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14. RELATED PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2012
Related Party Transactions [Abstract]  
NOTE 14. RELATED PARTY TRANSACTIONS

Accounts Payable and Related Party Vendor Payments

 

Desmond Wheatley, the current CEO and President of the Company, is the owner of a consulting firm that provided services to the Company during 2010, including his own personal services. As of December 31, 2011, the Company had a balance owed to this consulting firm of $109,145 that is included in Accounts Payable –Related Party. This balance was paid during 2012.

 

Prior to November 2012, Jay Potter, our director, was a registered representative of Allied Beacon and had been engaged through Allied Beacon to provide capital raising services to the Company as it related to the private offerings offered in 2012 and 2011. The Company has paid $84,000 in 2012 and $254,513 in 2011 of cash offering costs related to these services all of which have been accounted for as a reduction of additional paid in capital. Further, the Company paid this same affiliate $40,000 of debt issue costs in 2011 that were capitalized on the balance sheet and amortized over the life of the applicable convertible loan. In March 2012, in conjunction with the conversion of this loan to common stock of the Company, the Company paid a cash fee of $40,000 to Allied Beacon and an issuance of 68,966 warrants, each with a 5 year term for a total warrant valuation of $12,274. (See notes 9 and 12)

 

In 2011, a company owned in part by the Company’s Chairman rented office space from the Company for $500 per month which amount was deemed to be the equivalent value for rent paid by third parties for such space. This office space was vacated in December 2011. (see Note 10)

 

Note Payable to Officer

 

In 2009, the Company executed a 10% convertible note payable in the amount of $102,236 due December 31, 2010 to John Evey for amounts loaned to the Company. Mr. Evey joined the Board of Directors on April 27, 2010. Through a series of extensions, the note due date was extended to December 31, 2013. The current amount owed to Mr. Evey as of December 31, 2012 is $122,683. (See Note 7)

 

Warrants issued to Directors

 

In August 2011, the Company issued 600,000 warrants, each with a five year term and exercise price of $0.25, for investor relations and financial advisory services to a Company controlled by Jay Potter, our Director. These warrants, valued at $119,360 using the Black-Scholes valuation methodology, were expensed over the six month term of the agreement. (See Note 13)

 

In December 2011, and in conjunction with his resignation as Executive Chairman, the Company issued 1,138,120 warrants, each with a five year term and exercise price of $0.24 (market price at day of issuance) to Robert Noble in exchange for the cancellation of debts owed to Mr. Noble for vacation and deferred salary liabilities. These warrants were valued at $209,006 using the Black-Scholes valuation methodology and there was no gain or loss on the transaction. (See note 13)