partial debt to equity conversion of the $70,000 short-term promissory note originally dated August 25, 2011 and purchased on August 20, 2012 from Southridge, in which they converted $10,000 principal and $315 in interest.  We issued Levin Consulting Group 1,085,800 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0095 per share.  On January 10, 2013 we issued Levin Consulting Group an additional 633,383 shares because the closing bid price on the clearing date fell below the Initial closing bid price.

On December 18, 2012, SGI Group executed a partial debt to equity conversion of the $30,000 short-term promissory note originally dated August 25, 2011 and purchased on August 20, 2012 from Southridge, in which they converted $10,000 principal and $315 in interest.  We issued SGI Group 1,085,800 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0095 per share.

On December 21, 2012, WHC Capital LLC executed a partial debt to equity conversion of the $46,400 short-term promissory note originally dated December 10, 2010 and purchased on August 20, 2012 from a private investor, in which they converted $9,329 principal.  We issued WHC Capital LLC 982,000 common shares pursuant to Rule 144 based on an agreed conversion price of $0.0095 per share.

From January 2011 to April 2011, Southridge acquired promissory notes from a private investor totaling $800,000 in principal and 110,728 shares of common stock which were issued as collateral.  Southridge proposed that we amend the conversion terms of the notes permitting the holder to convert the notes and we agreed to the amendment.  From January 12, 2011 to May 18, 2012, Southridge issued notices of conversion to settle $700,000 in principal plus accrued premiums totaling $395,699 into 810,406 shares of our common stock, of which 103,606 shares were collateral shares and 706,800 new shares were issued pursuant to Rule 144.

As of December 31, 2012, we owe a total of $1,840,416 of short term debt of which $1,168,820 is principal, $633,042 is accrued premium and $38,555 is accrued interest.  We have repaid aggregate principal and premium in the amount of $173,376 on these short-term notes and a total of $2,552,291 principal, $405,790 in premium, and $69,357 in interest has been converted into 19,403,701 shares of our common stock of which 103,606 shares were collateral shares and 19,300,096 new shares were issued pursuant to Rule 144.  Out of the original 103,606 shares of common stock held as collateral, a balance of 7,122 shares remains on the $85,985 principal of the remaining notes.

All debt conversions were consummated at the contractual terms agreed upon for each loan.  Accordingly, there was no gain/loss on conversions.

There can be no assurances that we will be able to pay our short-term loans when due.  If we default on all of the notes due to the lack of new funding, the holders could exercise their right to sell the remaining 103,606 collateral shares and could take legal action to collect the amount due which could materially adversely affect IDSI and the value of our stock.