From April 26, 2012 to January 24, 2013, the Company sold convertible notes to unaffiliated accredited investors totaling $2,675,244.  The notes have a term of three years, bear interest at 12% per annum, and are convertible into units, where each unit consists of: (i) one share of common stock of the Issuer, par value $0.001 per share, and (ii) a warrant to purchase 0.25 shares of common stock of the Issuer at an exercise price of $1.25 per share.  The initial conversion ratio shall be equal to $1.00 per unit.  The notes may be converted at any time and from time to time in whole or in part prior to the maturity date thereof.  These securities were sold in reliance upon the exemption provided by Section 4(2) of the Securities Act and the safe harbor of Rule 506 under Regulation D promulgated under the Securities Act.  Accrued interest on these advances at June 30, 2013 was $166,190 and was converted to principal by the Company on July 1, 2013.  Accrued interest on these advances at December 31, 2012 was $134,975, and was converted to principal by the Company on January 1, 2013.  Interest expense for the six months ended June 30, 2013 and 2012, was $166,190 and $29,867, respectively. 

From April 5 through May 10, 2013, the Company sold convertible notes to unaffiliated accredited investors totaling $405,000.  The notes are convertible into units, where each unit consists of: (i) 1 share of common stock of the Issuer, par value $0.001 per share, and (ii) a warrant to purchase 0.25 shares of common stock of the Issuer at an exercise price of $0.75 per share.  The initial conversion ratio shall be equal to $0.50 per unit.  The notes may be converted at any time and from time to time in whole or in part prior to the maturity date thereof .  These securities were sold in reliance upon the exemption provided by Section 4(2) of the Securities Act and the safe harbor of Rule 506 under Regulation D promulgated under the Securities Act.  Accrued interest at June 30, 2013 and interest expense for the six months ended June 30, 2013 on these notes was $8,645.

On June 27 and June 30, 2013, the Company converted advances payable from related parties (see Note 8 and Note 9)  into convertible notes totaling $1,036,195.  The notes are convertible into units, where each unit consists of: (i) 1 share of common stock of the Issuer, par value $0.001 per share, and (ii) a warrant to purchase 0.25 shares of common stock of the Issuer at an exercise price of $0.75 per share.  The initial conversion ratio shall be equal to $0.50 per unit.  The notes may be converted at any time and from time to time in whole or in part prior to the maturity date thereof.  These securities were issued in reliance upon the exemption provided by Section 4(2) of the Securities Act and the safe harbor of Rule 506 under Regulation D promulgated under the Securities Act.  Accrued interest at June 30, 2013 and interest expense for the six months ended June 30, 2013 on these notes was $393.