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

8. Notes Payable - Related Parties

 

On March 29, 2012, the Company issued an unsecured note payable to Ramon Shealy ("Mr. 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 to August 27, 2012. On August 27, 2012 the note was extended to October 25, 2012. On October 24, 2012 the note was extended to November 24, 2012. On April 16, 2012, the Company issued a note payable to Mr. Shealy, in the amount of $12,000, bearing interest at a rate of 10% per quarter. All principal and interest was due on July 15, 2012. On July 12, 2012 the maturity was extended to September 13, 2012. On August 27, 2012 the maturity was extended to November 12, 2012.

 

On June 20, 2012, the Company issued an unsecured promissory note payable to a relative of the Company’s Founders, in the amount of $14,000, due July 1, 2014 and bearing interest at 5% per annum, with the principal and interest to be paid on maturity.

 

On July 16, 2012, the Company issued an unsecured note payable to a shareholder in the amount of $95,000, due 45 days from the date of issuance and bearing interest at a rate of 10% per annum, with the principal and interest to be paid on maturity. On July 20, 2012, the Company issued an unsecured note payable to the same shareholder in the amount of $25,000, due 45 days from the date of the issuance and bearing interest at a rate of 10% per annum, with the principal and interest to be paid on maturity. On August 29, 2012 the maturity for both notes were extended to November 16, 2012.

 

Notes payable due to related parties consist of the following:

 

    September 30,     December 31,  
    2012     2011  
Note payable, bearing interest at 8.65% per annum. Principal and unpaid interest are due on January 1, 2014.   $ 157,292     $ 157,292  
                 
Notes payable, bearing interest at 10% per annum. Principal and unpaid interest are due on November 16, 2012.     120,000       —  
                 
Notes payable, bearing interest at 5.00% per annum. Principal and unpaid interest are due on January 1, 2014.   $ 105,415       105,415  
                 
Note payable, bearing interest at 5.00% per annum. Principal and unpaid interest are due on July 1, 2014.   $ 14,000       —  
                 
Note payable, bearing interest at 10% for the term of the note. Principal and unpaid interest are due on November 12, 2012   $ 12,000       —  
                 
Note payable, bearing interest at 10% for the term of the note. Principal and unpaid interest are due on November 24, 2012.     238,000       —  
                 
Total notes payable - related party   $ 646,707     $ 262,707  
Less current portion     (370,000 )     —  
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
September 30,		     Amount  
  2013     $ 370,000  
  2014       276,707  
  Total     $ 646,707  

 

As of September 30, 2012 and December 31, 2011, accrued interest for these notes payable-related parties amounted to $200,369 and $157,859, respectively. Of these amounts, $30,405 and $0, respectively, is reflected within accrued expenses, related parties, and $169,964 and $157,859, respectively, is reflected within other long-term liabilities-related parties on the condensed consolidated balance sheets.

 

For the three and nine months ended September 30, 2012 and 2011, interest expense in connection with notes payable – related parties was $15,944 and $42,879 and $5,049 and $20,657, respectively.