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Notes Payable
3 Months Ended
Mar. 31, 2013
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. As of March 31, 2013 and December 31, 2012 the Company has accrued $3,967 and $3,372, respectively. As of May 2013 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 March 13, 2013 and December 31, 2012 the Company has accrued $25,550 and $22,297 in interest, respectively. The Company recorded $3,253 and $2,757 in interest expense for the three months ending March 31, 2013 and 2012, respectively. As of May 2013 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 March 31, 2013 and December 31, 2012 the Company accrued $4,484 and $4,031 in interest, respectively. The Company recorded $453 and $384 in interest expense for the three months ended March 31, 2013 and 2012, respectively. As of May 2013 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 March 31, 2013 and December 31, 2012, the Company had accrued interest of $766 and $653, respectively. The Company recorded $113 and $105 in interest expense for the three months ended March 31, 2013 and 2012, respectively. As of May 2013 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 $5,000. As of March 31, 2013 and December 31, 2012 the Company has accrued $8,836 and $7,389 in interest, respectively. The Company recorded $1,447 and $1,340 in interest expense for the three months ending March 31, 2013 and 2012, respectively. As of May 2013 no payments have been made on this note and the note is in default.


On October 16, 2012, the Company signed a $53,000 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on July 18, 2013. The holder of the note has the right, after the first one hundred eighty days of the note (March 18, 2013), to convert the note and accrued interest into common stock at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest five trading prices for the Common Stock during the ten trading day period ending one trading day prior to the date of Conversion Notice. The Company has the right to prepay the note and accrued interest during the first one hundred eighty days following the date of the note. During that time the amount of any prepayment during the first sixty days is 130% of the outstanding amounts owed while the amount of the prepayment increases every subsequent thirty days to 135%, 140%, 145%, and 150% of the outstanding amounts owed. The Company recorded debt issuance costs for this note of $3,000, a debt discount of $53,000 related to the conversion feature of the note, and a derivative liability at inception. Interest expense for the amortization of the debt discounts is calculated on a straight-line basis over the nine month life of the note. As of March 31, 2013 the total amortization was recorded in the amount of $32,361 resulting in a debt discount of $20,684. As of March 31, 2013 and December 31, 2012 the Company recorded accrued interest of $1,972 and $894, respectively.


On November 29, 2012, the Company signed a $37,500 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on September 3, 2013. The holder of the note has the right, after the first one hundred eighty days of the note (March 18, 2013), to convert the note and accrued interest into common stock at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest five trading prices for the Common Stock during the ten trading day period ending one trading day prior to the date of Conversion Notice. The Company has the right to prepay the note and accrued interest during the first one hundred eighty days following the date of the note. During that time the amount of any prepayment during the first sixty days is 130% of the outstanding amounts owed while the amount of the prepayment increases every subsequent thirty days to 135%, 140%, 145%, and 150% of the outstanding amounts owed. The Company recorded debt issuance costs for this note of $2,500, a debt discount of $36,545 related to the conversion feature of the note, and a derivative liability at inception. Interest expense for the amortization of the debt discounts is calculated on a straight-line basis over the nine month life of the note. As of March 31, 2013 the total amortization was recorded in the amount of $16,389 resulting in a debt discount of $20,156 at March 31, 2013. As of March 31, 2013 and December 31, 2012 the Company recorded accrued interest of $1,027 and $271, respectively.


On February 5, 2013, the Company signed a $47,500 convertible promissory note with a third party. The note bears interest at 8% per annum and is due on November 5, 2013. The holder of the note has the right, after the first one hundred eighty days of the note (May 17, 2013), to convert the note and accrued interest into common stock at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest five trading prices for the Common Stock during the ten trading day period ending one trading day prior to the date of Conversion Notice. The Company has the right to prepay the note and accrued interest during the first one hundred eighty days following the date of the note. During that time the amount of any prepayment during the first sixty days is 130% of the outstanding amounts owed while the amount of the prepayment increases every subsequent thirty days to 135%, 140%, 145%, and 150% of the outstanding amounts owed. The Company recorded debt issuance costs for this note of $2,500, a debt discount of $47,500 related to the conversion feature of the note, and a derivative liability at inception. Interest expense for the amortization of the debt discounts is calculated on a straight-line basis over the nine month life of the note. As of March 31, 2013 the total amortization was recorded in the amount of $9,194 resulting in a debt discount of $38,306 at. As of March 31, 2013 the Company recorded accrued interest of $562.