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Payables and Accruals
12 Months Ended
Dec. 31, 2011
Payables and Accruals  
Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE 6 -         CONVERTIBLE PROMISSORY NOTES PAYABLE

 

During 2011, the Company entered into a convertible promissory note agreement with an investor for $20,000.  The note carries an interest rate of 10% per annum.  The term of the loan is 18 months.  The principal and interest on the note may be converted into shares of common stock at the lower of $0.16 or a price equal to that of the thirty day moving average of the adjusted closing price for the Company’s common stock.  Interest expense on this note for the year ended December 31, 2011 was $333.  In accordance with FASB ASC 470 a beneficial conversion feature was recognized as a debt discount of $5,000 upon the issuance of this loan which will be amortized over the life of the loan.  As of December 31, 2011, $556 of the discount had been amortized to interest expense.

 

During 2010, the Company entered into a loan agreement with an investor.  The note carried an interest rate of 7% per annum.  During the year ended December 31, 2011, the Company received $137,000 in proceeds from additional loans made under this agreement.  The balance of this loan at December 31, 2011 and December 31, 2010, was $166,200 and $20,700, respectively, along with accrued interest of $10,815 and $583, respectively.  Effective August 1, 2011, a new agreement was entered into converting the note to a senior convertible promissory note, with a term of 18 months and an interest rate of 10% per annum.   The principal balance at that date was $166,200.  Interest payments of $4,155 are due on a quarterly basis.  The principal and interest on the note may be converted into shares of common stock at the lower of $0.20 or a price equal to that of the thirty day moving average of the adjusted closing price for the Company’s common stock.  As of December 31, 2011, the Company has not paid the quarterly interest payment due and a waiver of the initial interest payment requirement has been received from the note holder.  In accordance with FASB ASC 470 a beneficial conversion feature was recognized as a debt discount of $83,100 upon entry into the  new agreement to be amortized over the life of the loan.  As of December 31, 2011, $23,083 of the discount had been amortized to interest expense.

 

During 2009, the Company entered into loan agreements with investors for $9,000.  The notes carried an interest rate of 7% and were due on demand.  During the year ended December 31, 2011, the investors signed a letter of agreement to convert the notes, including any accrued interest, into 42,000 shares of restricted common stock.  Interest expense on these notes for the year ended December 31, 2011 was $315.