RELATED PARTY TRANSACTIONS

3 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 14 – RELATED PARTY TRANSACTIONS

During the three month period ended June 30, 2012:

In May of 2012, the Company entered into an agreement with an individual who is related to the Company’s CEO to continue serving as a member of the Company’s Board of Directors. Under the  agreement, the Director agreed to provide various 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 for one year and may be terminated by either the Company or the Director by providing written notice to the other party. The agreement also terminates automatically upon the death, resignation or removal of the Director.  Under the terms of the agreement, the Company agreed to pay the Director 3,000,000 restricted shares of its common stock at the execution of the agreement and to negotiate future compensation on a year-by-year basis. The Company also agreed to reimburse the Director for pre approved expenses. As of June 30, 2012, the Company had issued the related party Director 3,000,000 shares of its restricted common stock pursuant to the agreement. The 3,000,000 shares are included as an expense in the amount of $18,900 in consulting and contractor fees the accompanying income statement.

In June 2012, an individual who is related to the Company’s CEO entered into a subscription agreement to purchase 2,857,143 shares of the Company’s restricted common stock at a price of $0.0035 per share and the Company received proceeds of $10,000.

In June of 2012, two individuals who are related to the Company’s CEO entered into a subscription agreement to purchase 4,571,429 shares of the Company’s restricted common stock at a price of $0.0035 per share and the Company received proceeds of $16,000.

In June of 2012, the Company agreed to pay $1,500 for legal services related to the filing of schedules of share ownership for a related party shareholder. Legal counsel agreed to accept 300,000 shares of the Company’s restricted common stock for the payment for the legal services rendered. The Company issued 300,000 restricted common shares which are included as an expense in legal fees in the amount of $2,940 in the accompanying income statement.

The Company previously had an ongoing agreement to pay a person who is related to the Company’s CEO a minimum of $3,000 per month plus additional cash and/or stock based compensation at its discretion based on additional time that the consultant spent rendering services. The Company and the related party consultant mutually agreed to terminate the consulting agreement as of May 4, 2012. In January 2012, the Company issued 1,000,000 shares of its restricted common stock to the related party consultant. The shares were recorded as an expense of $7,900 in consulting and contractor fees in the accompanying income statement for the six month period ended June 30, 2012. All fees paid to the related party consultant during the six month period ended June 30, 2012 are included as an expense in consulting and contractor fees in the accompanying income statement. As of June 30, 2012 the Company did not owe any fees or compensation to the related party consultant.

The Company has an ongoing verbal agreement with a limited liability company that is controlled by a person who is related to the Company’s CEO to pay the related party consultant $2,400 per month to provide background research, background checks and investigative information on individuals and companies, and act as an administrative specialist to perform administrative duties and clerical services. The consultant provides the services under the direction and supervision of the Company’s CEO. During the three month period ended June 20, 2012 the Company paid the related party consultant fees of $5,600. All fees paid to the related party consultant during the six month period ended June 30, 2012 are included as an expense in consulting and contractor fees in the accompanying income statement for the period. At June 30, 2012, the Company owed the limited liability company $1,600 and this amount is included in accounts payable and accrued liabilities in the accompanying balance sheet.

The Company has an ongoing agreement with a limited liability company that is owned and controlled by a person who is related to the Company’s CEO to provide stock transfer agency services. During the three month period ended June 30, 2012, the Company paid the related party transfer agency fees of $2,000. All fees paid to the related party consultant during the six month period ended June 30, 2012 are included as an expense in consulting and contractor fees in the accompanying income statement for the period. At June 30, 2012, the Company owed the related party limited liability company $2,661 for transfer agency services rendered, legal fees incurred and other services. This amount is included in accounts payable and accrued liabilities in the accompanying balance sheet. In May 2012 the Company entered into a debt settlement agreement with the related party vendor to settle $19,260 of outstanding debt related to legal fees incurred by the related party vendor due to a lawsuit against the Company of which the related party vendor was also named as a defendant due to its position as the Company’s stock transfer agency. The Company issued 6,641,583 shares of its common stock to this vendor as satisfaction for the outstanding debt. The agreement between the Company and the vendor stipulated that should the transfer agency less than $19,260 from the sale of the stock, then they are entitled to receive up to an additional 4,000,000 shares of common stock or a cash payment until the balance is paid in full.

The Company previously had an ongoing agreement to pay a person who is related to the Company’s CEO a minimum of $3,000 per month plus additional cash and/or stock based compensation at its discretion based on additional time that the consultant spent rendering services. The Company and the related party consultant mutually agreed to terminate the consulting agreement as of May 4, 2012. In January 2012, the Company issued 1,000,000 shares of its restricted common stock to the related party consultant. The shares were recorded as an expense of $7,900 in consulting and contractor fees in the accompanying income statement for the six month period ended June 30, 2012. All fees paid to the related party consultant during the six month period ended June 30, 2012 are included as an expense in consulting and contractor fees in the accompanying income statement. As of June 30, 2012 the Company did not owe any fees or compensation to the related party consultant.

At June 30, 2012 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. The lender may file suit to foreclose on the Company’s assets then such consequence may have a material adverse effect on the Company and its prospects that could include shutting down the Company’s operations.

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.

A convertible promissory note dated January 18, 2012 in the amount of $50,000 with two individuals who are related to the Company’s CEO. This loan pays interest at a rate of 8% per annum and the principle and accrued interest were due on or before July 18, 2012. The note is secured and is convertible at the lender’s option into shares of the Company’s common stock at a rate of $0.004 per share. The note was not in default as of June 30, 2012, however the note is currently in default due to non-payment of principal and interest as of the date of the filing of this form 10-Q. The lenders may file suit to foreclose on the Company’s assets then such consequence may have a material adverse effect on the Company and its prospects that could include shutting down the Company’s operations.