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Notes Payable - Related Parties
 6 Months Ended
Jun. 30, 2012
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

8. Notes Payable - Related Parties

 

On March 29, 2012, the Company issued a note payable to Ramon Shealy, a director of the Company, in the amount of $238,000, bearing interest at a rate of 10% for the term of the note. All principal and interest was due and payable on June 27, 2012. On June 27, 2012, the maturity was extended an additional 60 days. On April 16, 2012 the Company issued a note payable to Ramon Shealy, a director of the Company in the amount of $12,000 bearing interest at a rate of 10% for the term of the note. All principal and interest was due July 12, 2012. On July 12, 2012, the maturity was extended an additional 60 days.

 

Notes payable due to related parties consist of the following:

 

    June 30,     December 31,  
    2012     2011  
Note payable, bearing interest at 8.65% per annum. Principal and unpaid interests are due on January 1, 2014.   $ 157,292     $ 157,292  
                 
Notes payable, bearing interest at 5.00% per annum. Principal and unpaid interest are due on January 1, 2014.     119,415       105,415  
                 
Contingently convertible notes payable, bearing interest at 10% per annum. Principal and unpaid interest due on June 1, 2012.     50,000       —  
                 
Note payable, bearing interest at 10% for the term of the note. Principal and unpaid interests are due on August 27, 2012.     238,000       —  
                 
Note payable, bearing interest at 10% for the term of the note. Principal and unpaid interest are due September  13, 2012.     12,000       —
                 
Total notes payable - related party   $ 576,707     $ 262,707  
Less current portion     (300,000 )     —  
Long-term portion of notes payable-related party   $ 276,707     $ 262,707  

  

Future minimum principal payments of these notes payable as described in this Note 8 are as follows:

 

For the Twelve Months Ended June 30,   Amount  
2013   $ 300,000  
2014     276,707  
Total   $ 576,707  

 

As of June 30, 2012 and December 31, 2011, accrued interest for these notes payable-related parties amounted to $189,069 and $157,859, respectively. Of these amounts, $17,494 and $0, respectively, is reflected within accrued expenses, related parties, and $171,575 and $162,138, respectively, is reflected within other long-term liabilities-related parties on the accompanying condensed consolidated balance sheets.

 

For the three and six months ended June 30, 2012 and 2011, interest expense in connection with notes payable – related parties was $21,211 and $26,933 and $8,753 and $15,605, respectively.

 

See Note 15 - Subsequent Event for conversion of the contingently convertible notes payable, (in aggregate amount of $50,000) bearing interest at 10% per annum, due June 1, 2012.