NOTE 10 - CONVERTIBLE DEBT

On May 27, 2011 the Company issued a convertible debt totaling $50,000. On June 28, 2011, the Company issued and additional Convertible Note in the amount of $37,500. The Convertible debt bears a rate of 8.0% simple interest per annum. The principal and accrued unpaid interest shall be due and payable on February 28, 2012. The "Variable Conversion Price" shall mean 59% multiplied by the Market Price (as defined herein) (representing a discount rate of 41%). "Market Price" means the average of the lowest five (5) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.

The following table illustrates the carrying value of the convertible debt:


	September 30, 2011			December 31, 2010
Convertible Note	$	87,500		$	-
Accrued Interest		2,153			-
Convertible Note, Net		89,653			-
Less: Current portion of convertible debt		(89,653	)		-
Long term portion of convertible debt	$	-		$	-

The following tables illustrate the fair value adjustments that were recorded related to the derivative financial instruments associated with the convertible debenture financings:

	Three Months ended September 30, 2011
Derivative income (expense):	Inception		Fair Value Adjustments			Redemptions		Total
Convertible debt	$	-	$	(122,289	)	$	-	$	(122,289	)
	$	-	$	(122,289	)	$	-	$	(122,289	)

The following table illustrates the components of derivative liabilities:

Balance at June 30, 2011	$	-
Change in fair value of derivative liability due to beneficial conversion feature		122,289
Debt redemption		-
Balance at September 30, 2011	$	122,289