OTHER LIABILITIES

3 Months Ended

Mar. 31, 2012

Other Liabilities Disclosure [Abstract]

Other Liabilities Disclosure [Text Block]

9. OTHER LIABILITIES

Other liabilities of $55,419 at March 31, 2012, consists of $30,000 loans payable, $22,500 assets pursuant to Asset Purchase Agreement (Note 7. ASSET PURCHASE), and $2,919 on-line training liability. The $30,000 loans payable is comprised of $20,000 short-term, unsecured loan, due on demand from one of the Board of Directors, and the other $10,000 short-term, due on demand is from the same lender disclosed in Note 11. CONVERTIBLE DEBENTURE, ref (7). Because documentation surrounding classification of the $10,000 as convertible debenture is unavailable, the Company classified this amount as other liability pending resolution.

Other liabilities of $13,320 at December 31, 2011, consists of $10,000 loan payable, and $3,320 on-line training liability. The $10,000 short-term loan, unsecured loan is from one of the Board of Directors and is without stated terms.

Effective July 1, 2005, the Company began including on-line training certificates with all hookah units sold. The training certificates entitle the holder to an on-line interactive course at no additional charge to the holder. The number of on-line training certificates issued per unit is the same as the number of divers the unit as sold is designed to accommodate (i.e., a three diver unit configuration comes with three on-line training certificates). The certificates have an eighteen-month redemption life after which time they expire. The eighteen-month life of the certificates begins at the time the customer purchases the unit. The Company owes the on-line training vendor the agreed upon negotiated rate for all on-line certificates redeemed payable at the time of redemption. For certificates that expire without redemption, no amount is due the on-line training vendor.

The Company estimates the on-line training liability based on the historical redemption rate of approximately 10%. The Company continues to monitor and maintain a reserve for certificate redemption that approximates the historical redemption rate.