NOTE 4 - NOTES PAYABLE

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

NOTE 4 - NOTES PAYABLE

NOTE 4 - NOTES PAYABLE

We issued an aggregate of $2.4 million face amount of Senior Secured Convertible Notes (the “Notes”). The Notes are divided into Series A, Series B and Series C with the Series A and B Notes aggregating to $1.95 million and the Series C Notes aggregating to $450,000. All of the Notes carry a 14% annual interest rate upon default and are payable on March 13, 2016. The Company has determined that the conversion feature of the Notes represent an embedded derivative since the Notes are convertible into a variable number of shares upon conversion. These Notes are classified as a derivative liability and not a note payable, see Note 11 below.

Notes payable at March 31, 2013 consist of the following:
Unsecured note payable to a shareholder bearing 8% interest.
Entire balance of principal and unpaid interest due on demand	$	124,230
Unsecured note payable to a shareholder bearing 10% interest
Entire balance of principal and unpaid interest due on demand	$	649,049
Total current	$	773,279
2013	$	773,279
2014	$	-0-
2015	$	-0-
2016	$	-0-
2017	$	-0-
	$	773,279