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4. LOANS PAYABLE

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 4 - LOANS PAYABLE

The Company has the following outstanding loans:

i.

$5,000: unsecured, bearing interest at 15% per annum, which was due on April 20, 2012. The loan balance remains outstanding to date and the Company intends to renegotiate the repayment terms with the lender. The loan was originally $10,000. During the year ended December 31, 2012, loan principal of $5,000 together with accrued loan interest of $1,000 was converted to a subscription for 120,000 shares of the Company’s common stock. Those shares were issued on July 24, 2012. As at September 30, 2013, the Company has accrued a total of $1,902 in interest payable on this loan.

ii.

$75,000: unsecured, bearing interest at 10% per annum, which was due on August 2, 2011. The loan balance remains outstanding to date and the Company intends to renegotiate the repayment terms with the lender. In 2011, the Company issued 250,000 shares of its common stock as additional consideration for receiving the loan. As at September 30, 2013, the Company has accrued a total of $17,179 in interest payable on this loan.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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