Note 6- Notes Payable

12 Months Ended

Dec. 31, 2012

Notes

Note 6- Notes Payable

Note 6- Notes Payable  

At December 31, 2012, outstanding notes payable was made up of the following:

Note Holder	Principal	Accrued Interest	Outstanding as of December 31, 2012
Notes Payable– Related Parties	$     53,977	$               --	$           53,977
Loan from investor	66,784	5,000	71,784
Total notes payable – current liabilities			$         125,761

At December 31, 2011, outstanding notes payable is made up of the following:

Note Holder	Principal	Accrued Interest	Outstanding as of December 31, 2011
Trunity LLC	$         --	$         141,996	$         141,996
Notes Payable to Founders	69,041	--	69,041
Payable to Related Parties			211,037
Loan from investor	16,784	--	16,784
Total notes payable – current liabilities			$         227,821

Notes Payable to Founders – In 2009, the Company entered into line of credit agreements with two of the founders to borrow up to $0.9 million, as needed, to fund working capital needs of the Company. These notes carried an interest rate of 10% and are to expire in September and December 2013.  In July 2011, all principal and interest due on these notes was converted to shares of common stock in the Company.

At December 31, 2011 and 2012, the notes payable to founders consists of short-term loans with the three founders.  Credit agreements exist with Terry Anderton and Les Anderton that allow the Company to borrow up to $0.9 million, as needed, to fund working capital needs. These agreements carry an interest rate of 10% and were extended by the board indefinitely subsequent to the initial expiration date of December of 2012.  The loans have no repayment terms but are expected to be settled in the second quarter of 2013

Trunity, LLC Note - Trunity, LLC was formed by the three founders of the Company to acquire the technology platform used by the Company. The assets of Trunity, LLC, which consisted chiefly of the rights to the technology platform, was sold to the Company for $1.8 million in the form of a Note bearing interest of 8% payable with 120 monthly installments, maturing in June 2019. In July 2011, all principal due on this note was converted to common shares of the Company and distributed to the three owners of Trunity, LLC.  In 2011, the Company made $153,500 in interest payments to the three founders.  In 2012, the Company converted the interest payable of $141,996 to the founders into debentures. See Note 8 for further discussion.

Short-term loan from Investor - In 2011, an investor in the Company made a short-term loan of $16,784 to the Company to cover its working capital needs.  There are no documented terms for this loan.  The Company has treated the loan as interest free and it expects to repay the loan in a short period of time. 

In 2012, an investor in the Company made a short-term loan of $50,000 to the Company to cover its working capital needs.  There are no documented terms for this loan however the Company has agree to pay by the end of the second quarter of 2013 interest expense of $5,000.   

Conversion of Notes to common shares of the Company - During the year ended December 31, 2011, the Company converted all of its long-term outstanding debt, totaling $3.8 million, to its common shares. Of the amount converted, $2.8 million was debt held by the three founders. Outside investors converted the remaining $1 million of debt.  The Company incurred non-cash expenses of approximately $293,000 to convert this debt.  This charge is primarily the unamortized discount incurred with the issuance of the Company’s first debt offering in 2009. 

In October 2010, the Company issued a single $100,000 promissory note to an investor.  The note called for fixed interest of $5,000 per month. This note had a maturity of January 8, 2011. Additionally, 100,000 warrants to purchase shares of Company stock were issued to this investor. See note 9 below, for a description of these warrants. In August 2011, this note with accrued but unpaid interest was converted to common shares.

Interest expense recognized for the years ended December 31, 2012 and 2011 was $141,930 and $173,253, respectively.