- CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

6 Months Ended

Jun. 30, 2011

- CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE

Upon inception, the Company evaluates each financial instrument to determine whether it meets the definition of “conventional convertible” debt under paragraph 4 of EITF 00-19, which was ultimately superseded by ASC 470.

Convertible Notes Payable

The following table reflects the convertible notes payable, other than the one remeasured to fair value, which is discussed in Note 10, as of June 30, 2011 and December 31, 2010:

Issue Date	Maturity Date	June 30, 2011		December 31, 2010		Interest Rate			Conversion Rate
Convertible notes payable, in default :
August 28, 2009	November 1, 2009	$	4,300	$	4,300		10.00	%	$	0.0150
November 30, 2009	May 30, 2010		10,000		10,000		6.00	%	$	0.0050
April 7, 2010	November 7, 2010		65,450		70,000		6.00	%	$	0.0080
November 12, 2010	November 7, 2010		40,000		40,000		6.00	%	$	0.0080
February 15, 2011	April 15, 2011		20,000		--		8.00	%	$	0.0028
			139,750		124,300
Convertible notes payable – related parties, in default:
January 9, 2009	January 9, 2010		10,000		10,000		10.00	%	$	0.0150
December 16, 2009	December 16, 2010		9,000		9,000		6.00	%	$	0.0050
January 25, 2010	January 25, 2011		6,000		6,000		6.00	%	$	0.0050
			25,000		25,000
		$	164,750	$	149,300

The convertible notes payable classified as “in default” are in default as of the date this quarterly report on Form 10-Q was ready for issue.

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE- continued

Notes Payable

The following table reflects the notes payable as of June 30, 2011 and December 31, 2010:

Issue Date	Maturity Date	June 30, 2011		December 31, 2010		Interest Rate
Notes payable:
April 27, 2011	April 27, 2012	$	5,000	$	--		6.00	%
April 28, 2011	July 10, 2011		50,000		--		6.00	%
May 10, 2011	July 10, 2011		5,000		--		6.00	%
May 19, 2011	July 10, 2011		5,000		--		6.00	%
May 25, 2011	July 25, 2011		5,000		--		6.00	%
May 26, 2011	July 26, 2011		20,000		--		6.00	%
June 16, 2011	July 3, 2011		15,000		--		6.00	%
June 17, 2011	August 7, 2011		5,000		--		6.00	%
June 23, 2011	August 23, 2011		25,000		--		6.00	%
			135,000		--
Notes payable, in default:
February 22, 2010	August 22, 2010		20,000		20,000		3.00	%
February 23, 2011	March 23, 2011		20,000		--		7.00	%
			40,000		20,000
Notes payable  – related parties:
June 6, 2011	August 6, 2011		5,000		--		6.00	%
Notes payable  – related parties, in default:
February 24, 2010	February 24, 2011	$	7,500	$	7,500		6.00	%
		$	187,500	$	27,500

Stockholder Loans

The following table reflects the stockholder loans as of June 30, 2011 and December 31, 2010: 

Issue Date	Maturity Date	June 30, 2011		December 31, 2010		Interest Rate
Various	None stated	$	4,900	$	7,900	8.00%
October 26, 2010	January 25, 2011		--		350	6.00%
November 16, 2010	January 16, 2011		--		1,875	6.00%
		$	4,900	$	10,125

At June 30, 2011 and December 31, 2010, combined accrued interest on the convertible notes payable, notes payable and stockholder loans was $16,056 and $9,038, respectively, and included in accounts payable and accrued liabilities on the accompanying balance sheets. Management intends to have discussions or has already had discussions with several of the promissory note holders who do not currently have convertible notes regarding converting their notes into equity. Any such agreements to convert promissory notes into equity would more than likely have a highly dilutive effect on current shareholders and there is a very high probability that such dilution may significantly negatively affect the trading price of the Company’s common stock.