NOTES PAYABLE, RELATED PARTY

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

NOTES PAYABLE, RELATED PARTY

NOTE 10– NOTES PAYABLE, RELATED PARTY

On March 14, 2013, an employee of the Company loaned us $25,000 via a note payable. Per the terms of the note, the principal accrues interest at the rate of 6% per year with a term of 90 days. The note does not require any principal and/or interest payments during the 90-day term, but the Company can make, at its sole discretion, principal and/or interest payments in any amount it chooses during the 90 day term. At the conclusion of the note’s 90-day term the Company is required to pay, in full, any and all unpaid principal and/or interest.

On June 26, 2013, the Company signed a revised agreement with this related party that extends the term through September 30, 2013. All of the other terms and conditions remained unchanged from the original agreement.

As of June 30, 2013, the outstanding principal balance was $25,000 and accrued and unpaid interest totaled $444, for a total amount due and payable of $25,444. Of the $444 in accrued and unpaid interest, $70 was recorded as interest expense during the three month period ended March 31, 2013, with the remaining $374 recorded as interest expense during the three month period ended June 30, 2013.

On March 20, 2013, the same employee of the Company who loaned us $25,000 via a note payable purchased 2,000,000 shares of the Company’s common stock at a price of $0.035 per share. The aggregate proceeds to the Company were $70,000. The shares were purchased as part of the Company’s Subscription Agreement dated December 2011.

As of June 30, 2013, this related party voluntarily terminated his employment with the Company to pursue other business opportunities.