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Note 6 - Senior Convertible Note Financing
12 Months Ended
Dec. 31, 2012
Debt Disclosure [Abstract]  
Senior Convertible Note Financing

NOTE 6 — Senior Convertible Note Financing

 

On November 19, 2010, the Company issued a senior secured convertible note having a principal amount of $1,000,000 in a private placement financing. The convertible note was recorded on the Company’s balance sheet net of the associated debt discount. On August 3, 2011, the Company gave notice to call its senior convertible note with a redemption date of September 6, 2011. The unconverted note principal at the notice date was $700,394. The note holder completed a full conversion of the note to common stock by the redemption date. Amortization of the related debt discount during the years ended December 31, 2011 and 2010, totaled $944,351 and $55,649, respectively, which is classified as interest expense in the Company’s Statement of Operations. Interest expense on the note principal for the years ended December 31, 2011 and 2010, was $56,107 and $11,667, respectively. In accordance with the terms of the convertible note, a premium was attached to the conversion upon redemption. This resulted in the additional interest expense recognized in the year ended December 31, 2011 of $89,387. An aggregate of 721,009 shares of common stock was issued during the year ended December 31, 2011 to satisfy the conversion of the entire principal amount of $1,000,000 plus $16,732 of accrued interest and $89,387 of additional interest expense.