RELATED PARTY AND FORMER OFFICERS NOTES PAYABLE

3 Months Ended

Mar. 31, 2012

Related Party Transactions [Abstract]

RELATED PARTY AND FORMER OFFICERS NOTES PAYABLE

NOTE 6 – RELATED PARTY AND FORMER OFFICERS NOTES PAYABLE

In December 2007, the former Chief Operating Officer and former Chief Executive Officer collectively forgave $1,416,500 of their outstanding accrued salaries ($1,387,500) and note payable ($29,000) balances. The amount forgiven has been accounted for as contributed capital. Additionally, the Company repaid $5,000 of the former Chief Executive Officer’s note payable balance. The remaining unpaid notes payable balances totaling $995,000 at March 31, 2012 and December 31, 2011 comprised of loans payable due on demand of $450,000 and $545,000 to its former Chief Operating Officer and Chief Executive Officer, respectively.

The loans bore interest at 5.5% per annum and were initially due December 31, 2002 and have been mutually extended and settled. Under the terms of the note extensions dated December 12, 2007, the loans bear interest at 5% per annum and are now due on demand. The Company has recorded interest expense for notes payable to these former officers of approximately $12,000 and $12,000 for the three months ended March 31, 2012 and 2011, respectively. Accrued interest related to these notes payable approximated $444,000 and $432,000 as of March 31, 2012 and December 31, 2011, respectively and is included in accrued liabilities, related parties.