Annual report pursuant to Section 13 and 15(d)

RELATED PARTY TRANSACTIONS

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RELATED PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2013
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 10 – RELATED PARTY TRANSACTIONS

 

Notes payable, related parties

 

In February 2011, we executed a secured, promissory note with one of our officers in the amount of $50,000 (the “2011 Officer Note”). The 2011 Officer Note is secured by certain assets in MV and bears interest at 8% per annum. The note was originally due on August 15, 2011, but as of December 31, 2012 was due on demand. As additional consideration for the change in terms, we issued a five year warrant to purchase 25,000 shares of our common stock at an exercise price of $0.60 per share to the officer. We valued the warrant at approximately $6,000 using the Black-Scholes model and recorded this amount as a debt discount. The debt discount was fully amortized during 2011. On December 31, 2013, the balance of the note and accrued interest which totaled $61,404 was converted into 122,080 shares of common stock.

 

Notes payable, related parties and accrued interest due to certain related parties as of December 31, 2013 and 2012 are as follows:

 

    2013     2012  
             
Note payable dated February 2004, bearing interest at 8% per annum, originally due January 2008; assigned to CEO by a third party in 2010; due on demand, in default at December 31, 2013 and 2012   $ 97,000     $ 97,000  
                 
Note payable due to President of our subsidiary, REGS, interest at 8% per annum, originally due February 2009, in default at December 31, 2012     —       4,200  
                 
2011 Officer Note (see description above), in default at December 31, 2012     —       50,000  
                 
Accrued interest     39,900       39,200  
                 
    $ 136,900     $ 190,400  

  

We believe the stated interest rates on the related party notes payable represent reasonable market rates based on the note payable arrangements we have executed with third parties.

 

For the years ended December 31, 2013 and 2012 we had revenues of $494,700 and $203,300, respectively, from a customer, Harley Dome, in which our CEO/President is a member of the Board of Directors of Armada Water Assets, Inc, the parent company of Harley Dome. Black Stone Management Services, LLC, in which Fortunato Villmagna is Chairman and a managing member and President of our subsidiary PWS, is a minority shareholder of Armada Water Assets, Inc.

 

In September 2013, PWS entered into an Exclusive Use License and Joint Operations Agreement (“License Agreement”) with Sterall Inc. (“Sterall”). Black Stone in which Fortunato Villmagna is Chairman and a managing member and President of our subsidiary PWS, is a minority shareholder of Sterall.