15. RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2011

Related Party Transactions Disclosure [Text Block]

15.  RELATED PARTY TRANSACTIONS

Accounts Payable and Related Party Vendor Payments

Desmond Wheatley, the current CEO and President of the Company, is the owner of a consulting firm that provided services to the Company during 2010, including his own personal services.  During 2010, the Company paid the consulting firm $121,515 as compensation for services rendered.  As of December 31, 2011 and 2010, the Company has a balance owed to this consulting firm of $109,145 that is included in Accounts Payable –Related Party

Jay Potter, Director, has been engaged through different organizations to provide capital raising services to the Company as it related to the private offering offered in 2011 and 2010.  The Company has paid $254,513 in 2011 and $140,766 in 2010 of cash offering costs related to these services all of which have been accounted for as a reduction of additional paid in capital. Further, the Company paid this same affiliate $40,000 of debt issue costs that are capitalized on the balance sheet and being amortized over the life of the applicable loan.

A company owned in part by the Company’s Chairman rented office space from the Company for $500 per month which amount was deemed to be the equivalent value for rent paid by third parties for such space.  This office space was vacated in December 2011.

Note Payable to Officer

As of December 31, 2010, the Company owed one of the Company’s stockholders’ and former officer $34,246.  As of December 31, 2011, this note was paid in full and has no balance owed. (See Note 7)

In 2009, the Company executed a 10% convertible note payable in the amount of $102,236 due December 31, 2010 to John Evey for amounts loaned to the Company.  Mr. Evey joined the Board of Directors on April 27, 2010.  In December 2011, the note due date was extended to December 31, 2012.  The current amount owed to Mr. Evey as of December 31, 2011 is $122,683. (See Note 8)

Warrants issued to Directors

In August 2011, the Company issued 600,000 warrants, each with a five year term and exercise price of $0.25, for investor relations and financial advisory services to a Company controlled by Jay Potter, our Director.  These warrants, valued at $119,360 using the Black-Scholes valuation methodology, will be expensed over the six month term of the agreement. (See Note 13)

In December 2011, and in conjunction with his resignation as Executive Chairman, the Company issued 1,138,120 warrants, each with a five year term and exercise price of $0.24 (market price at day of issuance) to Robert Noble in exchange for the cancellation of debts owed to Mr. Noble for vacation and deferred salary liabilities.  These warrants were valued at $209,006 using the Black-Scholes valuation methodology and there was no gain or loss on the transaction. (See note 13)