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Convertible Notes Payable

6 Months Ended

Sep. 30, 2011

Convertible Notes Payable [Abstract]

Note 4.

Convertible Notes Payable:

			September 30,		March 31,
			2011		2011
$	312,000	Convertible Note Financing, due March 31, 2012 (a)	$	49,776	$	117,166
$	600,000	Convertible Note Financing, due March 31, 2012 (b)		377,728		471,064
$	500,000	Convertible Note Financing, due March 31, 2012 (b)		481,138		1,016,841
$	243,333	Convertible Note Financing, due March 31, 2012 (c)		292,000		292,000
$	60,833	Convertible Note Financing, due March 31, 2012 (d)		60,833		60,833
$	20,000	Convertible Note Financing, due March 31, 2012 (c)		20,000		20,000
$	120,000	Convertible Note Financing, due March 31, 2012 (e)		90,427		250,609
$	5,000	Convertible Note Financing, due March 31, 2012 (e)		5,990		12,664
$	5,000	Convertible Note Financing, due March 31, 2012 (e)		3,768		10,442
$	60,000	Convertible Note Financing, due March 31, 2012 (e)		44,696		124,787
$	70,835	Convertible Note Financing, due March 31, 2012 (e)		53,378		147,931
$	507,500	Convertible Note Financing, due March 31, 2012 (f)		670,801		806,117
$	200,000	Convertible Note Financing, due March 31, 2012 (e)		56,049		210,155
$	161,111	Convertible Note Financing, due March 31, 2012 (e)		42,071		356,974
$	27,778	Convertible Note Financing, due March 31, 2012 (e)		13,320		46,251
$	111,112	Convertible Note Financing, due March 31, 2012 (g)		174,512		204,980
$	50,000	Convertible Note Financing, due March 31, 2012 (e)		12,108		195,592
$	55,000	Convertible Note Financing, due March 31, 2012 (e)		100,802		238,331
$	137,500	Convertible Note Financing, due March 31, 2012 (e)		209,998		595,829
$	55,000	Convertible Note Financing, due March 31, 2012 (e)		100,802		238,331
$	100,000	Convertible Note Financing, due March 31, 2012 (h)		16,943		134,638
$	900,000	Convertible Note Financing, due July 15, 2012 (i)		738,443		741,019
$	400,000	Convertible Note Financing, due July 15, 2012 (j)		175,831		670,891
$	600,000	Convertible Note Financing, due September 17, 2012 (k)		841,226		999,846
$	221,937	Convertible Note Financing, due September 17, 2012 (l)		198,482		-
$	500,000	Convertible Note Financing, due January 15, 2013 (m)		261,938		-

		Total convertible notes payable	$	5,093,060	$	7,963,291

(a)	$312,000 convertible notes payable

On January 8, 2008, we executed secured convertible notes in the aggregate of $520,000 with three lenders, all unrelated entities. We received a net amount of $430,000 with the $90,000 discount being treated as interest. The loans became payable on May 7, 2008, or we had the option of compelling the holder to convert all, or a portion of the outstanding principal and accrued interest into Company common stock based on defined criteria. On February 13, 2008, we repaid $260,000 of these loans. To date, total conversions of $280,670 in principal face value have been converted into common shares.

We have entered into the following Modification and Waiver Agreements related to this financing:

Date	Terms	Consideration
June 2008	Extend maturity to July 15, 2008	9,750 shares of common stock
September 2008	Extend maturity to sooner of January 1,	Increase principal by $52,000
	2009 or closing of another funding
Janary 2009	Extend matrity date to July 1, 2009 and add	140,000 shares of restricted stock
	a conversion option of $0.05
January 2010	Extend maturity date to June 30, 2010	Convertible notes (See Note 4(h))
July 2010	Extend maturity date to March 31, 2011	Change in conversion price to $.035
March 2011	Extend maturity date to March 31, 2012	Change in conversion price to $.02

The addition of a conversion option and the issuance of restricted stock in January 2009 resulted in an extinguishment loss of $56,000 under the FASB Accounting Standards Codification.

The January 2010 modification resulted in an extinguishment loss of $72,441. On July 14, 2010, the holders agreed to extend the due date to March 31, 2011 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $900,000. On March 17, 2011, the holders agreed to extend the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000.

We chose to value the entire hybrid instrument at fair value. We estimate the fair value of the hybrid contract as a common stock equivalent, enhanced by the forward elements (coupon, puts, and calls), because that technique embodies all of the assumptions (including credit risk, interest risk, stock price volatility and conversion behavior estimates) that are necessary to fair value complex, hybrid contracts.

(b)	$1,200,000 convertible notes payable

On October 23, 2007, we entered into a Subscription agreement with a group of accredited investors. Under this agreement, we agreed to sell up to $1,200,000 of our securities consisting of 10% convertible notes, shares of common stock and Class A and Class B common stock purchase warrants. The original subscription agreement required that we have an effective registration statement in order for the second closing date to occur. On February 15, 2008, we obtained a Waiver of Certain Conditions that allowed us to waive the requirement for the Registration Statement to become effective prior to the occurrence of the Second closing.

The convertible promissory notes were initially convertible into common shares based on a fixed conversion price of $6.60, and are subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. The conversion features were not afforded the exemption as conventional convertible, and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instruments at fair value. We estimate the fair value of the hybrid contract as a common stock equivalent, enhanced by the forward elements (coupon, puts, and calls), because that technique embodies all of the assumptions (including credit risk, interest risk, stock price volatility and conversion behavior estimates) that are necessary to fair value complex, hybrid contracts.

The warrants issued in this financing arrangement did not meet the conditions for equity classification and are also required to be carried as a derivative liability, at fair value. We estimate the fair value of the warrants on the inception dates, and subsequently, using the Black-Scholes valuation technique, adjusted for dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, dilution and risk free rates) that are necessary to fair value freestanding warrants. See also Note 6 Derivative Liabilities.

The warrants and the convertible notes contain full-ratchet protection so the exercise price of the warrants and the conversion price of the notes were reduced to $3.30 when the Company issued additional convertible instruments with this conversion rate on December 18, 2008. On January 27, 2009, we entered into a modification of the agreement which reduced the maturity date from October 23, 2009 to July 1, 2009 and changed from a periodic debt payment schedule to full payment of principal and interest on July 1, 2009. In exchange for this modification, we issued 62,500 shares of restricted stock, and we agreed to reduce the conversion price of the notes and related warrants to $1.00. This modification resulted in a loss on extinguishment of $379,183. During the quarter ended June 30, 2009, $85,000 of principal balance on the notes and $8,723 of interest was converted into common shares of stock at a price of $1.00. During the quarter ended December 31, 2009, $105,000 of principal balance of the notes and $4,500 of interest were converted into common shares at the default conversion price of $.16 calculated pursuant to the notes default provisions. The conversion price was reduced again to $.494 when the Company issued additional convertible instruments with a lower conversion rate in November 2009. On January 10, 2010, we entered into a modification of the agreement with certain note holders, which extended the maturity date to June 30, 2010. In exchange for this modification, we issued convertible promissory notes in the amount of $100,000 (See Note 4(h)). Additionally, we agreed to (i) issue additional warrants to purchase 1,635,792 shares of common stock and (ii) reduce the price of certain warrants to $0.20. This modification resulted in an extinguishment loss of $395,249. During the quarter ended March 31, 2010, $100,500 of principal balance of the notes was converted into common shares at the default conversion price of $.16 calculated pursuant to the notes default provisions. On January 28, 2010, certain warrants were re-priced to $0.16, and the expiration dates were extended to July 15, 2015. On February 11, 2010, the warrants which were re-priced to $0.20 on January 10, 2010 were re-priced to $0.16, and the expiration dates were extended to July 15, 2015.

During the quarter ended June 30, 2010, $36,000 of the principal balance of the notes was converted into common shares at the default conversion price of $0.16, calculated pursuant to the notes default provisions. On July 14, 2010, we extended the due date to March 31, 2011 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $900,000. The conversion price for the convertible debt was changed to $.035. In addition, $221,608 of the outstanding balance plus $27,460 in accrued interest payable was assigned to new debt holders. During the quarter ended September 30, 2010, $20,000 of the principal balance of the notes was converted into common shares at a conversion price of $.04. During the quarter ended March 31, 2011, $29,500 of the principal balance of the notes and $5,788 of accrued interest were converted into common shares at a conversion price range of $0.01216 to $0.01232. On March 17, 2011, we extended the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000. The conversion price for the convertible debt was changed to $0.02 as well as the exercise price of all associated warrants to $.02. During the quarter ended September 30, 2011, $1,356 of the principal balance of the notes were converted into common shares at a conversion price of $.006968.

Information and significant assumptions embodied in our valuations (including ranges for certain assumptions during the subject periods that instruments were outstanding) as of September 30, 2011 and March 31, 2011 for this financing are illustrated in the following tables:

$600,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0016		$	0.0305
Conversion or strike price	$	0.0011		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.63	%		1.94	%
Credit-risk adjusted yield		7.63	%		7.30	%		-			-
Dividends		-			-			-			-

$500,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0016		$	0.0305
Conversion or strike price	$	0.0011		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.63	%		1.94	%
Credit-risk adjusted yield		7.63	%		7.30	%		-			-
Dividends		-			-			-			-

(c)	$243,333 convertible notes payable

On September 29, 2008, for cash proceeds for $192,500, net of issuance costs of $7,500, we issued $243,333 face value convertible notes, due March 29, 2009, plus warrants to purchase (i) 28,384 shares of our common stock at an exercise price of $10.00 and (ii) additional warrants to purchase 28,384 shares of our common stock at an exercise price of $15.00, representing an aggregate 56,768 shares. The notes are convertible, only at the Company’s option, into common stock at $3.30 and are subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than that price. The notice of conversion must be given to the Holder on the first day following the twenty consecutive trading days during which the stock price is greater than $100.00 per share each trading day and the daily trading volume is greater than 100,000 shares. The Holder of the note does not have an option to convert the instrument. The note is secured by a security interest in all the tangible and intangible assets of the Company. According to the original terms of the note, fifty percent of the interest was due on December 28, 2008 and fifty percent due and payable on March 29, 2009; however, the Company modified the agreement on January 27, 2009 to require full payment of principal and interest on July 1, 2009 in exchange for a reduction of the conversion price of the note and exercise price of the warrants to $1.00. On January 27, 2009, the warrants were redeemed in exchange for a convertible note in the amount of $70,834. The exchange resulted in an extinguishment loss of $82,484. See Note 4(e). On January 10, 2010, we entered into a modification of the agreement with certain note holders, which extended the maturity date to June 30, 2010. In exchange for this modification, we issued convertible promissory notes in the amount of $100,000 (See Note 4 (h). This modification resulted in an extinguishment loss of $113,768. On July 14, 2010, we extended the due date to March 31, 2011 as part of the subscription agreement for a convertible debt financing in the principal gross amount of $900,000. On March 17, 2011, we extended the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000. The conversion price for the convertible debt was changed to $0.02 as well as the exercise price of all associated warrants to $.02.

In originally evaluating the financing transaction, we concluded that the conversion feature was not clearly and closely related to the debt instrument since the risks are those of an equity security; however, we determined that the conversion feature met the paragraph 11(a) exemption and did not require liability classification under the FASB Accounting Standards Codification. Since the embedded conversion feature did not require liability classification, we were required to consider if the contract embodied a beneficial conversion feature (“BCF”). The conversion option is contingent on a future stock price so under the guidance of The FASB Accounting Standards Codification, the beneficial conversion feature was calculated at inception but will not be recognized until the contingency is resolved. The aggregate BCF at its intrinsic value amounted to $192,739. This amount gives effect to (i) the trading market price on the contract date and (ii) the effective conversion price after allocation of proceeds to the warrants. Notwithstanding, BCF was limited to the value ascribed to the note (using the relative fair value approach).

We also evaluated the warrants to determine if they required liability or equity accounting. The warrants issued in conjunction with the financing are redeemable for cash upon the occurrence of acquisition, merger or sale of substantially all assets of the Company in an all cash transaction; therefore, the FASB Accounting Standards Codification requires that they be recorded as derivative liabilities on our balance sheet and marked to fair value each reporting period.

The warrants and the convertible note contain full-ratchet protection so the exercise price of the warrants and the conversion price of the notes were reduced to $3.30 when the Company issued additional convertible instruments with a lower conversion rate on December 18, 2008. The conversion price was reduced again to $.494 when the Company issued additional convertible instruments with a lower conversion rate in November 2009. The conversion price and exercise price were reduced again to $.035 as part of the July, 2010 financing of $900,000 and again to $.02 as part of the March, 2011 financing of $600,000.

In connection with the note, we issued a note payable in the amount of $20,000 under the same terms as the $243,333 note as consideration for finders’ fees. The finders’ fee note did not include warrants.

(d)	$60,833 convertible notes payable

On December 18, 2008, we entered into a financing arrangement that provided for the issuance of $60,833 face value convertible note for a purchase price of $50,000, due March 29, 2009, plus warrants to purchase (i) 7,084 shares of our common stock at an exercise price of $10.00 and (ii) additional warrants to purchase 7,084 shares of our common stock at an exercise price of $15.00, representing an aggregate 14,168 shares. The note was initially convertible into common shares, only at the Company’s option, a conversion price of $3.30 and is subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than that price. The notice of conversion must be given to the Holder on the first day following the twenty consecutive trading days during which the stock price is greater than $100.00 per share each trading day and the daily trading volume is greater than 100,000 shares. The Holder of the note does not have an option to convert the instrument. The note is secured by a security interest in all the tangible and intangible assets of the Company. According to the original terms of the note, fifty percent of the note was due on December 28, 2008 and fifty percent due and payable on March 29, 2009 and if the note was not paid by its maturity date; a default rate of 15% applied. The note was considered in default as of December 28, 2008 due to non-payment of the required principal payment, therefore, it is recorded at face value and default interest of 15% is being accrued. We modified the note agreement on January 27, 2009 to require full payment of principal and interest on July 1, 2009 in exchange for a reduction of the conversion price of the note and exercise price of the warrants to $1.00. On January 27, 2009, the warrants were redeemed in exchange for a convertible note in the amount of $70,835. The exchange resulted in an extinguishment loss of $82,484. See Note 4(e). The conversion price was reduced again to $.494 when the Company issued additional convertible instruments with a lower conversion rate in November 2009. On January 10, 2010, we entered into a modification of the agreement with certain note holders, which extended the maturity date to June 30, 2010. In exchange for this modification, we issued convertible promissory notes in the amount of $100,000 (See Note 4(h)). This modification resulted in an extinguishment loss of $26,282. On July 14, 2010, we extended the due date to March 31, 2011 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $900,000 in which the conversion price for the notes payable and exercise price of the warrants were reduced to $0.035. Later on March 17, 2011, we extended the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000 which the conversion price for the notes payable and exercise price for the warrants was reduced to $0.02.

In originally evaluating the financing transaction, we concluded that the conversion feature was not clearly and closely related to the debt instrument; however, it did meet the paragraph 11(a) exemption and did not require liability classification. We considered if the contract embodied a beneficial conversion feature (“BCF”) however there was no beneficial conversion feature present, since the effective conversion price was greater than the market value of the stock.

(e)	$947,224 convertible notes payable

On January 27, 2009, March 30, 2009, and July 15, 2009, we entered into Subscription agreements with a group of accredited investors that provided for the sale of an aggregate $892,224 face value secured convertible notes and warrants to purchase an aggregate 1,183,473 shares of our common stock. The notes and warrants are based on a fixed conversion price of $1.00 and are subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. The conversion price was reduced to $.494 when the Company issued additional convertible instruments with a lower conversion rate in November 2009. On January 10, 2010, we entered into a modification of the agreement with certain note holders, which extended the maturity date to June 30, 2010. In exchange for this modification, we issued convertible promissory notes in the amount of $50,000. Additionally, we agreed to reduce the price of certain warrants to $0.20. This modification resulted in an extinguishment loss of $309,740. During the year ended March 31, 2010, $94,000 of principal balance of the notes was converted into common shares at the default conversion price range of $1.00 to $.16 calculated pursuant to the notes default provisions. On January 28, 2010, certain warrants were re-priced to $0.16, and the expiration dates were extended to July 15, 2015. On February 11, 2010, the warrants which were re-priced to $0.20 on January 10, 2010 were re-priced to $0.16, and the expiration dates were extended to July 15, 2015. On May 13, 2010, we executed an allonge to the March, 2009 secured convertible notes payable for $55,000 as well as issued 114,583 warrants at an exercise price of $0.16. On July 14, 2010, we extended the due date to March 31, 2011 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $900,000. As part of this extension, the conversion price of the convertible notes payable and the exercise price of the applicable warrants were changed to $.035. On March 17, 2011, we extended the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000. As part of this extension, the conversion price of the convertible notes payable and the exercise price of the applicable warrants were changed to $.02.

For the quarter ended March 31, 2011, $187,981 principal balance and $40,321 of accrued interest for the notes were converted into common stock at a conversion price range of $.012 to $.01858. For the quarter ended June 30, 2011, $37,000 principal balance was converted into common stock at a conversion price of $0.1253. For the quarter ended September 30, 2011, $46,555 principal balance was converted into common stock at a conversion price range of $.00465 to $.007.

The following table provides the details of each of the financings:

					Shares		Shares
Gross					indexed		indexed
Face Value			Closing date	Maturity Date	to note		to warrants
$	130,000	(1)	January 27, 2009	March 31, 2012		19,117,647		120,000
	70,835	(2)	January 27, 2009	March 31, 2012		10,416,765		-
	60,000		February 17, 2009	March 31, 2012		8,823,529		60,000
	200,000		March 30, 2009	March 31, 2012		14,705,882		416,667
	161,111		July 15, 2009	March 31, 2012		11,846,471		335,649
	27,778		October 1, 2009	March 31, 2012		4,085,000		-
	50,000		January 28, 2010	March 31, 2012		3,676,471		104,167
	55,000		February 19, 2010	March 31, 2012		8,088,235		104,167
	137,500		March 26, 2010	March 31, 2012		17,363,944		286,459
	55,000		May 13, 2010	March 31, 2012		8,088,235		114,584

$	947,224					106,212,179		1,541,693

(1)	The $130,000 convertible notes payable includes two $5,000 face value convertible notes issued as payment for finder’s fees.

(2)	The $70,835 convertible notes payable was issued in exchange for the redemption of 56,767 warrants shares issued in connection with the September 29, 2008 convertible note financing and 14,167 warrant shares issued in connection with the December 18, 2008 convertible note financing.

We received the following proceeds from the financing transactions:

			Gross Proceeds		Debt Discount & Finance Costs		Net Proceeds

$	130,000	Face Value Convertible Note Financing	$	120,000	$	23,750	$	96,250
$	60,000	Face Value Convertible Note Financing		60,000		10,000		50,000
$	200,000	Face Value Convertible Note Financing		200,000		41,900		158,100
$	161,111	Face Value Convertible Note Financing		161,111		16,111		145,000
$	27,778	Face Value Convertible Note Financing		27,778		-		27,778
$	50,000	Face Value Convertible Note Financing		50,000		10,000		40,000
$	55,000	Face Value Convertible Note Financing		55,000		-		55,000
$	137,500	Face Value Convertible Note Financing		137,500		13,100		124,400
$	55,000	Face Value Convertible Note Financing		55,000		5,000		50,000

		Total	$	866,389	$	119,861	$	746,528

The holder has the option to redeem the convertible notes for cash in the event of defaults and certain other contingent events, including events related to the common stock into which the instrument was convertible, registration and listing (and maintenance thereof) of our common stock and filing of reports with the Securities and Exchange Commission (the “Default Put”). The conversion feature was not afforded the exemption as conventional convertible and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instrument at fair value. We estimate the fair value of the hybrid contract as a common stock equivalent, enhanced by the forward elements (coupon, puts, and calls), because that technique embodies all of the assumptions (including credit risk, interest risk, stock price volatility and conversion behavior estimates) that are necessary to fair value complex, hybrid contracts.

$130,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.634	%		1.938	%
Credit-risk adjusted yield		7.63	%		7.3	%		-			-
Dividends		-			-			-			-

$60,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.634	%		1.938	%
Credit-risk adjusted yield		7.63	%		7.3	%		-			-
Dividends		-			-			-			-

$200,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.634	%		1.938	%
Credit-risk adjusted yield		7.63	%		7.3	%		-			-
Dividends		-			-			-			-

$161,111 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.634	%		1.938	%
Credit-risk adjusted yield		7.63	%		7.3	%		-			-
Dividends		-			-			-			-

$27,778 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.634	%		1.938	%
Credit-risk adjusted yield		7.63	%		7.3	%		-			-
Dividends		-			-			-			-

$50,000, $55,000, $137,500 and $55,000 Convertible
Promissory Note Financing	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		130.00	%
Equivalent term (years)		-			-			3.79			4.29
Risk-free rate		-			-			0.634	%		1.938	%
Credit-risk adjusted yield		7.63	%		7.3	%		-			-
Dividends		-			-			-			-

(f)	$507,500 convertible note payable:

On August 8, 2008, the Company executed a secured convertible promissory note in the aggregate amount of $507,500 with one lender, an unrelated entity. The note was payable on August 7, 2009 with interest on the outstanding principal to accrue at 10%. This note was entered into pursuant to the terms of a Secured Promissory Note and Security Agreement, Asset Purchase Agreement and Registration Rights Agreement to purchase certain trademarks, notably “Slammers” and “Blenders”, from a company that previously acquired such trademarks through a foreclosure sale of certain assets of Bravo! Brands, Inc. The holder of this note payable had the right to convert all or any portion of the then aggregate outstanding principal amount together with interest at the fixed conversion price of $20.00. In November 2009, the note was settled with the issuance of new notes of equal face value, which are convertible into shares of common stock at a conversion price equal to the lesser of $1.00 or 80% of the average of the three lowest closing bid prices for the Company’s common stock for the twenty trading days preceding the date of conversion. The notes are subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. On January 10, 2009, we entered into a modification of the agreement with certain note holders, which extended the maturity date to June 30, 2010. In exchange for this modification, we issued convertible promissory notes in the amount of $50,000. Additionally, we agreed to reduce the price of certain warrants to $0.20. This modification resulted in an extinguishment loss of $206,356. During the year ended March 31, 2010, $15,000 of principal balance of the notes was converted into common shares at the default conversion price of $.16 calculated pursuant to the notes default provisions. For the quarter ended June 30, 2010, $34,868 of the principal balance was converted into common shares at the conversion price of $.16. On July 14, 2010, we extended the due date to March 31, 2011 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $900,000 in which the conversion price for the notes payable was changed to $.035. In addition, $203,882 of the outstanding balance plus $46,327 in accrued interest payable were assigned to new debt holders. On March 17, 2011, we extended the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000 in which the conversion price for the notes payable was changed to $.02.

The conversion feature was not afforded the exemption as conventional convertible and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instruments at fair value. We estimate the fair value of the hybrid contract as a common stock equivalent, enhanced by the forward elements (coupon, puts, and calls) because that technique embodies all of the assumptions (including credit risk, interest risk, stock price volatility and conversion behavior estimates) that are necessary to fair value complex, hybrid contracts.

(g)	$111,112 convertible note payable

In November 2009, the Company issued a convertible note with a face value of $111,112 and 150,000 shares of common stock in exchange for marketable securities with a fair market value on the date of the transaction of $76,000. The note is convertible into common stock at a fixed conversion price of $1.00 per share subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. On January 10, 2009, we entered into a modification of the agreement with certain note holders, which extended the maturity date to June 30, 2010. In exchange for this modification, we issued convertible promissory notes in the amount of $50,000. Additionally, we agreed to reduce the price of certain warrants to $0.20. This modification resulted in an extinguishment loss of $47,520. On July 14, 2010, we extended the due date to March 31, 2011 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $900,000 in which the conversion price of the notes payable and the exercise price of the applicable warrants were changed to $.035. On March 17, 2011, we extended the due date to March 31, 2012 as part of a subscription agreement for a convertible debt financing in the principal gross amount of $600,000. As part of this extension, the conversion price of the convertible notes payable and the exercise price of the applicable warrants were changed to $.02.

(h)	$100,000 convertible notes payable

As consideration for the modification agreement we entered into with certain investors on January 10, 2010, we agreed to issue two convertible promissory notes in the aggregate amount of $100,000. The notes are based on a fixed conversion price of $1.00 and are subject to full-ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. As part of the agreement from the July, 2010 financing for $900,000, the maturity date was extended to March 31, 2011, and the conversion price of the notes payable was changed to $.035. As part of the agreement from the March, 2011 financing for $600,000, the maturity date was extended to March 31, 2012, and the conversion price of the notes payable was changed to $.02.

$100,000 Convertible Promissory Note Financing	Hybrid Note
	September 30,			March 31,
		2011			2011
	(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02
Conversion or strike price	$	0.0095		$	0.0154
Volatility (based upon Peer Group)		-			-
Equivalent term (years)		-			-
Risk-free rate		-			-
Credit-risk adjusted yield		7.63	%		7.30	%

(i)	$900,000 convertible notes payable

On July 15, 2010, we entered into a Subscription Agreement with a group of accredited investors. Under this agreement, we agreed to sell up to $900,000 of our securities consisting of 10% convertible notes with a maturity date of July 15, 2012 and 65,999,999 Class A stock purchase warrants at an exercise price of $.035 with an expiration date of July 14, 2015.

The conversion price for the convertible notes payable per share shall be equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the common stock as reported by Bloomberg L.P. for the principal Market for the ten trading days preceding a conversion date but in no event greater than $.08. These notes payable and warrants are subject to full ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. The conversion features were not afforded the exemption as conventional convertible, and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instruments at fair value. The warrants issued in this financing arrangement did not meet the conditions for equity classification and are also required to be carried as a derivative liability, at fair value. We estimate the fair value of the warrants on the inception dates, and subsequently, using the Black-Sholes Merton valuation technique, adjusted for dilution, because that technique embodies all of the assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to fair value freestanding warrants. See also Note 6 – Derivative Liabilities. At inception, we allocated $156,000 as the valuation cost of the warrants (debt discount) against the gross proceeds of the $900,000 financing using the relative fair value method. We recorded a total debt discount of $171,600 (above $156,000 plus $15,600 for warrants issued to placement agent) in which we recorded $103,430 to capture the accretion of the debt discount through September 30, 2011.

Total financing costs paid from this financing amounted to $164,500 as well as a payment of $39,024 for other past due professional fees, resulting in a net amount of $696,476 to be paid to us at $150,000 per month until the total amount is paid in the following months. As such, we reported a stock subscription amount of $246,476 for the period ended September 30, 2010. That amount has since been paid from October through November, 2010. In addition, we recorded $15,600 in non-cash deferred financing fees for the issuance of 6,000,000 warrants as a finder’s fee as part of the total issued 65,999,999 Class A warrants. In addition, we paid other financing fees associated with this financing in the amount of $11,500, resulting in a total of $191,600. As noted throughout Note 4, certain debts were assigned to new debt holders. A total of $413,358 in convertible notes payable and $86,642 in accrued interest payable for a total of $500,000 was assigned to new debt holders as part of the July, 2010 financing. Out of the total $500,000 balance, a total of $233,625 in these assigned notes payable were converted into common shares of stock from inception through September 30, 2011. These $500,000 assigned notes have the same conversion price terms as the $900,000 new notes payable.

$900,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0068		$	0.0154		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			115.00	%		115.00	%
Equivalent term (years)		-			-			3.79			4.54
Risk-free rate		-			-			0.634	%		1.801	%
Credit-risk adjusted yield		7.63	%		7.30	%		-			-

(j)	$400,000 convertible notes payable

On January 21, 2011, we entered into a Subscription Agreement with a group of accredited investors. Under this agreement, we agreed to sell up to $400,000 of our securities consisting of 10% convertible notes with a maturity date of July 15, 2012 and 20,460,357 Class A stock purchase warrants at an exercise price of $.035 with an expiration date of January 20, 2016. The conversion price for the convertible notes payable per share shall be equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the common stock as reported by Bloomberg L.P. for the principal Market for the ten trading days preceding a conversion date but in no event greater than $.08. These notes payable and warrants are subject to full ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. The conversion features were not afforded the exemption as conventional convertible, and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instruments at fair value. The warrants issued in this financing arrangement did not meet the conditions for equity classification and are also required to be carried as a derivative liability, at fair value. We estimate the fair value of the warrants on the inception dates, and subsequently, using the Black-Sholes Merton valuation technique, adjusted for dilution, because that technique embodies all of the assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to fair value freestanding warrants. See also Note 6 – Derivative Liabilities. At inception, we allocated $136,123 as the valuation cost of the warrants (debt discount) against the gross proceeds of the $400,000 financing using the relative fair value method. We recorded $63,020 to capture the accretion of the debt discount through September 30, 2011.

Total financing costs paid from this financing amounted to $70,000 as well as the payment of $102,500 of a previous promissory note resulted in a net amount of $227,500 to be paid to us. Out of this total $227,500, an amount of $128,500 was paid in the first January, 2011 closing with the remaining amount of $99,000 being paid in the second February, 2011 closing. In addition, we recorded $31,921 in non-cash deferred financing fees for the issuance of 2,046,035 restricted shares of common stock as a finder’s fee.

$400,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.015		$	0.015		$	0.02		$	0.02
Volatility (based upon Peer Group)		-			-			120.00	%		130.00	%
Equivalent term (years)		-			-			4.31			4.81
Risk-free rate		-			-			0.77	%		2.2	%
Credit-risk adjusted yield		7.63	%		7.30	%		-			-

(k)	$600,000 convertible notes payable

On March 17, 2011, we entered into a Subscription Agreement with a group of accredited investors. Under this agreement, we agreed to sell up to $600,000 of our securities consisting of 10% convertible notes with a maturity date of September 17, 2012 and 43,708,610 Class A stock purchase warrants (includes 3,973,510 warrants as a finder’s fee) at an exercise price of $.02 with an expiration date of March 16, 2016. The conversion price for the convertible notes payable per share shall be equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the common stock as reported by Bloomberg L.P. for the principal Market for the ten trading days preceding a conversion date but in no event greater than $.02. These notes payable and warrants are subject to full ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. The conversion features were not afforded the exemption as conventional convertible, and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instruments at fair value. The warrants issued in this financing arrangement did not meet the conditions for equity classification and are also required to be carried as a derivative liability, at fair value. We estimate the fair value of the warrants on the inception dates, and subsequently, using the Black-Sholes Merton valuation technique, adjusted for dilution, because that technique embodies all of the assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to fair value freestanding warrants. See also Note 6 – Derivative Liabilities. At inception, we allocated $223,802 as the valuation cost of the warrants (debt discount) against the gross proceeds of the $400,000 financing using the relative fair value method. We recorded $80,817 to capture the accretion of the debt discount through September 30, 2011.

Total financing costs paid from this financing amounted to $90,000 resulted in a net amount of $510,000 to be paid to us. In addition, we recorded $75,371 in non-cash deferred financing fees for the issuance of 3,973,510 warrants to purchase common stock as a finder’s fee.

$600,000 Convertible Promissory Note Financing
(Initial Closing)	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	0.02		$	0.0011		$	0.02
Conversion or strike price	$	0.0011		$	0.015		$	0.0200		$	0.0200
Volatility (based upon Peer Group)		-			-			120.00	%		130.00	%
Equivalent term (years)		-			-			4.46			4.96
Risk-free rate		-			-			0.82	%		2.280	%
Credit-risk adjusted yield		7.63	%		7.30	%		-			-

(l)	$221,937 convertible notes payable

On May 23, 2011, the holder of the original April 2, 2008 short term bridge loan with principal balance of $120,000 and of the original May 19, 2008 short term bridge loan with principal balance of $33,000 entered into an agreement to transfer the original notes and personal guarantee of Roy Warren, CEO, to another debt holder (Jody Eisenman) who already is an existing debt holder and accredited investor. On June 30, 2011, the new debt holder entered into a Debt Exchange Agreement with the Company to transfer these two short term bridge loans dated April 2, 2008 with principal balance of $120,000 plus interest of $53,951 and the second short term bridge loan dated May 19, 2008 with principal balance of $33,000 plus interest of $14,986 for a grand total of $221,937 into a new long term convertible note with an interest rate of 10% and a maturity date of September 17, 2012. This new note covers all previous commitments through June 30, 2011. As consideration for this exchange, the Company cancelled the personal guarantee of Roy Warren, CEO, and issued a warrant to purchase 20,000,000 shares of the Company’s common stock at an exercise price of $.02 with a life of five years. This convertible note and warrants are subject to the same rights as all other convertible notes and associated warrants. Through this exchange, all original notes and guarantee and all obligations related thereunder were cancelled and terminated. We recorded $389 to capture the accretion of the debt discount through September 30, 2011.

Information and significant assumptions embodied in our valuations (including ranges for certain assumptions during the subject periods that instruments were outstanding) as of September 30, 2011 for this financing is illustrated in the following table:

$221,937 Convertible Promissory Note Financing	Hybrid Note						Warrants
	September 30,			March 31,			September 31,			March 31,
		2011			2011			2011			2011
Estimated fair value of underlying common share	$	0.0011		$	-		$	0.0011		$	-
Conversion or strike price	$	0.0068		$	-		$	0.020		$	-
Volatility (based upon Peer Group)		--			--			120.00	%		--
Equivalent term (years)		--			--			4.75			--
Risk-free rate		--			--			0.96	%		--
Credit-risk adjusted yield		7.63	%		0.00	%		--			0.00	%
Dividends		--			--			--			--

(m)	$500,000 convertible notes payable

On July 15, 2011, we entered into a Subscription Agreement with a group of accredited investors. Under this agreement, we agreed to sell up to $1,000,000 of our securities consisting of 10% convertible notes with a maturity date of January 15, 2013 in which we did sell $500,000. In addition, we did issue a convertible note under the same terms as the $500,000 convertible notes for a 3% finder’s fee. We issued 27,500,000 Class A stock purchase warrants (includes 2,500,000 warrants as a finder’s fee) at an exercise price of $.02 with an expiration date of July 14, 2016. The conversion price for the convertible notes payable per share shall be equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the common stock as reported by Bloomberg L.P. for the principal Market for the ten trading days preceding a conversion date but in no event greater than $.02. These notes payable and warrants are subject to full ratchet anti-dilution protection if we sell shares or share-indexed financing instruments at less than those prices. The conversion features were not afforded the exemption as conventional convertible, and the notes require liability classification under the FASB Accounting Standards Codification. We chose to value the entire hybrid instruments at fair value. The warrants issued in this financing arrangement did not meet the conditions for equity classification and are also required to be carried as a derivative liability, at fair value. We estimate the fair value of the warrants on the inception dates, and subsequently, using the Black-Sholes Merton valuation technique, adjusted for dilution, because that technique embodies all of the assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to fair value freestanding warrants. See also Note 6 – Derivative Liabilities. At inception, we allocated $70,454 as the valuation cost of the warrants (debt discount) against the gross proceeds of the $500,000 financing using the relative fair value method. We recorded $10,046 to capture the accretion of the debt discount through September 30, 2011.

Total financing costs paid from this financing amounted to $95,000 resulting in a net amount of $405,000 to be paid to us.

$500,000 Convertible Promissory Note Financing
	Hybrid Note						Warrants
	September 30,			March 31,			September 30,			March 31,
		2011			2011			2011			2011
	(unaudited)						(unaudited)
Estimated fair value of underlying common share	$	0.0011		$	-		$	0.0011		$	-
Conversion or strike price	$	0.00950		$	-		$	0.0200		$	-
Volatility (based upon Peer Group)F		-			-			110.00	%		0.00	%
Equivalent term (years)		-			-			4.79			0
Risk-free rate		-			-			0.90	%		0.000	%
Credit-risk adjusted yield		8.00	%		0.00	%		-			-