Shareholders' Deficit

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

Shareholders’ Deficit

4. Shareholders’ Deficit

Common Stock

In January 2013, the Company issued 3,000,000 shares of restricted common stock to two vendors for services. The fair value of the vested portion of these shares was determined to be $55,149. In June 2013, the Company issued 1,000,000 shares of restricted common stock to one vendor for services. The fair value of the vested portion of these shares was determined to be $42,345.

During the nine months ended September 30, 2013, holders of Convertible Debentures with a face value of $297,146 converted their debentures into 4,592,636 shares of restricted common stock. In addition, associated with these debentures, the Company paid $33,988 in accrued interest by issuing 472,746 shares of restricted common stock.

In April 2013, a shareholder converted 500,000 shares of Series C Convertible Preferred stock into 500,000 shares of restricted common stock.

In September 2013, the Company issued a nine month unsecured note with a face value of $45,000 and 500,000 restricted shares of common stock to an affiliate of the Company in exchange for $54,325 in cash. The imputed annual rate of interest was calculated to be 18.4% and is to be repaid in nine equal monthly installments. Of the 500,000 shares issued, 312,500 shares were issued for debt issuance costs in an amount of $15,625 which is being amortized as interest expense over the life of the note and 187,500 shares were issued for cash in an amount of $9,375.

Warrants

During the nine months ended September 30, 2013, in conjunction with the sale of Convertible Debentures, the Company issued five year common stock purchase warrants to acquire 12,653,479 shares to holders of the Debentures and as compensation to Agents. These warrants have exercise prices ranging from $0.0745 to $0.1287 per share.

In addition, during the nine months ended September 30, 2013, the holders of common stock purchase warrants to acquire 1,515,151 shares at an exercise price of $0.1287 exchanged their warrants for new warrants to acquire 2,837,873 shares at an exercise price of $0.0745 under the exchange provisions of their Convertible Debentures.

The balance of all warrants outstanding as of September 30, 2013 is as follows:

			Weighted
			Average
			Exercise
Warrants	Shares		Price
Outstanding at January 1, 2013		59,066,992	$	0.18
Granted		16,737,575	$	0.08
Exchanged cancelled		(1,515,151)	$	0.13
Exchanged issued		2,837,873	$	0.08
Cancelled		-	$	-
Exercised		-	$	-
Outstanding at September 30, 2013		77,127,289	$	0.15
Exercisable at September 30, 2013		77,127,289	$	0.15