Related Party Transactions

3 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 13 – RELATED PARTY TRANSACTIONS

During the three month period ended September 30, 2012:

In July 2012, a related party shareholder provided the Company with emergency short term loan proceeds totaling $5,000. The Company repaid the related party shareholder the entire $5,000 balance prior to September 30, 2012. The Company did not pay any interest or fees to the related party shareholder for providing the short term loan.

In August 2012, the Company entered into a promissory note agreement with a related party shareholder under which the related party shareholder agreed to provide the Company with an emergency short term loan in the amount of $2,500. The related party shareholder agreed to provide the loan to the Company at a 0% rate of interest and the Company agreed to pay the shareholder 200,000 restricted shares of its common stock as an equity kicker in exchange for providing the emergency no interest rate loan. The Company repaid the entire loan balance prior September 30, 2012. As of September 30, 2012, the Company had not issued the related party shareholder the 200,000 restricted shares of its common stock.

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 a minimum of $2,400 per month to provide administrative services, background research, background checks and investigative information on individuals and companies, and to perform administrative duties and clerical services. If the related party consultant performs additional work then the monthly fee may increase. The consultant provides the services under the direction and supervision of the Company’s CEO. During the three month period ended September 30, 2012 the Company paid the related party consultant fees of $9,600. All fees paid to the related party consultant during the nine month period ended September 30, 2012 are included as an expense in consulting and contractor fees in the accompanying income statement for the nine month period ended September 30, 2012. At September 30, 2012, the Company owed the limited liability company $1,200 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. All fees paid to the related party consultant during the nine month period ended September 30, 2012 are included as an expense in consulting and contractor fees in the accompanying income statement for the nine month period ended September 30, 2012. At September 30, 2012, the Company owed the related party limited liability company $5,257 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 July 2012 the Company entered into a debt settlement agreement with the related party vendor to settle $5,677 of outstanding debt related to legal fees incurred by the related party vendor due to a lawsuit against the Company in 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 1,530,111 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 realize less than $5,677 from the sale of the stock, then they are entitled to receive up to an additional 1,000,000 shares of common stock or a cash payment to cover the difference in the amount owed.

At September 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 September 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.