XML 37 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Notes Payable
9 Months Ended
Sep. 30, 2012
Notes Payable [Abstract]  
Notes Payable

9. Notes Payable


On July 1, 2010 the Company entered into a short-term note payable of $40,000 with Smith Consulting Services (SCS) and affiliates. On April 30, 2012 the Company converted $20,000 of the note principal and $9,850 of payables to that party as well as $4,551 in interest payable in stock totaling 300,000 shares. On June 21, 2012 the Company converted $5,000 as well as $1,000 in interest payable in stock totaling 66,667 shares. The remaining balance of the note is $15,000 with $4,301 in interest as of September 30, 2012. The Company recorded $531 and $1,175 in interest expense for the three months ended September 30, 2012 and 2011, respectively. As of November 2012 the remaining balance on the note has not been repaid.


On October 1, 2010, the Company signed a $50,000 convertible promissory note with a third party. The note bears interest at 18% per annum and was due on November 5, 2010. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company's common stock at a price of $0.70 per share. As of September 30, 2012 the Company has accrued $19,540 in interest on the note payable and recorded $2,757 and $2,250 in interest expense for the three months ending September 30, 2012 and 2011, respectively. As of November 2012 the Company is currently in default as no payments have been made on the note and the note has not been converted.


On March 25, 2011 the Company entered into a short-term note payable of $7,500 with Smith Consulting Services (SCS) and affiliates. The note is due on demand with an 18% interest rate. As of September 30, 2012 the Company accrued $2,187 interest on the note payable. The Company recorded $384 and $338 in interest expense for the three months ended September 30, 2012 and 2011, respectively. As of November 2012 no payments have been made on this note and the note is in default.


On May 31, 2011, a shareholder loaned the Company $5,000 on a short-term convertible note payable. The note was due on February 10, 2012 and has an 8% interest rate. The note provides for the conversion of principal plus interest into the Company's common stock at a price equal to 50% of the market price on date of conversion. Consequently, the liability has been recorded at $10,000 on the balance sheet. The difference between the face value and fair value of the note has been recognized as interest expense. As of September 30, 2012, the Company had accrued interest of $548. The Company recorded $105 and $100 in interest expense for the three months ended September 30, 2012 and 2011, respectively. As of November 2012 no payments have been made on this note and the note is in default.


On August 10, 2011, the Company signed a $65,000 convertible promissory note with a third party. The note bears interest at 8% per annum and was due on February 10, 2012. The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principal balance into the Company's common stock at a price of $0.02. The Company calculated the value of the beneficial conversion feature (BCF) using the intrinsic method as stipulated in ASC 470. The value of the BCF of the note has been calculated at $13,000. For the nine months ended September 30, 2012, the Company recorded approximately, $3,250 in amortization. As of September 30, 2012 the Company has accrued $6,048 in interest on the note payable and recorded $1,340 in interest expense for the three months ending September 30, 2012. As of November 2012 no payments have been made on this note and the note is in default.


On June 22, 2012, the Company signed a $200,000 convertible promissory note payable to a third party. The note is due on December 22, 2012 and has a 10% interest rate. The note provides for the conversion of principal plus interest into the Company's common stock at a price equal to 90% of the market price on date of conversion. Consequently, the liability has been recorded at $222,222 on the balance sheet. The difference between the face value and the fair value of the note has been recognized as interest expense. As of September 30, 2012, the Company had accrued interest of $5,438 and recorded $5,000 in interest expense for the three months ended September 30, 2012. As of November 2012 no payments have been made on this note.