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16. Related Party Transactions
 12 Months Ended
Dec. 31, 2012
Related Party Transactions [Abstract]  
16. Related Party Transactions

16. Related Party Transactions

 

The Company owes Eric McAfee and McAfee Capital, solely owned by Eric McAfee, amounts of $1,262,133and $1,254,188 in connection with employment agreements and expense reimbursements, which are included in accrued expenses and accounts payable on the balance sheet as of December 31, 2012 and 2011.  For the years ended December 31, 2012 and 2011, the Company expensed $65,343 and $519,828 in connection with non-employee compensation and expense reimbursements. Beginning September 2011, Eric McAfee began receiving employee compensation. For the years ended December 31, 2012 and 2011, Eric McAfee received $180,000 and $60,000, respectively, in employee compensation.

 

For the years ending December 31, 2012 and 2011, Eric McAfee received payments from the Company of principal, interest and fees associated with a revolving line of credit co-owned with Laird Cagan, a related party, and other investors, by converting part of the balance due for 6,231,159 and 18,141,715 shares of common stock, respectively. Laird Cagan received 2,634,376 and 7,669,857 shares of common stock as part of the same payments-for-stock transactions with the same terms.

 

The Company owes various Board Members amounts of $1,300,313 and $638,563 as of December 31, 2012 and 2011, respectively, in connection with board compensation fees, which are included in accounts payable on the balance sheet.  For the years ended December 31, 2012 and 2011, the Company expensed $379,500 and $228,654, respectively, in connection with board compensation fees.

 

In July 2009, the Company entered into a sublease agreement with Nevo Energy, Inc. (formerly known as Solargen Energy, Inc.) for approximately 3,000 square feet of leased space. For the year ending December 31, 2012 and 2011, the Company invoiced Nevo Energy $58,801 and $86,291, respectively, in rents and utilities charges, but reserved all the payments during 2011 and 2012 due to Nevo Energy’s inability to pay. The Nevo Energy lease expired in May 2012. Eric McAfee is a member of the Board of Directors and a significant shareholder of Nevo Energy, Inc.  Michael Peterson, a former member of the Company’s Board of Directors, was also the Chief Executive Officer of Nevo Energy, Inc. during 2011.   See Note 7 Operating Leases.