NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of notes payable

Notes payable consist of the following:

	September 30, 2015			December 31, 2014
90 day Convertible Notes (Chairman of the Board)	$	2,498,980		$	2,498,980
24 month Convertible Notes ($100,000 to Board member)		225,000			225,000
10 day Note (Board member)		-			42,500
Series A-3 15% OID Convertible Notes and Warrants		14,353			11,765
Series B-1 OID Convertible Notes and Warrants		65,104			56,659
Series B-2 OID Convertible Notes and Warrants		1,035,973			244,565
Notes Payable, gross		3,839,410			3,079,469
Less LPA amount		(485,980	)		(485,980	)
Notes Payable, net	$	3,353,430		$	2,593,489

Details of notes payable as of September 30, 2015 are as follows:

	Principal Amount			Carrying Value			Cash Interest Rate			Common Stock Conversion Price		Maturity Date
90 day Convertible Notes (Chairman of the Board)	$	2,498,980		$	2,498,980			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
Series A-3 15% OID Convertible Notes and Warrants		11,765	(1)		14,353	(1)		None			0.25	January 2015
Series B-1 OID Convertible Notes and Warrants		80,000			65,104			None			0.23	March 2017
Series B-2 OID Convertible Notes and Warrants		1,361,177			1,035,973			None			0.20-0.25	Aug. 2015 – July 2016
Notes Payable, gross	$	4,176,922			3,839,410
Less LPA amount					(485,980	)
Notes Payable, net				$	3,353,430

(1) Includes $2,588 of accrued loss on conversion of OID note.

Schedule of notes payable details

Details of notes payable as of September 30, 2015 are as follows:

	Principal Amount			Carrying Value			Cash Interest Rate			Common Stock Conversion Price		Maturity Date
90 day Convertible Notes (Chairman of the Board)	$	2,498,980		$	2,498,980			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
Series A-3 15% OID Convertible Notes and Warrants		11,765	(1)		14,353	(1)		None			0.25	January 2015
Series B-1 OID Convertible Notes and Warrants		80,000			65,104			None			0.23	March 2017
Series B-2 OID Convertible Notes and Warrants		1,361,177			1,035,973			None			0.20-0.25	Aug. 2015 – July 2016
Notes Payable, gross	$	4,176,922			3,839,410
Less LPA amount					(485,980	)
Notes Payable, net				$	3,353,430

(1) Includes $2,588 of accrued loss on conversion of OID note.

Schedule of debt issuance

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

2013	$	1,188,980
2012		1,210,000
2011		100,000
Total	$	2,498,980

Private Placement [Member] | 15% Series A-3 OID Convertible Notes And Warrants [Member] | Warrant [Member]

Schedule of Valuation techniques

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

	Warrants
Expected term		2 years
Volatility		184.88	%
Risk Free Rate		0.32	%

Schedule of proceeds from debt

The proceeds of the Notes issued during the three months ended March 31, 2014 were allocated to the components as follows:

	Proceeds allocated at issue date
Private Offering Notes	$	32,390
Private Offering Warrants		14,845
Beneficial Conversion feature		7,765
Total	$	55,000

Schedule of debt conversion

Presented below is summary information related to the conversion:

Statement of Operations
Loss on conversion of notes	$	43,288
Accelerated interest expense	$	35,109
Balance Sheet
Shares issued as of June 30, 2014		798,825
Shares to be issued subsequent to June 30, 2014		529,415
Principal amount of notes converted	$	265,648

Presented below is summary information related to the conversion:

Statement of Operations
Loss on conversion of notes	$	2,588
Accelerated interest expense	$	-
Balance Sheet
Shares issued		-
Principal amount of notes converted	$	11,765

Private Placement [Member] | Series B-1 OID Convertible Notes And Warrants [Member] | Warrant [Member]

Schedule of Valuation techniques

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

	Warrants March 20, 2014
Expected term		4 years
Volatility		151.52	%
Risk Free Rate		1.32	%

Schedule of proceeds from debt

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

	Proceeds allocated at issue date
Private Offering Notes	$	34,272
Private Offering Warrants		26,811
Beneficial Conversion feature		3,917
Total	$	65,000

As a result of the triggering of the above noted one time anti-dilution provision, the Company reallocated the proceeds of the Notes during the quarter ended December 31, 2014 as follows:

	Proceeds allocated at issue date
Private Offering Notes	$	46,222
Private Offering Warrants		18,778
Beneficial Conversion feature		-
Total	$	65,000

Private Placement [Member] | Series B-2 OID Convertible Notes And Warrants [Member] | Warrant [Member]

Schedule of Valuation techniques

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

	Warrants three months ended March 31, 2015
Expected term		1 year
Volatility		180.15-185.71	%
Risk Free Rate		0.18-0.22	%

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

	Warrants three months ended September 30, 2015
Expected term		1 year
Volatility		171.36	%
Risk Free Rate		0.28	%

Schedule of proceeds from debt

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

	Proceeds allocated at issue date
Private Offering Notes	$	197,521
Private Offering Warrants		46,097
Beneficial Conversion feature		13,382
Total	$	257,000

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

	Proceeds allocated at issue date
Private Offering Notes	$	342,857
Private Offering Warrants		120,000
Beneficial Conversion feature		137,143
Total	$	600,000