Note 9. Promissory Notes and Debentures

9 Months Ended

Sep. 30, 2011

Debt Disclosure [Text Block]

Note 9.  Promissory Notes and Debentures

In March 2011, the Company entered into a settlement agreement with Rockmore pursuant to which the Company agreed to issue 12 million shares of its common stock to Rockmore in full payment of the outstanding balance of the debenture and accrued interest thereon, and for a full release from all claims filed by Rockmore against the Company.  The Company recorded a contingent loss in the amount of $169,818 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.  The Company recognized a reduction in derivative liability of $78,490 which resulted in a corresponding increase in additional paid-in capital.

During the nine months ended September 30, 2011, Rozetta-Cell Life Sciences, Inc., a Nevada corporation that the Company is proposing to acquire (“Rozetta-Cell”), made loans to the Company for a total of $71,451 in addition to the prior notes payable balance of $154,482 for aggregate notes payable of $225,933.  During the three months ended September 30, 2011, the Company provided Waco Capital, Inc. (“Waco”), an affiliate of Rozetta-Cell, with 24,232,000 shares of common stock as payment for $199,135 of Rozetta-Cell notes payable leaving a balance due of $26,798 and reducing the amount owed to Waco of $24,232.  The Rozetta-Cell loans are interest free and payable on demand.  The Company incurred $5,557 of imputed interest during the nine months ended September 30, 2011 which resulted in an increase in additional paid-in capital since the interest is not payable.  A gain of $17,396 was also recorded as an increase in additional paid-in capital due to the related party nature of the transaction.

In September 2011, the Company received a loan of $12,000 and provided the lender with a six-month note payable at 12% interest per annum.

The carrying values of the Company’s notes payable, net of unamortized discounts, amounted to $639,262 and $735,482 at September 30, 2011 and December 31, 2010, respectively, as follows:

	September 30, 2011		December 31, 2010
Notes Payable	$	12,000	$	-0-
Notes Payable – Related Party		26,798		154,482
Notes Payable – in Default		501,000		501,000
Less: Unamortized Discount		-0-		-0-
Total		501,000		501,000
Notes Payable – in Default – Related Party		80,000		80,000
Total Notes Payable, Net	$	619,798	$	735,482

The carrying values of the Company’s convertible debentures, net of unamortized discounts, amounted to $272,176 and $303,853 at September 30, 2011 and December 31, 2010, respectively, as follows:

	September 31, 2011		December 31, 2010
Convertible Debentures – in Default	$	272,176	$	303,853
Total Convertible Debentures, Net	$	272,176	$	303,853