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Note 6. Notes Payable Related Party

6 Months Ended

Jun. 30, 2011

6.	Notes Payable – Related Party. Two $1,000,000 notes are payable under an unsecured loan agreement with Hayashibara Biochemical Laboratories, Inc. (“HBL”), a major stockholder, dated July 22, 1999. Although we are currently in default on the notes, HBL has not demanded payment.

In 2010, the Company entered into a verbal agreement with Paul Tibbits, a Director, to purchase 12,000,000 warrants held by him for $200,000. On January 10, 2011 a promissory note in the amount of $200,000 was executed at an annual interest rate of 0.43%, with no stated maturity date, and no collateral.

On March 9, 2011, the Company entered into a promissory agreement with Paul Tibbits, a Director, for $20,000. A note was executed and includes interest at 0.54% per annum; the note is due upon demand, or if no demand is made, on September 11, 2011.

On April 6, 2011, the Company entered into another promissory agreement with Paul Tibbits, a Director, for $40,000. A note was executed and includes interest at 0.54% per annum; the note is due upon demand, or if no demand is made, on October 8, 2011.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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