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NOTES PAYABLE (Tables)
12 Months Ended
Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Schedule of Notes Payable

Notes payable as of December 31, 2013 consists of the following:

 

    Principal
Amount
    Carrying
Value
    Cash
Interest
Rate
    Common
Stock
Conversion
Price
    Maturity
Date
90 day Convertible Notes (Chairman of the Board)   $ 2,518,000     $ 2,518,000       6 %   $ 1.05     Various 2014
24 month Convertible Notes ($100,000 to Board member)     225,000       225,000       6 %     1.05     March 2014 -
June 2014
Tonaquint 9% OID Convertible Notes and Warrants     112,500       87,705       7 %     0.30     May 2014
Southridge Convertible Note     12,000       12,000       None       75% of closing bid     June 2014
Series A1 15% OID Convertible Notes and Warrants     149,412       81,415       None       0.20     August 2014
Series A2 15% OID Convertible Notes and Warrants     134,236       69,571       None       0.25     September 2014
Notes Payable, gross   $ 3,151,148       2,933,691                      
Less LPA amount             (505,000 )                    
Notes Payable, net           $ 2,488,691                      

 

Schedule of 90 day Convertible Notes

The Company has issued 90-day notes payable to borrow funds from a director, now the chairman of our Board, as follows:

 

2013   $ 1,208,000  
2012     1,210,000  
2011     100,000  
Total   $ 2,518,000  

 

Tonaquint Original Issue Discount Convertible Notes And Warrants [Member]
 
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Schedule of Estimated Fair Value of Notes Assumptions

We estimated the fair value of each component on the issue date and the conversion date using a Black-Scholes pricing model with the following assumptions:

 

    Warrant -
July 16, 2013
    Warrant -
December 31,
2013
    Derivative -
July 16, 2013
    Derivative -
December 31,
2013
 
Expected term     5 years       4.54 years       0.83 years       0.38 years  
Volatility     124.51 %     139.93 %     192.87 %     230.46 %
Risk Free Rate     1.38 %     1.75 %     0.10 %     0.70 %

 

Schedule of Proceeds of Notes Allocation

The proceeds of the Note were allocated to the three components as follows:

 

    Proceeds allocated
at issue date - July
16, 2013
    Value at December
31, 2013
 
Tonaquint Note   $ 57,400     $ 87,705  
Tonaquint Warrant   $ 26,076     $ 8,227  
Embedded conversion option derivative liability   $ 19,024     $ -  
Total   $ 102,500     $ 95,932  

 

Series A 15% Original Issue Discount Convertible Notes and Warrants [Member]
 
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Schedule of Estimated Fair Value of Notes Assumptions

We estimated the fair value of the warrants on the issue date using a Black-Scholes pricing model with the following assumptions:

 

    Warrants
(Tranche 1)-
November 15,
2013
    Warrants
(Tranche 2)-
December 30,
2013
 
Expected term     2 years       2 years  
Volatility     180.02 %     184.38 %
Risk Free Rate     0.31 %     0.39 %

 

Schedule of Proceeds of Notes Allocation

The proceeds of the Notes were allocated to the components as follows:

 

    Proceeds allocated
at issue date
 
Private Offering Notes   $ 120,313  
Private Offering Warrants   $ 76,429  
Beneficial Conversion feature     44,358  
Total   $ 241,100