Equipment Lease Payable

12 Months Ended

Dec. 31, 2012

9. Equipment Lease Payable

At December 31, 2011, the Company had $257,583 included in Accounts Payable - Trade relating to certain equipment acquired. In January 2012, the Company renegotiated the terms of the payable into a lease agreement for the same equipment, which resulted in an adjustment to the cost basis of the equipment (see Note 4). The lease term is five years with a principal amount of $257,583 and an effective interest rate of 14.7% per annum.

Future minimum lease payments, by year and in the aggregate, under equipment leases, which includes capital leases, as of December 31, 2012, are as follows:

For the years ending December 31,	Lease payments

2013	$	76,757
2014		76,727
2015		75,892
2016		48,949
Total		278,325
Less: amount representing interest		(62,917	)
Present value of future lease payments	$	215,408

As of December 31, 2012, the related equipment had a gross and net book value of $305,641 and $281,472, respectively. Depreciation of assets held under equipment leases in the amounts of $20,376 and $3,793 is included in depreciation expense for the years ended December 31, 2012 and 2011, respectively.