NOTES PAYABLE

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

NOTE 6 - NOTES PAYABLE

During 2012, the Company borrowed an aggregate of $61,000 under three notes payable as follows:

·   Two 60-day unsecured notes bearing interest at 6% per annum for $10,000 and $14,000

·   One 60-day note for $35,000 bearing no interest that automatically converts into 3,500,000 shares of the Company stock if the note is not paid within the 60 day time period.

·   A demand non-interest bearing note for $2,000 from a non-related party.

The $10,000 and $14,000 notes were paid during 2012 through the issuance of 2,400,000 common shares. The fair value of the common shares was determined to be $31,200 resulting in a loss on the extinguishment of debt of $7,200.

The Company evaluated the $35,000 note for a beneficial conversion feature on the loan commitment date and determined that a beneficial conversion feature existed. The intrinsic value of the beneficial conversion feature was determined to be $31,500. This beneficial conversion feature was recognized as interest expense on the date the loan became convertible. The $35,000 note was not repaid by its maturity date and it was converted into the 3,500,000 common shares.

As of December 31, 2012 and 2011, the aggregate outstanding principal on third party notes payable was $2,000 and $0, respectively.