11. Loans payable to officers and director

12 Months Ended

Dec. 31, 2011

11. Loans payable to officers and director

The Loans Payable to Officers and a Director represent loans from the Company’s President, an officer and a member of the board of directors and amounted to the following:

	December 31,
	2011		2010

Officer and director, interest at 9.5%	$	78,919	$	391,993
An officer, non-interest bearing		50,244		127,421
An officer, interest at 5.0% if not repaid on timely basis		55,000		231,525
A director, interest at 10.0%		-		45,000
Total	$	184,163	$	795,939

These loans are unsecured, due on demand, have no priority or subordination features, do not bear any restrictive covenants and contain no acceleration provisions. Interest expense on these loans for 2011 and 2010 was $0 and $49,398, respectively.

During 2011, $45,000 was paid to the director to pay down the last portion of the principal balance of a loan made to the Company in 2005. The officer and director provided the Company with $557,650 from December 2010 through June 2011, he was repaid $564,363 during the first six months of 2011 (please see footnotes 12 and 17 for additional information). During 2011, $77,176 was paid to an officer pursuant to an employment agreement.

In connection with the employment agreement for its Senior Vice President and Chief Operating Officer, the Company assumed a promissory note of $231,525 formerly owed to him by PEI and agreed to pay the promissory note with $121,525 payable to him upon the closing of the acquisition of PEI by the Company, $55,000 due 90 days after the closing of the acquisition, and $55,000 due 180 days after the closing of the acquisition. Any unpaid amounts after 180 days following the closing of the acquisition will bear interest at 5%. In June 2011, upon closing the acquisition of PEI, the Company paid the first installment of $121,525 and $55,000 was paid in September 2011.