6 - Note Payable
In March 2011, the Company entered into a lending facility that provides for advances of up to $500,000 with interest at 12% per annum payable monthly. The facility was provided by an investor in our preferred stock (Note 9). As of September 30, 2011, there was a balance of $80,000 on the facility. As of December 31, 2011 and September 30, 2012, there was no balance outstanding on the facility.
On November 5, 2012, the Company issued an aggregate of $500,000 in two year 10% convertible notes to two investors, and on November 7, 2012 the Company issued an aggregate of $500,000 in two year 10% convertible notes to three additional investors. The notes may be prepaid by the Company with fifteen days notice, and may be converted into the Companys common stock at the lesser of 80% of the Companys fair market value at the time of conversion or $4.00 per share. The notes were issued with two year warrants to purchase an aggregate of 200,000 common shares at $3.25 per share.