RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

NOTE 7 - RELATED PARTY TRANSACTIONS

On December 2, 2009, the Company signed a one year lease for 2,400 square feet of office space. The rent for the space is $2,400 per month. The landlord is related to one of the officers of the Company. The lease was renewed on January 1, 2012, however, during 2012, the lease was terminated by mutual consent and the offices were vacated by the Company.

During 2012, the Company paid four related parties $11,250 in cash and issued 7,218,580 shares of common stock with a value of $116,538 for officer and director services. In the year ended December 31, 2011 the Company paid four related parties $169,500 and issued $169,250 of common stock to the same parties and accrued $44,250 for officer and director services.

On November 20, 2009, the Company converted accounts payable and advances from Montse Zaman, a related party, of $71,184 to a three year unsecured note maturing on November 19, 2012. Interest is incurred at 12% per annum unless the principal and interest are not paid by maturity at which time the interest rate accelerates to 18% per annum. During 2010 the related party advanced the Company an additional $8,000 bringing the total principal amount under the note as of December 31, 2012 and 2011 to $79,184.

During 2012, Montse Zaman made multiple advances totaling $12,610 to the Company. The debt is unsecured, carries zero interest and is due on demand.

During 2012, the Company borrowed $1,000 from Tisa Capital Corp which is controlled by a related party. The debt is unsecured, carries zero interest and is due on demand.

During 2007, the Company borrowed $12,700 from Phoenix Consulting Services Inc. controlled by a related party. The loan is unsecured and matured on April 1, 2008 and accrued interest at 12% per annum. The note can be converted into common shares of the company at the holder’s option at a conversion price to be determined in the future. Amounts outstanding under this agreement subsequent to April 1, 2008 accrue interest at 18% per annum. On November 20, 2009, the note including principal and interest totaling $16,025 was converted to a long term note due November 19, 2012 with principal and interest due at maturity. If the principal and interest are not paid by maturity, the interest rate accelerates to 18% per annum. The unpaid principal amount on this note was $16,025 as of December 31, 2011. During 2012, Phoenix Consulting advanced an additional $1,000 to the Company bringing the total principal amount under the note to $17,025 as of December 31, 2012.

During June 2011, the Company entered into a service agreement with Cleantech Transit, Inc. which is a related party due to common directors and officers. The Company provided consulting services to Cleantech from April 1, 2011 through March 31, 2012 in return for 5,000,000 shares of Cleantech common stock. The fair value of the stock received was determined to be $775,000 of which $581,781 was recognized as revenue during 2011 and $193,219 was recorded as deferred revenues as of December 31, 2011. The deferred revenue was written-off against the carrying value of the equity method investment during the year ended December 31, 2012.

In April 2012 the Company extended its contract with Cleantech Transit, Inc. through April 30, 2013. Under the terms of the agreement the Company receives $22,000 per month payable in either in cash or stock at the option of Cleantech Transit. During the year ended December 31, 2012 the Company received an aggregate of 105,953,152 shares of Cleantech stock valued at $0 and received $21,800 in cash. The shares received from Cleantech were accounted as an equity method investment held in related party in the consolidated balance sheets (see Note 4).