10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2012

or

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 000-50356

EAST COAST DIVERSIFIED CORPORATION

(Exact Name of registrant as specified in its charter)

Nevada	55-0840109
(State or other Jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

810 Franklin Court, Suite H

Marietta, Georgia 30067

(Address of principal executive offices)

(770) 953-4184

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  T    No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes T No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:

£	Large Accelerated Filer	£	Accelerated Filer
£	Non-Accelerated Filer	S	Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes £   No T

As of November 14, 2012, there were 1,957,787,326 shares outstanding of the registrant’s common stock.

EXPLANATORY NOTE

The purpose of this Amendment No.1 (the “Amendment”) to the East Coast Diversified Corporation (the “Company”) quarterly report on Form 10-Q for the period ended September 30, 2012, originally filed with the U.S. Securities and Exchange Commission on November 19, 2012 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.

No other changes have been made in this Amendment to the Form 10-Q. This Amendment speaks as of the original date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to rule 406T of Regulation S–T, the interactive data files on Exhibit 101 attached hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liabilities under those sections.

2

Item 6. Exhibits.

Exhibit No.	Description
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

*furnished herewith

3

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  December 5, 2012	By: /s/ Kayode Aladesuyi
	Kayode Aladesuyi
	Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer)

XML

6. Commitments and Contingencies (Details) (USD $)	Sep. 30, 2012
Commitments and Contingencies Disclosure [Abstract]
2012	$ 6,489
2013	26,735
2014	27,550
2015	28,366
2016	29,219
2017	15,054
Total	$ 133,413

XML

3. Related Parties

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

NOTE 3 - Related Parties

 Loans payable – related parties at September 30, 2012 and December 31, 2011 consist of the following:

	September 30,		December 31,
	2012		2011
Unsecured non-interest bearing note payable, due on demand, to Frank Russo, a Director of the Company.  During the nine months ended September 30, 2012, $5,000 was paid on the note.	$	404,979	$	409,979
Unsecured note payable to Edward Eppel,  a Director of the Company, which bears interest at 10% per annum and is due on demand.  Accrued interest is equal to $27,596 and $15,763, respectively.		201,152		189,319
Unsecured non-interest bearing note payable, due on demand, to Anis Sherali, a Director of the Company.  During the nine months ended September 30, 2012, Mr. Sherali loaned an additional $56,500 to the Company and converted the entire note balance of $87,500 preferred stock.		–		31,000
Total	$	606,131	$	630,298

Frank Russo, a Director of the Company, is a holder of an unsecured non-interest bearing note of the Company.  At December 31, 2010, $422,006 was due to Mr. Russo.  The Company repaid $5,000 and $12,027 to Mr. Russo during the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively. During the nine months ended September 30, 2012, the Company converted $10,000 of accrued board compensation due to Mr. Russo into 102,041 shares of Series A preferred stock. Additionally, during the nine months ended September 30, 2012, Mr. Russo converted 6,922,685 shares of common stock owned by him into 346,134 shares of Series A preferred stock.

Edward Eppel, a Director of the Company, is a holder of a note of the Company which bears interest at 10% per annum. At December 31, 2010, $173,256 was due to Mr. Eppel.  The Company borrowed $0 and $299 from Mr. Eppel during the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively.  $11,833 and $15,763 of interest was accrued and included in the loan balance for the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively. During the nine months ended September 30, 2012, the Company converted $10,000 of accrued board compensation due to Mr. Eppel into 102,041 shares of series A preferred stock.

During the year ended December 31, 2011, the Company borrowed $195,000 from Mr. Sherali and issued a non-interest bearing note. Also during the year ended December 31, 2011, the Company converted $127,000 of the note and issued 13,005,556 shares of common stock and converted $37,000 of the note and issued 462,500 shares of Series A preferred stock to Mr. Sherali. During the nine months ended September 30, 2012, the Company borrowed an additional $56,500 from Mr. Sherali and converted the $87,500 balance of the note and issued 2,592,898 shares of Series A preferred stock to Mr. Sherali. During the nine months ended September 30, 2012, Mr. Sherali purchased 3,830,076 shares of the Company’s Series A preferred stock for $104,500 and the Company converted $10,000 of accrued board compensation due to Mr. Sherali into 102,041 shares of Series A Preferred stock. Additionally, during the nine months ended September 30, 2012, Mr. Sherali converted 32,420,942 shares of common stock owned by him into 1,621,047 shares of Series A preferred stock.

Kayode Aladesuyi, the Company’s Chairman, Chief Executive Officer, and President, was the holder of an unsecured non-interest bearing note of the Company. At December 31, 2010, the outstanding balance on the note was $18,456. During the year ended December 31, 2011, the Company borrowed $10,619 from and repaid $29,075 to Mr. Aladesuyi. The balance of the note at December 31, 2011 is $0.

The Company issued 4,000,000 shares of its common stock to Mr. Aladesuyi for services during the years ended December 31, 2011 and converted $230,000 of accrued salaries due to Mr. Aladesuyi to 32,857,143 shares of common stock. During the nine months ended September 30, 2012, the Company converted $10,000 of accrued board compensation due to Mr. Aladesuyi into 102,041 shares of Series A preferred stock and issued 14,583,333 shares of Series A preferred stock as a bonus award to Mr. Aladesuyi.

On October 5, 2011, the Company entered into a license with BBGN&K LLC (“BBGN&K”) for the rights to use certain patented technologies of which BBGN&K owns the patents. Mr. Aladesuyi is the managing member of BBGN&K. The license agreement calls for royalty payments beginning in 2012 of 8% of EarthSearch’s revenues to be paid quarterly. Also on October 5, 2011, the Company's Board of Directors approved the issuance of 1,428,572 shares of Series A preferred stock to Mr. Aladesuyi as payment of $200,000 initial license fee.

On November 2, 2011, the Company issued 4,285,714 shares of its preferred stock to Mr. Aladesuyi in conversion of $600,000 of accrued compensation due him.

On November 2, 2011, the Company issued 1,375,000 shares of its preferred stock to Mr. Russo in conversion of $125,000 of accrued compensation due him.

On August 5, 2012, the Company entered into a license agreement with Web Asset, LLC (“Web Asset”) for the rights to use certain social media concept and idea created by Mr. Kayode Aladesuyi. Mr. Aladesuyi is the managing member of Web Asset. The license agreement calls for royalty payments of 49% of the revenues earned by the Company in its use of the social media concept after the Company has earned its first $2,000,000 of revenue, payable quarterly. In addition, the Company is required to pay to Web Asset a one-time fee of $150,000.

Andrea Sousa, Comptroller of the Company, is the wife of Kayode Aladesuyi. On January 12, 2012 the Company issued 7,500,000 shares of the Company’s common stock in exchange of salaries payable to Ms. Rocha of $22,500.

During the nine months ended September 30, 2012, Mr. Aladesuyi, his five children, and BBGN&K converted a combined 46,027,281 shares of common stock owned by them into 2,301,363 shares of Series A preferred stock.

During the nine months ended September 30, 2012, Ms. Sousa converted 1,119,436 shares of common stock owned by her into 55,971 shares of Series A preferred stock.

XML

2. Loans Payable

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

NOTE 2 - Loans Payable

Loans payable at September 30, 2012 and December 31, 2011 consist of the following:

	September 30,		December 31,
	2012		2011
Loans Payable, Current:
Unsecured $450,000 note payable to Azfar Haque, which bears interest at 9% per annum and was originally due June 15, 2008. At December 31, 2011 the note was in default.  On September 19, 2011, $25,000 of this note was transferred to an investor and was converted to common stock.  During the year ended December 31, 2011, $227,250 of this note was converted to common stock.  During the nine months ended September 30, 2012, the remaining $372,655 plus $3,595 of additional accrued interest was purchased by multiple investors.  Accrued interest is equal to $ nil and $174,905 respectively.	$	–	$	372,655
Unsecured $80,000 note payable to Rainmaker Global, Inc. which bears interest at 30% per annum and was originally due December 31, 2009. At December 31, 2011 the note was in default.  During the nine months ended September 30, 2012, $102,000 of this note was purchased by Ironridge Global IV, Ltd.  Pursuant to the purchase agreement, Rainmaker Global agreed to settle the entire amount due for the purchase price of $102,000, creating a gain on the settlement of $38,125. Accrued interest is equal to $nil and $54,125 respectively.		–		134,125
$20,000 convertible note payable to Leonard Marella, which bears interest at 10% per annum and was originally due October 1, 2009.  At December 31, 2011 the note was in default.  During the nine months ended September 30, 2012, $24,862 of this note was purchased by Ironridge Global IV, Ltd.  Pursuant to the purchase agreement, Mr. Marella agreed to settle the entire amount due for the purchase price of $24,862, creating a gain on the settlement of $521. Accrued interest is equal to $nil and $4,883, respectively.		–		24,883

	September 30,		December 31,
	2012		2011
Unsecured non-interest bearing note payable, due on demand, to Syed Ahmed.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		7,000
Unsecured non-interest bearing note payable, due on demand, to Alina Farooq.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		3,500
Unsecured non-interest bearing note payable, due on demand, to William Johnson.  The note holder loaned the Company an additional $5,100 and the entire note of $12,000 was converted to preferred stock during the nine months ended September 30, 2012.		–		6,900
Unsecured non-interest bearing note payable, due on demand, to Robert Saidel.  The note holder loaned the Company  an additional $1,976 during the six months ended June 30, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		23,964
Unsecured non-interest bearing note payable, due on demand, to Michael Johnstone.  The note was repaid during the nine months ended September 30, 2012.		–		1,100
Unsecured non-interest bearing note payable, due on demand, to Michael Carbone, Sr.   The note was converted to preferred stock during the nine months ended September 30, 2012.		–		5,000
Unsecured $25,000 convertible note payable to Mindshare Holdings, Inc., which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $289 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,000 of accrued interest, was converted to common stock.		–		32,133
Unsecured $25,000 convertible note payable to Southridge Partners II LP, which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $367 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,249 of accrued interest, was converted to common stock.		–		32,211
Unsecured $17,500 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due February 1, 2012.  The note includes a redemption premium of $2,625 and is discounted for its unamortized beneficial conversion feature of $1,885 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $17,500, plus $439 of accrued interest, was converted to common stock.		–		18,240
Unsecured $9,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due June 30, 2012.  This note is currently in default.  The note includes a redemption premium of $1,350 and is discounted for its unamortized beneficial conversion feature of $nil and $7,337 as of September 30, 2012 and December 31, 2011, respectively.  During the nine months ended September 30, 2012, the note balance of $9,000 was converted to common stock.		–		3,013
Unsecured $16,290 convertible note payable to First Trust Management, which bears interest at 7% per annum and due September 25, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd. The note is discounted for its unamortized beneficial conversion feature of $nil and $6,247 as of September 30, 2012 and December 31, 2011, respectively.		–		10,043

	September 30,		December 31,
	2012		2011
Unsecured non-interest bearing note payable, due on demand, to Syed Ahmed.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		7,000
Unsecured non-interest bearing note payable, due on demand, to Alina Farooq.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		3,500
Unsecured non-interest bearing note payable, due on demand, to William Johnson.  The note holder loaned the Company an additional $5,100 and the entire note of $12,000 was converted to preferred stock during the nine months ended September 30, 2012.		–		6,900
Unsecured non-interest bearing note payable, due on demand, to Robert Saidel.  The note holder loaned the Company  an additional $1,976 during the six months ended June 30, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		23,964
Unsecured non-interest bearing note payable, due on demand, to Michael Johnstone.  The note was repaid during the nine months ended September 30, 2012.		–		1,100
Unsecured non-interest bearing note payable, due on demand, to Michael Carbone, Sr.   The note was converted to preferred stock during the nine months ended September 30, 2012.		–		5,000
Unsecured $25,000 convertible note payable to Mindshare Holdings, Inc., which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $289 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,000 of accrued interest, was converted to common stock.		–		32,133
Unsecured $25,000 convertible note payable to Southridge Partners II LP, which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $367 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,249 of accrued interest, was converted to common stock.		–		32,211
Unsecured $17,500 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due February 1, 2012.  The note includes a redemption premium of $2,625 and is discounted for its unamortized beneficial conversion feature of $1,885 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $17,500, plus $439 of accrued interest, was converted to common stock.		–		18,240
Unsecured $9,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due June 30, 2012.  This note is currently in default.  The note includes a redemption premium of $1,350 and is discounted for its unamortized beneficial conversion feature of $nil and $7,337 as of September 30, 2012 and December 31, 2011, respectively.  During the nine months ended September 30, 2012, the note balance of $9,000 was converted to common stock.		–		3,013
Unsecured $16,290 convertible note payable to First Trust Management, which bears interest at 7% per annum and due September 25, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd. The note is discounted for its unamortized beneficial conversion feature of $nil and $6,247 as of September 30, 2012 and December 31, 2011, respectively.		–		10,043

	September 30,		December 31,
	2012		2011
Unsecured $10,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due June 30, 2012. The note is currently in default. The note includes a redemption premium of $2,000 and is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  During the nine months ended September 30, 2012,  the note balance of $10,000 was converted to common stock. Accrued interest is equal to $226.		–		–
Unsecured $37,500 convertible note payable to Asher Enterprises, Inc., which bears interest at 8% per annum and due November 16 2012.  The note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012. During the nine months ended September 30, 2012,  the note balance of $39,000, including accrued interest of $1,500, was converted to common stock.		–		–
Unsecured $30,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due October 17 2012.  The note is discounted for its unamortized beneficial conversion feature of $856 at September 30, 2012.  During the nine months ended September 30, 2012,  $15,000 of the note balance was converted to common stock.  Accrued interest is equal to $2,229.		16,373		–
On February 17, 2012, Panache Capital, LLC entered into an agreement to purchase $50,000 of the note payable to Azfar Haque.  The Company exchange the original note to Mr. Haque with a new note to Pananche which bears interest at 10% per annum and due February 17, 2013.  During the nine months ended September 30, 2012, $44,348 of the note was converted to common stock.  The note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $628.		6,280		–
In February 2012, Magna Group, LLC entered into two agreements to purchase a total of $275,000 of the note payable to Azfar Haque.  The Company exchanged the original note to Mr. Haque with new notes to Magna which bear interest at 12% per annum and due February 24, 2013.  During the nine months ended September 30, 2012, the entire note balance, including accrued interest of $600, totaling $275,600 was converted to common stock.		–		–
Unsecured $16,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due May 3, 2013.  The note is discounted for its unamortized beneficial conversion feature of $7,853 at September 30, 2012.  Accrued interest is equal to $789.		8,936
Unsecured $10,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due January 3, 2013.  The note is discounted for its unamortized beneficial conversion feature of $3,607 at September 30, 2012.  Accrued interest is equal to $450.		6,843
Unsecured $3,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due January 21, 2013.  The note is discounted for its unamortized beneficial conversion feature of $1,137 at September 30, 2012.  Accrued interest is equal to $130.		1,993
Unsecured $12,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due February 5, 2013.  The note is discounted for its unamortized beneficial conversion feature of $5,094 at September 30, 2012.  Accrued interest is equal to $462.		7,368

	September 30,		December 31,
	2012		2011
Unsecured $32,500 convertible note payable to Asher Enterprises, Inc., which bears interest at 8% per annum and due February 25, 2013.  The note is discounted for its unamortized beneficial conversion feature of $12,749 at September 30, 2012. Accrued interest is equal to $926.		20,677		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On May 10, 2012, the Company received $3,200, which is due September 30, 2012. The note is currently in default. The draw on the note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $62.		3,262		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On June 7, 2012, the Company received $2,500, which is due September 30, 2012. The note is currently in default. The draw on the note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $40.		2,540		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On June 12, 2012, the Company received $9,500, which is due September 30, 2012. The note is currently in default. The draw on the note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $143.		9,643		–
Unsecured $5,500 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due March 6, 2013.  The note is discounted for its unamortized beneficial conversion feature of $2,654 at September 30, 2012.  Accrued interest is equal to $157.		3,003		–
Unsecured $42,500 convertible note payable to Asher Enterprises, Inc., which bears interest at 8% per annum and due April 19, 2013.  The note is discounted for its unamortized beneficial conversion feature of $24,671 at September 30, 2012. Accrued interest is equal to $708.		18,537		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On July 17, 2012, the Company received $3,700, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $1,004 at September 30, 2012.  Accrued interest is equal to $39.		2,735		–

	September 30,		December 31,
	2012		2011
Unsecured $15,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due March 26, 2013.  The note is discounted for its unamortized beneficial conversion feature of $7,254 at September 30, 2012.  Accrued interest is equal to $330.		8,076		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On August 3, 2012, the Company received $18,350, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $5,543 at September 30, 2012.  Accrued interest is equal to $148.		12,955		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On August 20, 2012, the Company received $10,000, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $3,061 at September 30, 2012.  Accrued interest is equal to $56.		6,995		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On August 27, 2012, the Company received $40,000, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $14,445 at September 30, 2012.  Accrued interest is equal to $192.		25,747		–
Unsecured $10,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due March 31, 2013. The note is discounted for its unamortized beneficial conversion feature of $4,375 at September 30, 2012. Accrued interest is equal to $57.		5,682		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On September 5, 2012, the Company received $4,100, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $1,802 at September 30, 2012.  Accrued interest is equal to $14.		2,312		–
Unsecured $40,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due March 31, 2013. The note is discounted for its unamortized beneficial conversion feature of $12,444 at September 30, 2012. Accrued interest is equal to $116.		27,672		–
Subtotal, Loans Payable, Current		203,895		711,882
Loans Payable, Non-current:
Unsecured $70,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due October 24, 2013.  The note is discounted for its unamortized beneficial conversion feature of $36,117 at September 30, 2012.  Accrued interest is equal to $5,039.		38,922		–
Total Loans Payable	$	242,817	$	711,882

The Company accrued interest expense of $35,390 and $95,583 for the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively, on the above loans.  Accrued interest is included in the loan balances.

The Company borrowed $676,076 and $244,755 during the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively. The Company made payments of $12,600 and $2,500 on the loans during the nine months ended September 30, 2012 and the year ended December 31, 2011. During the nine months ended September 30, 2012, the Company converted $768,036 of loans payable into 851,372,252 shares of the Company’s common stock and $57,000 of loans payable into 1,000,000 shares of the Company’s Series A preferred stock. During the year ended December 31, 2011, the Company converted $394,619 of loans payable into 14,748,313 shares of the Company’s common stock.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued under the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $164,150 was drawn against the note on January 2, 2012 and $4,500 was repaid during the nine months ended September 30, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $66,686, of which, the entire amount has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $4,016 has been accrued for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, $52,400 of the note has been converted into 59,135,976 shares of the Company’s common stock and $40,000 of the note has been converted into 800,000 shares of Series A preferred stock. During the nine months ended September 30, 2012, $65,000 of the note was sold by the note holder to various parties. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $6,266. The note is currently in default.

On January 3, 2012, the Company issued a $40,000 unsecured convertible promissory note to Southridge Partners II LP. The note bears interest at 5% per annum, is due June 30, 2012, and is convertible at a 50% discount to the average of the two low closing bid prices during the five day period prior to the conversion date. The note includes a redemption premium of $8,000 which is being amortized as interest expense over the term of the loan. The note is discounted by the value of its beneficial conversion feature of $38,261, which has been fully accreted as interest expense during the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the note balance of $40,000 was converted into 49,786,633 shares of the Company’s common stock.

On January 3, 2012, the Company issued a $32,500 unsecured convertible promissory note to Asher Enterprises, Inc. The note bears interest at 8% per annum, is due October 5, 2012, and is convertible at a 40% discount to the average of the three low trading prices during the ten day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $21,667, which has been fully accreted as interest expense during the nine months ended September 30, 2012. Interest of $1,300 has been accrued for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the note balance of $33,800 was converted into 27,644,522 shares of the Company’s common stock.

On January 5, 2012, the Company issued a $60,000 unsecured convertible promissory note to Street Capital, Inc. for services to be rendered. The note bears no interest and is due July 5, 2012. The Company issued 600,000 shares of common stock to Street capital as an incentive to provide the loan. The note is discounted for the fair value of the common stock of $2,160, which has been fully accreted as interest expense during the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd. (see Note 4).

On January 17, 2012, the Company issued a $10,000 unsecured convertible promissory note to Southridge Partners II LP. The note bears interest at 5% per annum, is due June 30, 2012, and is convertible at a 50% discount to the average of the two low closing bid prices during the five day period prior to the conversion date. The note includes a redemption premium of $2,000 which is being amortized as interest expense over the term of the loan. The note is discounted by the value of its beneficial conversion feature of $9,167, which has been fully accreted as interest expense during the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the note balance of $10,000 was converted into 12,811,644 shares of the Company’s common stock.

On February 13, 2012, Azfar Haque transferred $10,000 of the $450,000 note payable to him to SGI Group, LLC per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Mr. Haque with a new note to SGI Capital, LLC which bears interest at 10% per annum and due February 13, 2013. The note is discounted by the value of its beneficial conversion feature of $5,455, all of which has been accreted as interest expense for the nine months ended September 30, 2012. On February 16, 2012, the entire note of $10,000 was converted to 9,103,332 shares of common stock.

On February 14, 2012, the Company issued a $37,500 unsecured convertible promissory note to Asher Enterprises, Inc. The note bears interest at 8% per annum, is due November 16, 2012, and is convertible at a 50% discount to the average of the three low trading prices during the ten day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $33,750, all of which has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $1,500 has been accrued for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the note balance of $39,000 was converted into 70,619,043 shares of the Company’s common stock.

On February 16, 2012, Azfar Haque transferred $41,250 of the $450,000 note payable to him to Southridge Partners II LP per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Mr. Haque with a new note to Southridge Partners II LP which bears interest at 10% per annum and due February 16, 2013. The note is discounted by the value of its beneficial conversion feature of $19,286, which has been fully accreted as interest expense for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the entire note of $41,250 was converted to 25,662,101 shares of common stock.

On February 17, 2012, the Company issued a $30,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due October 17, 2012, and is convertible at a 55% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $29,999, of which, $29,143 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $2,229 has been accrued for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, $15,000 of the note balance was converted to 74,257,426 shares of common stock. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $16,373.

On February 17, 2012, Azfar Haque transferred $50,000 of the $450,000 note payable to him to Panache Capital, LLC per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Mr. Haque with a new note to Panache Capital, LLC which bears interest at 10% per annum and due February 17, 2013. The note is discounted by the value of its beneficial conversion feature of $26,667, which has been fully accreted as interest expense for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, $44,348 of the note was converted to 39,342,949 shares of the Company’s common stock. Interest of $628 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $6,280.

On February 17, 2012, Azfar Haque transferred $75,000 of the $450,000 note payable to him to Magna Group, LLC per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Mr. Haque with a new note to Magna Group, LLC which bears interest at 12% per annum and due February 17, 2013. The note is discounted by the value of its beneficial conversion feature of $61,184, which has been fully accreted as interest expense for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the entire note of $75,000 was converted to 23,241,401 shares of common stock.

On February 24, 2012, Azfar Haque transferred $50,000 of the $450,000 note payable to him to Magna Group, LLC per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Mr. Haque with a new note Magna Group, LLC which bears interest at 12% per annum and due February 24, 2013. The note is discounted by the value of its beneficial conversion feature of $150,000, which has been fully accreted as interest expense during the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the entire note balance of $60,600, including accrued interest of $600, was converted to 147,537,153 shares of the Company’s common stock.

On February 24, 2012, the Company issued a $70,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due October 24, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $56,452, of which, $20,335 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $5,039 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $38,922.

 On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $2,500 was drawn against the note on April 2, 2012 and was fully repaid during the nine months ended September 30, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $972, which has been fully accreted as interest expense for the nine months ended September 30, 2012.

On May 3 2012, the Company issued a $16,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due May 3, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $13,333, of which, $5,480 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $789 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $8,936. The note is currently in default.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $3,200 was drawn against the note on May 10, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $1,414, which has been fully accreted as interest expense during the nine months ended September 30, 2012. Interest of $62 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $3,262. The note is currently in default.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $3,000 was drawn against the note on May 11, 2012 and was fully repaid during the nine months ended September 30, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $1,275, which has been fully accreted as interest expense for the nine months ended September 30, 2012.

On May 16, 2012, the Company issued a $10,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due January 16, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $8,182, of which, $4,575 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $450 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $6,843.

On May 21, 2012, the Company issued a $3,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due January 21, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $2,464, of which, $1,327 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $130 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $1,993.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $1,500 was drawn against the note on May 22, 2012 and was fully repaid during the nine months ended September 30, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $611, which has been fully accreted as interest expense for the nine months ended September 30, 2012.

On May 23 2012, the Company issued a $32,500 unsecured convertible promissory note to Asher Enterprises, Inc. The note bears interest at 8% per annum, is due February 25, 2013, and is convertible at a 42% discount to the average of the three low trading prices during the ten day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $23,947, of which, $11,198 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $926 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $20,677.

On June 5, 2012, the Company issued a $12,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due February 5, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $9,750, of which, $4,656 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $462 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $7,368.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $2,500 was drawn against the note on June 7, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $1,111, which has been fully accreted as interest expense for the nine months ended September 30, 2012. Interest of $40 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $2,540. The note is currently in default.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $9,500 was drawn against the note on June 12, 2012. The draw is due September 30, 2012 and is discounted by the value of its beneficial conversion feature of $4,222, which has been fully accreted as interest expense for the nine months ended September 30, 2012. Interest of $143 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $9,643. The note is currently in default.

On July 6, 2012, the Company issued a $5,500 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due March 6, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $4,125, of which, $1,471 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $157 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $3,003.

On July 17, 2012, the Company issued a $42,500 unsecured convertible promissory note to Asher Enterprises, Inc. The note bears interest at 8% per annum, is due April 19, 2013, and is convertible at a 42% discount to the average of the three low trading prices during the ten day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $34,000, of which, $9,329 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $708 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $18,537.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $3,700 was drawn against the note on July 17, 2012. The draw is due March 31, 2013 and is discounted by the value of its beneficial conversion feature of $1,423, of which, $419 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $39 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $2,735.

 On July 26, 2012, the Company issued a $15,000 unsecured convertible promissory note to Hanover Holdings I, LLC. The note bears interest at 12% per annum, is due March 26, 2013, and is convertible at a 45% discount to the average of the three low trading prices during the three day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $10,000, of which, $2,746 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $330 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $8,076.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $18,350 was drawn against the note on August 3, 2012. The draw is due March 31, 2013 and is discounted by the value of its beneficial conversion feature of $7,340, of which, $1,797 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $148 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $12,955.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $10,000 was drawn against the note on August 20, 2012. The draw is due March 31, 2013 and is discounted by the value of its beneficial conversion feature of $3,750, of which, $389 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $56 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $6,995.

On August 21, 2012, Bulldog Insurance transferred $25,000 of the $164,150 note payable to Bulldog Insurance to Magna Group, LLC per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Bulldog Insurance with a new note to Magna Group, LLC which bears interest at 12% per annum and due August 21, 2013. The note is discounted by the value of its beneficial conversion feature of $12,500, which has been fully accreted as interest expense for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the entire note of $25,000 was converted to 64,814,816 shares of common stock.

On August 21, 2012, Bulldog Insurance transferred $40,000 of the $164,150 note payable to Bulldog Insurance to Southridge Partners II LP per a Securities Transfer Agreement between the two parties. The Company exchanged the original note to Bulldog Insurance with a new note to Southridge Partners II LP which bears interest at 12% per annum and due August 21, 2013. The note is discounted by the value of its beneficial conversion feature of $17,143, which has been fully accreted as interest expense for the nine months ended September 30, 2012. During the nine months ended September 30, 2012, the entire note of $40,000 was converted to 110,242,674 shares of common stock.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $40,000 was drawn against the note on August 27, 2012. The draw is due March 31, 2013 and is discounted by the value of its beneficial conversion feature of $17,143, of which, $2,698 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $192 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $25,747.

On September 4, 2012, the Company issued a $10,000 unsecured convertible promissory note to Southridge Partners II LP. The note bears interest at 8% per annum, is due March 31, 2013, and is convertible at a 35% discount to the lowest closing bid prices during the ten day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $5,000, of which, $625 has been accreted as interest expense during the nine months ended September 30, 2012. Interest of $57 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $5,682.

On November 2, 2011, the Company entered into an unsecured convertible promissory note agreement with Bulldog Insurance. The notes issued pursuant to the agreement bear interest at 8% per annum, are generally due 6 months after issuance, and are convertible at a 35% discount to the market price of the average closing prices of the previous 3 closing days prior to the conversion date. $4,100 was drawn against the note on September 5, 2012. The draw is due March 31, 2013 and is discounted by the value of its beneficial conversion feature of $2,050, of which, $248 has been accreted as interest expense for the nine months ended September 30, 2012. Interest of $14 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $2,312.

On September 17, 2012, the Company issued a $40,000 unsecured convertible promissory note to Southridge Partners II LP. The note bears interest at 8% per annum, is due March 31, 2013, and is convertible at a 35% discount to the lowest closing bid prices during the ten day period prior to the conversion date. The note is discounted by the value of its beneficial conversion feature of $13,333 of which, $889 has been accreted as interest expense during the nine months ended September 30, 2012. Interest of $116 has been accrued for the nine months ended September 30, 2012. The outstanding balance of the loan, net of discounts, at September 30, 2012 is $27,672.

XML

Consolidated Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current assets
Cash	$ 74,611	$ 53,519
Accounts receivable, net	542,391	273,031
Inventory	113,784	33,523
Prepaid license fees	200,000	50,000
Prepaid expenses	11,000	3,076
Total current assets	941,786	413,149
Property and equipment, net	16,581	22,814
Other assets
Capitalized research and development costs, net		9,273
Intangible assets, net	624,750	739,500
Goodwill	742,107	742,107
Prepaid license fees	100,000	137,500
Escrow deposits	3,910	3,462
Security deposits	20,000	4,521
Total other assets	1,490,767	1,636,363
Total assets	2,449,134	2,072,326
Current liabilities
Bank overdraft	0	16,675
Loans payable, current	203,895	711,882
Loans payable - related party, current	606,131	630,298
Due to related party	79,432
Accounts payable and accrued expenses	411,951	721,010
Accrued payroll and related liabilities	1,894,364	1,717,582
Total current liabilities	3,195,773	3,797,447
Other liabilities
Loans payable, non-current	38,922
Total liabilities	3,234,695	3,797,447
Contingent acquisition liabilities	1,104,973	1,104,973
Amounts payable in common stock	325,630	0
Derivative liability	175,339	0
Stockholders' deficit
Common stock, $0.001 par value, 5,900,000,000 and 480,000,000 shares authorized, 1,705,489,448 and 289,895,481 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	1,705,489	289,895
Additional paid-in capital	13,655,732	10,180,384
Preferred stock subscriptions receivable	(1,174,998)	0
Accumulated deficit	(16,284,075)	(13,062,595)
Total East Coast Diversified stockholders' deficit	(2,059,398)	(2,571,288)
Noncontrolling interest	(332,105)	(258,806)
Total stockholders' deficit	(2,391,503)	(2,830,094)
Total liabilities and stockholders' deficit	2,449,134	2,072,326
SeriesAPreferredStockMember
Stockholders' deficit
Preferred stock	38,452	21,028
Series B Preferred Stock [Member]
Stockholders' deficit
Preferred stock	$ 2

XML

Consolidated Statements of Cash Flows (Parenthetical)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Statement of Cash Flows [Abstract]
Issuance of 851,372,252 and14,748,313 shares of common stock in conversion of loans payable	851,372,252	14,748,313
Issuance of 13,055,556 shares of common stock in conversion of loans payable - related party, respectively		13,055,556
Issuance of 1,000,000 shares of series A preferred stock in conversion of loans payable	1,000,000
Issuance of 2,592,898 shares of series A preferred stock in conversion of loans payable - related party	2,592,898
Issuance of 620,200,000 shares of common stock in settlement of loans and accounts payable converted to Amounts payable in common stock	620,200,000
Issuance of 4,324,515 shares of Series A preferred stock to related parties in conversion of 86,490,344 shares of common stock	4,324,515
Issuance of 4,324,515 shares of Series A preferred stock to related parties in conversion of 86,490,344 shares of common stock	86,490,344
Issuance of 372,000 shares of Series A preferred stock to third parties in conversion of 7,440,000 shares of common stock	372,000
Issuance of 372,000 shares of Series A preferred stock to third parties in conversion of 7,440,000 shares of common stock	7,440,000
Issuance of 1,500,000 shares of series B preferred stock under stock subscription	1,500,000
Issuance of 357,143 shares of common stock in conversion of accounts payable	0	357,143
Issuance of 7,500,000 and 32,857,143 shares of common stock in conversion of accrued salaries	7,500,000	32,857,143
Issuance of 408,164 shares of series A preferred stock in conversion of accrued salaries	408,164

XML

3. Related Parties (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012
Accrued board compensation converted into Preferred Stock Series A, amount	$ 40,000
Accrued board compensation converted into Preferred Stock Series A, shares	408,164
Frank Russo [Member]
Accrued board compensation converted into Preferred Stock Series A, amount	10,000
Accrued board compensation converted into Preferred Stock Series A, shares	102,041
Common stock converted into Series A Preferred stock, common stock converted	6,922,685
Common stock converted into Series A Preferred stock, preferred stock issued	346,134
Edward Eppel [Member]
Accrued board compensation converted into Preferred Stock Series A, amount	10,000
Accrued board compensation converted into Preferred Stock Series A, shares	102,041
Anis Sherali [Member]
Accrued board compensation converted into Preferred Stock Series A, amount	10,000
Accrued board compensation converted into Preferred Stock Series A, shares	102,041
Common stock converted into Series A Preferred stock, common stock converted	32,420,942
Common stock converted into Series A Preferred stock, preferred stock issued	1,621,047
Kayode Aladesuyi [Member]
Accrued board compensation converted into Preferred Stock Series A, amount	$ 10,000
Accrued board compensation converted into Preferred Stock Series A, shares	102,041
Preferred Series A stock issued as a bonus	14,583,333
SousaMember
Common stock converted into Series A Preferred stock, common stock converted	1,119,436

XML

5. Stockholders' Deficit (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012
Stockholders Deficit Details Narrative
Series A Preferred Stock issued in private placements, shares	5,081,385
Series A Preferred Stock issued in private placements, value	$ 151,900
Series A Preferred Stock issued in private placements subscriptions, shares	1,500
Series A Preferred Stock issued in private placements subscriptions, value	1,500,000
Accrued board compensation converted into Preferred Stock Series A, amount	40,000
Accrued board compensation converted into Preferred Stock Series A, shares	408,164
Series A Preferred stock issued for services rendered, shares	607,487
Series A Preferred stock issued for services rendered, amount	45,000
Common stock issued for cash, shares	250,000
Common stock issued for cash, value	1,000
Common stock issued for services, shares	12,819,231
Common stock issued for services, value	80,205
Common stock issued for accrued salaries, shares	7,500,000
Common stock issued for accrued salaries, amount	$ 22,500

XML

1. Nature of Business, Presentation, and Going Concern

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NOTE 1 - Nature of Business, Presentation, and Going Concern

Organization

EarthSearch Communications International, Inc. (“EarthSearch”) was founded in November 2003 as a Georgia corporation. The company subsequently re-incorporated in Delaware on July 8, 2005.

On December 18, 2009, East Coast Diversified Corporation's (“ECDC” or the “Company”) former principal stockholders, Frank Rovito, Aaron Goldstein and Green Energy Partners, LLC (collectively the “Sellers”), entered into a Securities Purchase Agreement (the "Purchase Agreement") with Kayode Aladesuyi (the “Buyer”), pursuant to which the Sellers beneficial owners of an aggregate of 6,997,150 shares of the Company's common stock (the “Sellers' Shares”), agreed to sell and transfer the Sellers' Shares to the Buyer for an aggregate of Three Hundred Thousand Dollars ($300,000.00). The Purchase Agreement also provided that the Company would enter into a share exchange agreement with EarthSearch.

On January 15, 2010, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with EarthSearch, pursuant to which the Company agreed to issue 35,000,000 shares of the Company's restricted common stock to the shareholders of EarthSearch. On April 2, 2010, EarthSearch consummated all obligations under the Share Exchange Agreement. In accordance with the terms and provisions of the Share Exchange Agreement, the Company acquired 93.49% of the issued and outstanding common stock of EarthSearch. As a result of the Purchase Agreement and Share Exchange Agreement, our principal business became the business of EarthSearch. The Board of Directors of the Company (the “Board”) passed a resolution electing the new members of the Board and appointing new management of the Company and effectively resigning as their last order of business.

The Share Exchange was accounted for us as an acquisition and recapitalization. EarthSearch is the acquirer for accounting purposes and, consequently, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements herein are those of EarthSearch. The accumulated deficit of EarthSearch was also carried forward after the acquisition.

On December 31, 2011, the Company acquired 1,800,000 additional shares of EarthSearch from a non-controlling shareholder in exchange for 439,024 shares of the Company's common stock. As of December 31, 2011, the Company owns 94.66% of the issued and outstanding stock of EarthSearch.

On October 23, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Rogue Paper, Inc., a California corporation (“Rogue Paper”), and shareholders of Rogue Paper (the “Rogue Paper Holders”). Rogue Paper is headquartered in San Francisco, California and is a developer of mobile and branded applications for major media enterprises. The Company acquired fifty-one percent (51%) of the issued and outstanding common stock of Rogue Paper in exchange for 2,500,000 shares of the Company’s Series A convertible preferred stock (the “Series A Preferred”).

Pursuant to the Share Exchange Agreement, no sooner than twelve months from the Effective Date, the Series A Preferred shares shall be convertible, at the option of the holder of such shares, into an aggregate of fifty million shares of the Company’s common stock, par value $0.001 per share. Beginning sixth months from the Effective Date, both the Company and holders of the Series A Preferred shares shall have the option to redeem any portion of such holders’ Series A Preferred shares, for cash, at a price of sixty cents ($0.60) per share. Additionally, commencing twenty-four (24) months from the Effective Date, the holders of the remaining, unsold shares of Rogue Paper common stock may require the Company to redeem such shares, for cash, at a price of three cents ($0.03) per share.

On January, 12, 2012, StudentConnect Inc., a Georgia corporation, was formed as a subsidiary of the Company.

On July, 4, 2012, WetWinds Inc., a Georgia corporation, was formed as a subsidiary of the Company.

The Company is a holding company for several subsidiaries offering products and services in several areas of technology. EarthSearch Communications is a Logistics and Asset Management Company. The Company has created an integration of Radio Frequency Identification Technology (“RFID”) and GPS technology and is an international provider of supply chain management solutions offering real-time visibility in the supply chain with integrated RFID/GPS and other telemetry products.  These solutions help businesses worldwide to increase asset management, provide safety and security, increase productivity, and deliver real-time visibility of the supply chain through automation.

StudentConnect provides school transportation technology that would allow parents to receive real time notification about the status of their children. The company utilizes wireless communication between GPS and RFID to provide these services. The product is provided to schools and parents at zero cost. The Company’s business model allows it to charge business advertisers who sponsor alerts and messages to parents receiving the messages.

Rogue Paper, Inc., (“Rogue Paper”) the Company’s majority owned subsidiary offers second screen technology to media organizations and businesses. Additionally, ECDC recently completed the acquisition of a social media technology and through its subsidiary, WetWinds, intends to launch this operation during the fourth quarter of 2012.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.  Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. All intercompany transactions and accounts have been eliminated in consolidation. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

These unaudited consolidated financial statements should be read in conjunction with our 2011 annual consolidated financial statements included in our annual report on Form 10-K/A, filed with the SEC on May 4, 2012.

Going Concern

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As reflected in the accompanying unaudited consolidated financial statements, the Company had an accumulated deficit of $16,284,075 at September 30, 2012, a net loss and net cash used in operations of $3,221,480 and $1,171,086, respectively, for the nine months ended September 30, 2012.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate revenues, and continue to raise additional investment capital.  No assurance can be given that the Company will be successful in these efforts.

The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  Management believes that actions presently being taken to obtain additional funding and implement its strategic plans will afford the Company the opportunity to continue as a going concern.

Concentration of Credit Risk

The Company grants unsecured credit to commercial and governmental customers in the United States and abroad. Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. As of September 30, 2012, five customers account for 70% of the total accounts receivable compared to three customers accounting for 77% at December 31, 2011.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense was $311,671 and $nil for the nine months ended September 30, 2012 and 2011, respectively. At September 30, 2012 and December 31, 2011, the allowance for doubtful accounts was $311,671 and $nil, respectively.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure to its customers.

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	100,000,000	20,000
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	5,900,000,000	480,000,000
Common stock shares issued	1,705,489,448	289,895,481
Common stock shares oustanding	1,705,489,448	289,895,481
SeriesAPreferredStockMember
Preferred stock shares issued	38,451,581	10,513,813
Preferred stock shares outstanding	38,451,581	10,513,813
Series B Preferred Stock [Member]
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0

XML

6. Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Future minimum lease payments

2012	$	6,489
2013		26,735
2014		27,550
2015		28,366
2016		29,219
2017		15,054
	$	133,413

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 14, 2012
Document And Entity Information
Entity Registrant Name	EAST COAST DIVERSIFIED CORP
Entity Central Index Key	0001256540
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,957,787,326
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

XML

1. Nature of Business, Presentation, and Going Concern (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Sales Accountability of Customers	70.00%		77.00%
Bad debt expense	$ 311,671	$ 0
Allowance for doubtful accounts	$ 311,671		$ 0

XML

Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Product sales	$ 52,721	$ 20,027	$ 514,397	$ 189,657
Consulting and development	64,710	62,720	473,920	230,220
User fees	13,593	10,444	44,401	43,406
Total revenues	131,024	93,191	1,032,718	463,283
Cost of revenues:
Product sales	41,096	14,121	333,289	100,960
Consulting and development	20,484	12,182	135,221	71,548
User fees	10,006	20,199	48,184	42,068
Selling, general and administative expense	1,024,595	319,157	2,797,541	972,314
Total operating expenses	1,096,181	365,659	3,314,235	1,186,890
Loss from operations	(965,157)	(272,468)	(2,281,517)	(723,607)
Other income (expense)
Other income	57,019		58,431
Interest expense	(134,083)	(44,152)	(635,280)	(88,535)
Gain on settlement of debt			141,141
Loss on conversion of debt		(20,239)	(575,263)	(20,239)
Change in derivative liability	8,518		(2,291)
Total other income (expense)	(68,546)	(64,391)	(1,013,262)	(108,774)
Net loss	(1,033,703)	(336,859)	(3,294,779)	(832,381)
Net loss attributable to noncontrolling interests	58,710	9,001	73,299	26,324
Net loss attributable to East Coast Diversified Corporation	$ (974,993)	$ (327,858)	$ (3,221,480)	$ (806,057)
Net loss per share - basic and diluted	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Weighted average number of shares outsanding during the period - basic and diluted (in Shares)	1,142,756,004	180,067,427	720,718,304	165,205,586

XML

6. Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

NOTE 6 - Commitments and Contingencies

Operating Leases

The Company leases its office facilities in Marietta, Georgia. The term of the lease is 66 months with escalating lease payments beginning at $2,163 per month. At September 30, 2012, future minimum lease payments under the lease are as follows:

2012	$	6,489
2013		26,735
2014		27,550
2015		28,366
2016		29,219
2017		15,054
	$	133,413

Rent expense was $26,920 and $49,005 for the nine months ended September 30, 2012 and 2011, respectively.

Acquisition Liabilities

Pursuant to the Share Exchange Agreement with Rogue Paper, Inc., commencing nine months from October 23, 2011 (the “Execution Date”), both the Company and the holders of the Preferred Shares shall have the option to redeem any portion of such holders Preferred Shares for cash, at a price of sixty cents ($0.60) per share, or $1,075,000.  Commencing twenty four (24) months from the Execution date, holders of the remaining forty-nine percent (49%) of Rogue Paper Common Shares, have the option to have such shares redeemed by the Company for cash, at a price of $0.03 per share, or $29,973. 

License Agreements

On October 5, 2011, the Company entered into a license with BBGN&K LLC (“BBGN&K”) for the rights to use certain patented technologies of which BBGN&K owns the patents. The license agreement calls for royalty payments beginning in 2012 of 8% of EarthSearch’s revenues to be paid quarterly (see Note 3 – Related Parties).

On August 5, 2012, the Company entered into a license agreement with Web Asset, LLC (“Web Asset”) for the rights to use certain social media concept and idea created by Mr. Kayode Aladesuyi. The license agreement calls for royalty payments of 49% of the revenues earned by the Company in its use of the social media concept after the Company has earned its first $2,000,000 of revenue, payable quarterly (see Note 3 – Related Parties).

XML

5. Stockholders' Deficit

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note [Abstract]

NOTE 5 - Stockholders' Deficit

Authorized Capital

On September 17, 2010, the Board authorized the creation of a common stock incentive plan (the “2010 Stock Incentive Plan”) for our management and consultants. The Company registered twenty five million (25,000,000) shares of its common stock pursuant to the 2010 Stock Incentive Plan on Form S-8 filed with the Commission on September 27, 2010. As of September 30, 2012, no options have been granted under the plan.

On October 19, 2012 the Company filed a certificate of amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to increase the Company’s authorized capital stock to 6,000,000,000 shares, par value $0.001 per share, including (i) 5,900,000,000 shares of common stock, par value $0.001 per share and (ii) 100,000,000 shares of preferred stock, par value $0.001 per share.

Preferred Stock Issued for Cash

During the nine months ended September 30, 2012, the Company issued 5,081,385 shares of Series A preferred stock in private placements for a total of $151,900 ($0.0299 per share average).

Preferred Stock Issued for Subscriptions

During the nine months ended September 30, 2012, the Company issued 1,500 shares of series B preferred stock in a private placement for a total of $1,500,000 ($1,000 per share). During the nine months ended September 30, 2012, $325,002 of the subscription receivable was received in cash.

Preferred Stock Issued in Conversion of Debt

During the nine months ended September 30, 2012, the Company issued 2,592,898 shares of Series A preferred stock in the conversion of $87,500 of notes payable to related parties (see Note 3 – Related Parties) and 1,000,000 shares of Series A Preferred in the conversion of $57,000 of notes payable to unrelated parties (see Note 2 – Loans Payable).

Preferred Stock Issued for Services

During the nine months ended September 30, 2012, the Company converted $40,000 of accrued compensation to its board of directors to 408,164 shares of Series A preferred stock and issued 14,583,333 shares of Series A preferred stock to its Chief Executive Officer as a bonus award (see Note 3 – Related Parties) and issued 607,487 shares of Series A preferred stock to an unrelated party for services at the fair value of the services rendered of $45,000.

Preferred Stock Issued in Conversion of Common Stock

During the nine months ended September 30, 2012, the Company issued 4,324,515 shares of Series A preferred stock to related parties for the conversion and return of 86,490,344 shares of common stock and issued 372,000 shares of Series A preferred stock to unrelated parties for the conversion and return of 7,440,000 shares of common stock.

Common Stock Issued for Cash

During the nine months ended September 30, 2012, the Company issued 250,000 shares of common stock in private placements for a total of $1,000 ($0.004 per share).

Common Stock Issued in Conversion of Debt

During the nine months ended September 30, 2012, the Company issued 851,372,252 shares of common stock in the conversion of $768,036 of notes payable to unrelated parties (see Note 2 – Loans Payable).

During the nine months ended September 30, 2012, the Company issued 620,200,000 shares of common stock, with a market value of $1,144,930, to Ironridge in settlement of $742,715 of amounts payable in common stock (see Note 4 – Amounts Payable in Common Stock and Derivative Liability).

Common Stock Issued for Services

During the nine months ended September 30, 2012, the Company issued 12,819,231 shares of common stock to unrelated parties for services of $80,205, or an average price of $0.006 per share based on the market value of the shares at the time of issuance.  These shares were issued under the 2010 Stock Incentive Plan (“2010 Plan”) dated September 17, 2010. As of September 30, 2012, 230,000 shares remain unissued under the 2010 Plan.

During the nine months ended September 30, 2012, the Company converted $22,500 of accrued salaries due to Ms. Rocha to 7,500,000 shares of common stock, at a price of $0.007 per share based on the market value of the shares at the time of issuance (see Note 3 – Related Parties).

During the nine months ended September 30, 2012, the Company issued 600,000 shares of common stock to an unrelated party for an incentive to enter into a loan agreement, at an average price of $0.0036 per share based on the market value of the shares at the time of issuance (see Note 2 – Loans Payable).

Common Stock Issued in Conversion of Preferred Stock

During the nine months ended September 30, 2012, the Company issued 16,782,828 shares of common stock and 56 shares of Series B preferred stock to an unrelated parties for the conversion and return of 1,032,014 shares of Series A preferred stock.

XML

4. Amounts Payable in Common Stock and Derivative Liability (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012
Notes to Financial Statements
Common stock issued in settlement of debt, shares	620,200,000
Common stock issued in settlement of debt, value	$ 1,144,930
Common stock issued in settlement of debt, liability value	742,715
Derivative liability reduction	$ 402,215

XML

2. Loans Payable (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Notes payable	$ 203,895	$ 711,882
Loans Payable, Non-current	38,922
Total Loans Payable	203,895	711,882
Azfar Haque 1 [Member]
Notes payable		372,655
Rainmaker Global Inc [Member]
Notes payable		134,125
Leonard Marella [Member]
Notes payable		24,883
Syed Ahmed [Member]
Notes payable		7,000
Alina Farooq [Member]
Notes payable		3,500
William Johnson [Member]
Notes payable		6,900
Robert Saidel [Member]
Notes payable		23,964
Michael Johnstone [Member]
Notes payable		1,100
Michael Carbone Sr [Member]
Notes payable		5,000
Mindshare Holdings Inc [Member]
Notes payable		32,133
Southridge Partners II LP 1 [Member]
Notes payable		32,211
Southridge Partners II LP 2 [Member]
Notes payable		18,240
Southridge Partners II LP 3 [Member]
Notes payable		3,013
First Trust Management [Member]
Notes payable		10,043
Syed Ahmed 2 [Member]
Notes payable		7,000
Alina Farooq 2 [Member]
Notes payable		3,500
William Johnson 2 [Member]
Notes payable		6,900
Robert Saidel 2 [Member]
Notes payable		23,964
Michael Johnstone 2 [Member]
Notes payable		1,100
Michael Carbone Sr 2 [Member]
Notes payable		5,000
Mindshare Holdings Inc 2 [Member]
Notes payable		32,133
SouthridgePartnersIILP4 [Member]
Notes payable		32,211
Southridge Partners II LP5 [Member]
Notes payable		18,240
Southridge Partners II LP6 [Member]
Notes payable		3,013
First Trust Management 2 [Member]
Notes payable		10,043
Southridge Partners II LP7 [Member]
Notes payable
Asher Enterprises Inc [Member]
Notes payable
Hanover Holdings I LLC [Member]
Notes payable	16,373
PanacheHoldingsMember
Notes payable		6,280
Hanover Holdings I LLC2 [Member]
Notes payable	8,936
Hanover Holdings I LLC3 [Member]
Notes payable	6,843
Hanover Holdings I LLC4 [Member]
Notes payable	1,993
Hanover Holdings I LLC 5 [Member]
Notes payable	7,368
Asher Enterprises Inc 2 [Member]
Notes payable	20,677
BulldogInsuranceMember
Notes payable	3,262
BulldogInsurance2Member
Notes payable	2,540
BulldogInsurance3Member
Notes payable	9,643
HanoverHoldingsILLC6Member
Notes payable	3,003
Asher Enterprises Inc 3 [Member]
Notes payable	18,537
BulldogInsurance4Member
Notes payable	2,735
HanoverHoldingsILLC7Member
Notes payable	8,076
Bulldog Insurance 5 [Member]
Notes payable	12,955
Bulldog Insurance 6 [Member]
Notes payable	6,995
Bulldog Insurance 7 [Member]
Notes payable	25,747
Southridge Partners II LP 8 [Member]
Notes payable	5,682
Bulldog Insurance 8 [Member]
Notes payable	2,312
Southridge Partners II LP 9 [Member]
Notes payable	$ 27,672

XML

2. Loans Payable (Tables)

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Loans payable

	September 30,		December 31,
	2012		2011
Loans Payable, Current:
Unsecured $450,000 note payable to Azfar Haque, which bears interest at 9% per annum and was originally due June 15, 2008. At December 31, 2011 the note was in default.  On September 19, 2011, $25,000 of this note was transferred to an investor and was converted to common stock.  During the year ended December 31, 2011, $227,250 of this note was converted to common stock.  During the nine months ended September 30, 2012, the remaining $372,655 plus $3,595 of additional accrued interest was purchased by multiple investors.  Accrued interest is equal to $ nil and $174,905 respectively.	$	–	$	372,655
Unsecured $80,000 note payable to Rainmaker Global, Inc. which bears interest at 30% per annum and was originally due December 31, 2009. At December 31, 2011 the note was in default.  During the nine months ended September 30, 2012, $102,000 of this note was purchased by Ironridge Global IV, Ltd.  Pursuant to the purchase agreement, Rainmaker Global agreed to settle the entire amount due for the purchase price of $102,000, creating a gain on the settlement of $38,125. Accrued interest is equal to $nil and $54,125 respectively.		–		134,125
$20,000 convertible note payable to Leonard Marella, which bears interest at 10% per annum and was originally due October 1, 2009.  At December 31, 2011 the note was in default.  During the nine months ended September 30, 2012, $24,862 of this note was purchased by Ironridge Global IV, Ltd.  Pursuant to the purchase agreement, Mr. Marella agreed to settle the entire amount due for the purchase price of $24,862, creating a gain on the settlement of $521. Accrued interest is equal to $nil and $4,883, respectively.		–		24,883
Unsecured non-interest bearing note payable, due on demand, to Syed Ahmed.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		7,000
Unsecured non-interest bearing note payable, due on demand, to Alina Farooq.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		3,500
Unsecured non-interest bearing note payable, due on demand, to William Johnson.  The note holder loaned the Company an additional $5,100 and the entire note of $12,000 was converted to preferred stock during the nine months ended September 30, 2012.		–		6,900
Unsecured non-interest bearing note payable, due on demand, to Robert Saidel.  The note holder loaned the Company  an additional $1,976 during the six months ended June 30, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		23,964
Unsecured non-interest bearing note payable, due on demand, to Michael Johnstone.  The note was repaid during the nine months ended September 30, 2012.		–		1,100
Unsecured non-interest bearing note payable, due on demand, to Michael Carbone, Sr.   The note was converted to preferred stock during the nine months ended September 30, 2012.		–		5,000
Unsecured $25,000 convertible note payable to Mindshare Holdings, Inc., which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $289 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,000 of accrued interest, was converted to common stock.		–		32,133
Unsecured $25,000 convertible note payable to Southridge Partners II LP, which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $367 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,249 of accrued interest, was converted to common stock.		–		32,211
Unsecured $17,500 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due February 1, 2012.  The note includes a redemption premium of $2,625 and is discounted for its unamortized beneficial conversion feature of $1,885 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $17,500, plus $439 of accrued interest, was converted to common stock.		–		18,240
Unsecured $9,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due June 30, 2012.  This note is currently in default.  The note includes a redemption premium of $1,350 and is discounted for its unamortized beneficial conversion feature of $nil and $7,337 as of September 30, 2012 and December 31, 2011, respectively.  During the nine months ended September 30, 2012, the note balance of $9,000 was converted to common stock.		–		3,013
Unsecured $16,290 convertible note payable to First Trust Management, which bears interest at 7% per annum and due September 25, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd. The note is discounted for its unamortized beneficial conversion feature of $nil and $6,247 as of September 30, 2012 and December 31, 2011, respectively.		–		10,043
Unsecured non-interest bearing note payable, due on demand, to Syed Ahmed.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		7,000
Unsecured non-interest bearing note payable, due on demand, to Alina Farooq.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		3,500
Unsecured non-interest bearing note payable, due on demand, to William Johnson.  The note holder loaned the Company an additional $5,100 and the entire note of $12,000 was converted to preferred stock during the nine months ended September 30, 2012.		–		6,900
Unsecured non-interest bearing note payable, due on demand, to Robert Saidel.  The note holder loaned the Company  an additional $1,976 during the six months ended June 30, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd.		–		23,964
Unsecured non-interest bearing note payable, due on demand, to Michael Johnstone.  The note was repaid during the nine months ended September 30, 2012.		–		1,100
Unsecured non-interest bearing note payable, due on demand, to Michael Carbone, Sr.   The note was converted to preferred stock during the nine months ended September 30, 2012.		–		5,000
Unsecured $25,000 convertible note payable to Mindshare Holdings, Inc., which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $289 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,000 of accrued interest, was converted to common stock.		–		32,133
Unsecured $25,000 convertible note payable to Southridge Partners II LP, which bears interest at 8% per annum and due January 5, 2012.  The note includes a redemption premium of $7,500 and is discounted for its unamortized beneficial conversion feature of $367 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $25,000, plus $1,249 of accrued interest, was converted to common stock.		–		32,211
Unsecured $17,500 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due February 1, 2012.  The note includes a redemption premium of $2,625 and is discounted for its unamortized beneficial conversion feature of $1,885 at December 31, 2011.  During the nine months ended September 30, 2012, the note balance of $17,500, plus $439 of accrued interest, was converted to common stock.		–		18,240
Unsecured $9,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due June 30, 2012.  This note is currently in default.  The note includes a redemption premium of $1,350 and is discounted for its unamortized beneficial conversion feature of $nil and $7,337 as of September 30, 2012 and December 31, 2011, respectively.  During the nine months ended September 30, 2012, the note balance of $9,000 was converted to common stock.		–		3,013
Unsecured $16,290 convertible note payable to First Trust Management, which bears interest at 7% per annum and due September 25, 2012.  During the nine months ended September 30, 2012, the note was purchased by Ironridge Global IV, Ltd. The note is discounted for its unamortized beneficial conversion feature of $nil and $6,247 as of September 30, 2012 and December 31, 2011, respectively.		–		10,043
Unsecured $10,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due June 30, 2012. The note is currently in default. The note includes a redemption premium of $2,000 and is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  During the nine months ended September 30, 2012,  the note balance of $10,000 was converted to common stock. Accrued interest is equal to $226.		–		–
Unsecured $37,500 convertible note payable to Asher Enterprises, Inc., which bears interest at 8% per annum and due November 16 2012.  The note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012. During the nine months ended September 30, 2012,  the note balance of $39,000, including accrued interest of $1,500, was converted to common stock.		–		–
Unsecured $30,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due October 17 2012.  The note is discounted for its unamortized beneficial conversion feature of $856 at September 30, 2012.  During the nine months ended September 30, 2012,  $15,000 of the note balance was converted to common stock.  Accrued interest is equal to $2,229.		16,373		–
On February 17, 2012, Panache Capital, LLC entered into an agreement to purchase $50,000 of the note payable to Azfar Haque.  The Company exchange the original note to Mr. Haque with a new note to Pananche which bears interest at 10% per annum and due February 17, 2013.  During the nine months ended September 30, 2012, $44,348 of the note was converted to common stock.  The note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $628.		6,280		–
In February 2012, Magna Group, LLC entered into two agreements to purchase a total of $275,000 of the note payable to Azfar Haque.  The Company exchanged the original note to Mr. Haque with new notes to Magna which bear interest at 12% per annum and due February 24, 2013.  During the nine months ended September 30, 2012, the entire note balance, including accrued interest of $600, totaling $275,600 was converted to common stock.		–		–
Unsecured $16,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due May 3, 2013.  The note is discounted for its unamortized beneficial conversion feature of $7,853 at September 30, 2012.  Accrued interest is equal to $789.		8,936
Unsecured $10,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due January 3, 2013.  The note is discounted for its unamortized beneficial conversion feature of $3,607 at September 30, 2012.  Accrued interest is equal to $450.		6,843
Unsecured $3,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due January 21, 2013.  The note is discounted for its unamortized beneficial conversion feature of $1,137 at September 30, 2012.  Accrued interest is equal to $130.		1,993
Unsecured $12,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due February 5, 2013.  The note is discounted for its unamortized beneficial conversion feature of $5,094 at September 30, 2012.  Accrued interest is equal to $462.		7,368
Unsecured $32,500 convertible note payable to Asher Enterprises, Inc., which bears interest at 8% per annum and due February 25, 2013.  The note is discounted for its unamortized beneficial conversion feature of $12,749 at September 30, 2012. Accrued interest is equal to $926.		20,677		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On May 10, 2012, the Company received $3,200, which is due September 30, 2012. The note is currently in default. The draw on the note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $62.		3,262		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On June 7, 2012, the Company received $2,500, which is due September 30, 2012. The note is currently in default. The draw on the note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $40.		2,540		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On June 12, 2012, the Company received $9,500, which is due September 30, 2012. The note is currently in default. The draw on the note is discounted for its unamortized beneficial conversion feature of $nil at September 30, 2012.  Accrued interest is equal to $143.		9,643		–
Unsecured $5,500 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due March 6, 2013.  The note is discounted for its unamortized beneficial conversion feature of $2,654 at September 30, 2012.  Accrued interest is equal to $157.		3,003		–
Unsecured $42,500 convertible note payable to Asher Enterprises, Inc., which bears interest at 8% per annum and due April 19, 2013.  The note is discounted for its unamortized beneficial conversion feature of $24,671 at September 30, 2012. Accrued interest is equal to $708.		18,537		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On July 17, 2012, the Company received $3,700, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $1,004 at September 30, 2012.  Accrued interest is equal to $39.		2,735		–
Unsecured $15,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due March 26, 2013.  The note is discounted for its unamortized beneficial conversion feature of $7,254 at September 30, 2012.  Accrued interest is equal to $330.		8,076		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On August 3, 2012, the Company received $18,350, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $5,543 at September 30, 2012.  Accrued interest is equal to $148.		12,955		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On August 20, 2012, the Company received $10,000, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $3,061 at September 30, 2012.  Accrued interest is equal to $56.		6,995		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On August 27, 2012, the Company received $40,000, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $14,445 at September 30, 2012.  Accrued interest is equal to $192.		25,747		–
Unsecured $10,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due March 31, 2013. The note is discounted for its unamortized beneficial conversion feature of $4,375 at September 30, 2012. Accrued interest is equal to $57.		5,682		–
On November 2, 2011, the Company entered into a Unsecured Convertible Promissory Note Agreement with Bulldog Insurance for up to $250,000, which bears interest at 8% per annum.  On September 5, 2012, the Company received $4,100, which is due March 31, 2013. The draw on the note is discounted for its unamortized beneficial conversion feature of $1,802 at September 30, 2012.  Accrued interest is equal to $14.		2,312		–
Unsecured $40,000 convertible note payable to Southridge Partners II LP, which bears interest at 5% per annum and due March 31, 2013. The note is discounted for its unamortized beneficial conversion feature of $12,444 at September 30, 2012. Accrued interest is equal to $116.		27,672		–
Subtotal, Loans Payable, Current		203,895		711,882
Loans Payable, Non-current:
Unsecured $70,000 convertible note payable to Hanover Holdings I, LLC, which bears interest at 12% per annum and due October 24, 2013.  The note is discounted for its unamortized beneficial conversion feature of $36,117 at September 30, 2012.  Accrued interest is equal to $5,039.		38,922		–
Total Loans Payable	$	242,817	$	711,882

XML

7. Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

NOTE 7 - Subsequent Events

 On October 1, 2012, the Company issued a $15,000 unsecured convertible promissory note to SC Advisors, Inc. The note bears interest at 8% per annum, is due June 30, 2013, and is convertible at the average of the three low losing bid prices during the five day period prior to the conversion date.

On October 3, 2012, the Company issued a $10,000 unsecured convertible promissory note to Southridge partners II LP. The note bears interest at 8% per annum, is due June 30, 2013, and is convertible at a 50% discount to the lowest closing bid price during the fifteen day period prior to the conversion date.

On October 25, 2012, the Company issued a $39,647 unsecured promissory note to Azfar Haque. The note bears interest at 9% per annum, is due May 25, 2013.

On October 26, 2012, the Company issued 1,250,000 shares of its Series A preferred stock to a related party for $6,000 in cash.

On October 23, 2012, the Company issued 100,000,000 shares of the Company’s common stock to Ironridge in reliance on the private placement exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof. The shares issued to Ironridge were issued pursuant to a Stipulation for Settlement of Claims (the “Stipulation”) filed by the Company and Ironridge in the Superior Court for the State of California, County of Los Angeles (Case No. BC481395) on April 20, 2012 in settlement of claims purchased by Ironridge from certain creditors of the Company.

On October 24, 2012, the Company issued a $5,000 unsecured convertible promissory note to Bulldog Insurance. The note bears interest at 5% per annum, is due March 30, 2013, and is convertible at a 30% discount to the average closing price during the three day period prior to the conversion date.

On October 26, 2012, the Company issued 78,787,878 shares of its common stock in conversion of loans payable in the amount of $13,000.

On November 8, 2012, the Company issued a $7,000 unsecured convertible promissory note to Southridge partners II LP. The note bears interest at 8% per annum, is due June 30, 2013, and is convertible at a 50% discount to the lowest closing bid price during the fifteen day period prior to the conversion date.

On November 8, 2012, the Company issued 73,510,000 shares of its common stock in conversion of loans payable in the amount of $7,351.

On November 15, 2012, the Company issued a $5,000 unsecured convertible promissory note to Bulldog Insurance. The note bears interest at 5% per annum, is due May 15, 2013, and is convertible at a 30% discount to the average closing price during the three day period prior to the conversion date.

The Company has evaluated subsequent events through the date the financial statements were issued and filed with Securities and Exchange Commission. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements.

XML

1. Nature of Business, Presentation, and Going Concern (Policies)

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

EarthSearch Communications International, Inc. (“EarthSearch”) was founded in November 2003 as a Georgia corporation. The company subsequently re-incorporated in Delaware on July 8, 2005.

On December 18, 2009, East Coast Diversified Corporation's (“ECDC” or the “Company”) former principal stockholders, Frank Rovito, Aaron Goldstein and Green Energy Partners, LLC (collectively the “Sellers”), entered into a Securities Purchase Agreement (the "Purchase Agreement") with Kayode Aladesuyi (the “Buyer”), pursuant to which the Sellers beneficial owners of an aggregate of 6,997,150 shares of the Company's common stock (the “Sellers' Shares”), agreed to sell and transfer the Sellers' Shares to the Buyer for an aggregate of Three Hundred Thousand Dollars ($300,000.00). The Purchase Agreement also provided that the Company would enter into a share exchange agreement with EarthSearch.

On January 15, 2010, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with EarthSearch, pursuant to which the Company agreed to issue 35,000,000 shares of the Company's restricted common stock to the shareholders of EarthSearch. On April 2, 2010, EarthSearch consummated all obligations under the Share Exchange Agreement. In accordance with the terms and provisions of the Share Exchange Agreement, the Company acquired 93.49% of the issued and outstanding common stock of EarthSearch. As a result of the Purchase Agreement and Share Exchange Agreement, our principal business became the business of EarthSearch. The Board of Directors of the Company (the “Board”) passed a resolution electing the new members of the Board and appointing new management of the Company and effectively resigning as their last order of business.

The Share Exchange was accounted for us as an acquisition and recapitalization. EarthSearch is the acquirer for accounting purposes and, consequently, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements herein are those of EarthSearch. The accumulated deficit of EarthSearch was also carried forward after the acquisition.

On December 31, 2011, the Company acquired 1,800,000 additional shares of EarthSearch from a non-controlling shareholder in exchange for 439,024 shares of the Company's common stock. As of December 31, 2011, the Company owns 94.66% of the issued and outstanding stock of EarthSearch.

On October 23, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Rogue Paper, Inc., a California corporation (“Rogue Paper”), and shareholders of Rogue Paper (the “Rogue Paper Holders”). Rogue Paper is headquartered in San Francisco, California and is a developer of mobile and branded applications for major media enterprises. The Company acquired fifty-one percent (51%) of the issued and outstanding common stock of Rogue Paper in exchange for 2,500,000 shares of the Company’s Series A convertible preferred stock (the “Series A Preferred”).

Pursuant to the Share Exchange Agreement, no sooner than twelve months from the Effective Date, the Series A Preferred shares shall be convertible, at the option of the holder of such shares, into an aggregate of fifty million shares of the Company’s common stock, par value $0.001 per share. Beginning sixth months from the Effective Date, both the Company and holders of the Series A Preferred shares shall have the option to redeem any portion of such holders’ Series A Preferred shares, for cash, at a price of sixty cents ($0.60) per share. Additionally, commencing twenty-four (24) months from the Effective Date, the holders of the remaining, unsold shares of Rogue Paper common stock may require the Company to redeem such shares, for cash, at a price of three cents ($0.03) per share.

On January, 12, 2012, StudentConnect Inc., a Georgia corporation, was formed as a subsidiary of the Company.

On July, 4, 2012, WetWinds Inc., a Georgia corporation, was formed as a subsidiary of the Company.

The Company is a holding company for several subsidiaries offering products and services in several areas of technology. EarthSearch Communications is a Logistics and Asset Management Company. The Company has created an integration of Radio Frequency Identification Technology (“RFID”) and GPS technology and is an international provider of supply chain management solutions offering real-time visibility in the supply chain with integrated RFID/GPS and other telemetry products.  These solutions help businesses worldwide to increase asset management, provide safety and security, increase productivity, and deliver real-time visibility of the supply chain through automation.

StudentConnect provides school transportation technology that would allow parents to receive real time notification about the status of their children. The company utilizes wireless communication between GPS and RFID to provide these services. The product is provided to schools and parents at zero cost. The Company’s business model allows it to charge business advertisers who sponsor alerts and messages to parents receiving the messages.

Rogue Paper, Inc., (“Rogue Paper”) the Company’s majority owned subsidiary offers second screen technology to media organizations and businesses. Additionally, ECDC recently completed the acquisition of a social media technology and through its subsidiary, WetWinds, intends to launch this operation during the fourth quarter of 2012.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.  Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. All intercompany transactions and accounts have been eliminated in consolidation. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

These unaudited consolidated financial statements should be read in conjunction with our 2011 annual consolidated financial statements included in our annual report on Form 10-K/A, filed with the SEC on May 4, 2012.

Going Concern

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As reflected in the accompanying unaudited consolidated financial statements, the Company had an accumulated deficit of $16,284,075 at September 30, 2012, a net loss and net cash used in operations of $3,221,480 and $1,171,086, respectively, for the nine months ended September 30, 2012.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate revenues, and continue to raise additional investment capital.  No assurance can be given that the Company will be successful in these efforts.

The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  Management believes that actions presently being taken to obtain additional funding and implement its strategic plans will afford the Company the opportunity to continue as a going concern.

Concentration of Credit Risk

The Company grants unsecured credit to commercial and governmental customers in the United States and abroad. Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. As of September 30, 2012, five customers account for 70% of the total accounts receivable compared to three customers accounting for 77% at December 31, 2011.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense was $311,671 and $nil for the nine months ended September 30, 2012 and 2011, respectively. At September 30, 2012 and December 31, 2011, the allowance for doubtful accounts was $311,671 and $nil, respectively.

Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure to its customers.

XML

3. Related Parties (Tables)

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Loans payable related parties

	September 30,		December 31,
	2012		2011
Unsecured non-interest bearing note payable, due on demand, to Frank Russo, a Director of the Company.  During the nine months ended September 30, 2012, $5,000 was paid on the note.	$	404,979	$	409,979
Unsecured note payable to Edward Eppel,  a Director of the Company, which bears interest at 10% per annum and is due on demand.  Accrued interest is equal to $27,596 and $15,763, respectively.		201,152		189,319
Unsecured non-interest bearing note payable, due on demand, to Anis Sherali, a Director of the Company.  During the nine months ended September 30, 2012, Mr. Sherali loaned an additional $56,500 to the Company and converted the entire note balance of $87,500 preferred stock.		–		31,000
Total	$	606,131	$	630,298

XML

3. Related Parties (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Unsecured note payable	$ 606,131	$ 630,298
Frank Russo [Member]
Unsecured note payable	404,979	409,979
Edward Eppel [Member]
Unsecured note payable	201,152	189,319
Anis Sherali [Member]
Unsecured note payable		$ 31,000

XML

6. Commitments and Contingencies (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 26,920	$ 49,005

XML

Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss	$ (3,221,480)	$ (806,057)
Adjustments to reconcile net loss to net cash used in operations:
Noncontrolling interests	(73,299)	(26,324)
Depreciation and amortization	130,956	86,098
Provision for doubtful accounts	311,671
Issuance of loan payable for consulting services	60,000
Stock issued for services and compensation	425,205	239,625
Amortization of prepaid license fee	37,500
Amortization of payment redemption premium as interest	12,076	7,683
Gain on recovery of redemption premiums	(28,975)
Gain on settlement of loans payable	(38,646)
Gain on settlement of accounts payable	(102,495)
Loss on conversion of debt	575,263	20,239
Change in derivative liability	2,291
Accretion of beneficial conversion feature on convertible notes payable as interest	604,841	13,535
Accretion of stock discounts to comvetible notes payable as interest	2,160
Interest accrued on loans payable	47,224	63,237
Changes in operating assets and liabilities:
Accounts receivable, net	(581,031)	(194,463)
Inventory	(80,261)	14,525
Prepaid expenses	(10,000)	(173)
Security deposits	(15,479)
Escrow deposits	(448)	16,873
Bank overdraft	(16,675)
Due to related party	(70,568)
Accounts payable and accrued expenses	619,802	52,476
Accrued payroll and related liabilities	239,282	188,528
Net cash used in operating activities	(1,171,086)	(324,198)
Cash flows from investing activities:
Capital expenditures	(700)
Net cash from investing activities	(700)
Cash flows from financing activities:
Proceeds from issuance of common stock	1,000	169,250
Proceeds from issuance of preferred stock	151,900
Proceeds from preferred stock subscription	325,002
Proceeds from loans payable	676,076	113,072
Proceeds from loans payable - related party	56,500	154,919
Repayments of loans payable	(12,600)
Repayments of loans payable - related party	(5,000)	(105,976)
Net cash from financing activities	1,192,878	331,265
Net increase (decrease) in cash	21,092	7,067
Cash at beginning of period	53,519	7,067
Cash at end of period	74,611	8,345
Supplemental disclosure of cash flow information:
Cash paid for interest	0	4,080
Cash paid for taxes	0	0
Non-cash investing and financing activities:
Issuance of 851,372,252 and 14,748,313 shares of common stock in conversion of loans payable	786,036	138,478
Issuance of 13,055,556 shares of common stock in conversion of loans payable - related party, resepctively		137,500
Issuance of 1,000,000 shares of series A preferred stock in conversion of loans payable	57,000
Issuance of 2,592,898 shares of series A preferred stock in conversion of loans payable - related party	87,500
Payment redemption premiums on convertible notes payable	2,592,898	17,625
Loans and accounts payable converted to Amounts payable in common stock	1,068,345	0
Issuance of 620,200,000 shares of common stock in settlement of loans and accounts payable converted to Amounts payable in common stock	1,144,930
Issuance of 4,324,515 shares of Series A preferred stock to related parties in conversion of 86,490,344 shares of common stock	86,490
Issuance of 372,000 shares of Series A preferred stock to third parties in conversion of 7,440,000 shares of common stock	7,440
Issuance of 1,500,000 shares of series B preferred stock under stock subscription	1,500,000	606,669
Beneficial conversion feature of convertible notes payable	708,137	33,565
Discount for stock issued in connection with issuance of note payable	2,160
Issuance of 357,143 shares of common stock in conversion of accounts payable		2,500
Issuance of 7,500,000 and 32,857,143 shares of common stock in conversion of accrued salaries	22,500	230,000
Issuance of 408,164 shares of series A preferred stock in conversion of accrued salaries	40,000
Prepaid license fee accrued	$ 150,000

XML

4. Amounts Payable in Common Stock and Derivative Liability

9 Months Ended

Sep. 30, 2012

Amounts Payable In Common Stock And Derivative Liability

NOTE 4 - Amounts Payable in Common Stock and Derivative Liability

During the nine months ended September 30, 2012, Ironridge Global IV, Ltd. (“Ironridge”) purchased $826,367 of accounts payable and $241,978 of loans payable, for a total of $1,068,345, from certain creditors of the Company. On April 20, 2012, the Superior Court of the State of California for the County of Los Angeles, Central District approved a Stipulation for Settlement of Claims (the “Settlement of Claims”) in the favor of Ironridge. The Settlement of Claims calls for the amount to be paid by issuance of the Company’s common stock. The number of shares of the common stock is to be calculated based on the volume weighted average price (“VWAP”) of the common stock over the calculation period, not to exceed the arithmetic average of the individual daily VWAPs of any five trading days during the calculation period, less a discount of 35%. The calculation period is defined as the period from the approval of the Settlement of Claims until the settlement is completed.

As the terms of the settlement include issuing common stock at a 35% discount to the conversion price, a derivative liability for the discount was established at the time of the Settlement of Claims of $575,263, which was charged to operations during the nine months ended September 30, 2012 as a loss on conversion of debt. The derivative liability is revalued at the end of each reporting period with any change in the liability being charged to operations. For the nine months ended September 30, 2012, the change in derivative liability of $2,291 has been expensed.

As common stock is issued in installments on the settlement, the Amounts Payable in Common Stock and the Derivative Liability will be reduced accordingly. During the nine months ended September 30, 2012, 620,200,000 shares of common stock, with a market value of $1,144,930, were issued to Ironridge in settlement of $742,715 of the liability, resulting in the reduction of the derivative liability of $402,215.

XML

2. Loans Payable (Details Narrative) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Notes to Financial Statements
Accrued interest	$ 35,390		$ 95,583
Total borrowings during period	676,076	113,072	244,755
Repayments made on borrowings	$ 12,600		$ 2,500