- RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2011

- RELATED PARTY TRANSACTIONS

NOTE 14 – RELATED PARTY TRANSACTIONS

On July 13, 2011 the Company issued 2,500,000 shares of its restricted common stock to one of its Directors who is related to the Company’s CEO. The shares were issued as compensation for providing services as a member of the Company’s Board of Directors pursuant to an agreement dated April 16, 2011. The 2,500,000 shares were previously accrued as a liability in the period ended June 30, 2011.

On July 26, 2011 a convertible note holder who is related to the Company’s CEO elected to convert the note dated December 16, 2009 with a face value of $9,000 into 1,9089,00 shares of the Company’s common stock at a price of $0.005 per share.

On August 4, 2011 the Company issued 1,000,000 shares of its restricted common stock to one of its Directors for providing consulting services to the Company under an agreement dated June 20, 2011. The 1,000,000 shares were previously accrued as a liability in the period ended June 30, 2011. The Company also paid the Director $11,275 during the three month period ended September 39, 2011 for various consulting services rendered.

On August 12, 2011 a promissory note holder who is related to the Company’s CEO elected to amend his promissory note to make the note convertible into shares of the Company’s common stock and to convert the note dated July 6, 2011 with a face value of $5,000 into 1,010,988 shares of the Company’s common stock at a price of $0.005 per share.

On August 26, 2011 a convertible note holder who is a former Director of the Company elected to convert shareholder loans that were provided to the Company in 2009 with a remaining principal balance of $4,800 into 1,200,000 shares of the Company’s common stock at a price of $0.004 per share. The Company did not pay any interest to the former Director for providing these loans.

On September 19, 2011 two individuals who are related to the Company’s CEO purchased 600,000 shares of the Company’s common stock at a price of $0.005 per share for total proceeds of $3,000.

On September 22, 2011 the Company entered into agreements with an individual who is a former Director of the Company to join the Company’s advisory council. Under the advisory council agreement, the advisor agreed to provide various advisory services to the Company, including making recommendations for both the short term and the long term business strategies to be employed by the Company, monitoring and assessing the Company’s business and to advise the Company’s Board of Directors with respect to an appropriate business strategy on an ongoing basis, commenting on proposed corporate decisions and identifying and evaluating alternative courses of action, making suggestions to strengthen the Company’s operations, identifying and evaluating external threats and opportunities to the Company, evaluating and making ongoing recommendations to the Board with respect to the Company’s business, and providing such other advisory or consulting services as may be appropriate from time to time. The term of the advisory council agreement is for one year. In consideration for the performance of the advisory services, the Company agreed to issue the advisor 900,000 shares of the Company’s common stock. According to the agreement the shares vest at a rate of 75,000 per month during the term of the agreement.  If the advisory council agreements is terminated prior to the expiration of the one year terms, then the advisors has agreed to return to the Company for cancellation any portion of their shares that have not vested. Under the advisory council agreement, the Company has agreed to reimburse the advisor for pre approved expenses.

NOTE 14 – RELATED PARTY TRANSACTIONS - continued

During the three month period ended September 30, 2011:

The Company paid a total of $1,607 to a limited liability company for stock transfer agency services. The limited liability company is owned and controlled by a person who is related to the Company’s CEO and a former Director of the Company owns a minority, non-controlling interest in the limited liability company. At September 30, 2011, the Company owed the limited liability company $6,692 for transfer agency services rendered and for additional services rendered to assist the Company with its proxy statement and related shareholder meeting and vote. This amount is included in accounts payable and accrued liabilities in the accompanying balance sheet.

The Company owes a person related to its CEO $262 for expenses related to the purchase of a boat part for the Company’s salvage vessel. This amount is included in accounts payable and accrued liabilities in the accompanying balance sheet.

The Company has an ongoing agreement to pay a person who is related to the Company’s CEO a minimum of $3,000 per month for providing various administrative, clerical, office management and consulting services. The Company also agreed to pay the related party consultant additional cash and/or stock based compensation at its discretion in the event that the consultant provides services to the Company that exceed normal business hours. The agreement is verbal and may be terminated by the Company or the consultant at any time. At September 30, 2011 the Company owed the consultant $1,500 for past services rendered. This amount is included in accounts payable and accrued liabilities in the accompanying balance sheet.

At September30, 2011, the following promissory notes and shareholder loans were outstanding to related parties:

A convertible note payable dated January 9, 2009, due to a person related to the Company’s CEO with a face amount of $10,000. This note bears interest at a rate of 10% per annum with interest payment to be paid monthly and is convertible at the note holder’s option into the Company’s common stock at $0.015 per share.  The convertible note payable was due on or before January 9, 2010 and is secured.  This convertible note payable is currently in default due to non-payment of principal and interest.

A convertible loan dated January 25, 2010, in the principal amount of $6,000 with a person who is related to the Company’s CEO. This loan pays interest at a rate of 6% per annum and the principle and accrued interest are due on or before January 25, 2011. The note is not secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.005 per share. This loan is currently in default due to non-payment of principal and interest.

A loan agreement dated February 24, 2010, the principal amount of $7,500 with a corporation. The Company’s CEO is a director of the corporation and a former Director of the Company is an officer of the corporation. The loan is not secured and pays interest at a rate of 6% per annum and the principle and accrued interest were due on or before February 24, 2011. This loan is currently in default due to non-payment of principal and interest.