11. Notes Payable	3 Months Ended
Mar. 31, 2013
Notes
11. Notes Payable	11. NOTES PAYABLE In December 2011, the Company issued a 90-day note payable to borrow $100,000 from a director, now the chairman of the Board. Additional notes payable were issued to the same individual in January 2012 ($100,000); in April 2012 ($100,000), in May 2012 ($25,000); in June 2012 ($20,000); in July 2012 ($325,000); in August 2012 ($50,000); in September 2012 ($15,000); in October 2012 ($165,000); in November 2012 ($130,000); in December 2012 ($280,000); in January 2013 ($190,000); in February 2013 ($115,000); and in March ($200,000). The proceeds from these notes ($1,815,000) were used for general corporate purposes. These notes have been extended several times. A conversion feature was added to the Notes when they were extended, which allows for conversion of the eligible principal amounts to common stock at any time after the six month anniversary of the effective date (the date the funds are received) at a rate of $1.05 per share. Additional terms have been added to all Notes to include additional interest payments to all Notes if extended beyond their original maturity dates and to provide the lender with a security interest in unencumbered inventory and intangible assets of the Company other than proceeds relating to the Calmare device and accounts receivable. The full amount of principal and 6.00% simple interest per annum are now due in the quarter ended September 30, 2013. In March 2012, the Company issued a 24-month convertible promissory note to borrow $100,000 for general corporate purposes. Additional 24-month convertible promissory notes were issued in April 2012 ($25,000) and in June 2012 ($100,000). Conversion of the eligible principal amounts to common stock is allowed at any time after the six month anniversary of the effective date of each note at a rate of $1.05 per share The full amount of principal was outstanding at March 31, 2013; 6.00% simple interest is payable monthly in advance; $125,000 of these notes are classified as long term, with due dates in April and June of 2014. At March 31, 2013, $1,915,000 of the outstanding were Notes payable to related parties; $1,815,000 to the chairman of our Board and $100,000 to another director. Subsequent to March 31, 2013, an additional $590,000 was borrowed from our chairman. The terms and conditions are as noted above.

11. Notes Payable

3 Months Ended

Mar. 31, 2013

11. NOTES PAYABLE

In December 2011, the Company issued a 90-day note payable to borrow $100,000 from a director, now the chairman of the Board. Additional notes payable were issued to the same individual in January 2012 ($100,000); in April 2012 ($100,000), in May 2012 ($25,000); in June 2012 ($20,000); in July 2012 ($325,000); in August 2012 ($50,000); in September 2012 ($15,000); in October 2012 ($165,000); in November 2012 ($130,000); in December 2012 ($280,000); in January 2013 ($190,000); in February 2013 ($115,000); and in March ($200,000). The proceeds from these notes ($1,815,000) were used for general corporate purposes. These notes have been extended several times. A conversion feature was added to the Notes when they were extended, which allows for conversion of the eligible principal amounts to common stock at any time after the six month anniversary of the effective date (the date the funds are received) at a rate of $1.05 per share. Additional terms have been added to all Notes to include additional interest payments to all Notes if extended beyond their original maturity dates and to provide the lender with a security interest in unencumbered inventory and intangible assets of the Company other than proceeds relating to the Calmare device and accounts receivable. The full amount of principal and 6.00% simple interest per annum are now due in the quarter ended September 30, 2013.

In March 2012, the Company issued a 24-month convertible promissory note to borrow $100,000 for general corporate purposes. Additional 24-month convertible promissory notes were issued in April 2012 ($25,000) and in June 2012 ($100,000). Conversion of the eligible principal amounts to common stock is allowed at any time after the six month anniversary of the effective date of each note at a rate of $1.05 per share The full amount of principal was outstanding at March 31, 2013; 6.00% simple interest is payable monthly in advance; $125,000 of these notes are classified as long term, with due dates in April and June of 2014.

At March 31, 2013, $1,915,000 of the outstanding were Notes payable to related parties; $1,815,000 to the chairman of our Board and $100,000 to another director. Subsequent to March 31, 2013, an additional $590,000 was borrowed from our chairman. The terms and conditions are as noted above.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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