NOTE 11 - CONVERTIBLE PROMISSORY NOTES

6 Months Ended

Jun. 30, 2011

Schedule of Long-term Debt Instruments [Table Text Block]

NOTE 11 – CONVERTIBLE PROMISSORY NOTES

In January 2011, the Company issued a convertible promissory note amounting to $50,000. The note bears interest at 8% per annum and matures on October 5, 2011. The Company paid deferred financing cost of $3,000 in connection with this note payable and is being amortized over the term of the note. The note is convertible at the option of the holder into shares of common stock beginning on the date which is 180 days after the date of this note, at a conversion price equal to 58% of the average of three lowest trading prices during the 10 trading day period of the Company’s common stock prior to the date of conversion.

In February 2011, the Company issued a convertible promissory note amounting to $42,500 with the same terms and conditions of the convertible promissory note issued in January 2011. The Company paid deferred financing cost of $2,500 in connection with this note payable and is being amortized over the term of the note.

In June 2011, the Company issued a convertible promissory note amounting to $30,000 with the same terms and conditions of the convertible promissory note issued in January 2011. The Company paid deferred financing cost of $2,500 in connection with this note payable and is being amortized over the term of the note.

In accordance with ASC 470-20-25, the convertible note was considered to have an embedded beneficial conversion feature (BCF) because the effective conversion price was less than the fair value of the Company’s common stock. Therefore the portion of proceeds allocated to the convertible debentures of $68,450 was determined to be the value of the beneficial conversion feature and was recorded as a debt discount and is being amortized over the term of the note. The Company evaluated whether or not the convertible note contains embedded conversion options, which meet the definition of derivatives under ASC 815-15 “Accounting for Derivative Instruments and Hedging Activities” and related interpretations.  The Company concluded that the convertible notes issued in January 2011 and March 2011 is not considered a derivative until after 180 days from the date of issuance. As of June 30, 2011, accrued interest amounted to $3,444. As of June 30, 2011, amortization of deferred financing cost on these notes amounted to $46,177.

Convertible promissory notes as of June 30, 2011 consisted of the following:

	June 30, 2011
Secured convertible promissory note	$	122,500
Less: Debt discount		(43,997	)
	$	78,503

For the three and six months at June 30, 2011, amortization of debt discount amounted to $26,454 and $17,543, respectively,