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CONVERTIBLE NOTES PAYABLE
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements  
Note 6. CONVERTIBLE NOTES PAYABLE

In September and November 2011, the Company borrowed $50,000 and $32,500 respectively, from Asher Enterprises, Inc. The convertible promissory notes accrue interest at the rate of 8% per annum.  They were due on September 7, 2012 and November 16, 2012, respectively. These notes are convertible by the holder after 180 days at 45% of the average of the lowest three closing bid prices in the ten trading day period before the conversion. The notes are currently in default.

 

On May 25, 2012 Asher Enterprises issued a notice of conversion to convert $10,000 of the September 2011 note for 4,347,826 shares at a price of $0.0023 per share.  The remaining balance of the note after the conversion was $40,000.

 

On November 2, 2012 Asher Enterprises issued a notice of conversion to convert $8,800 of the September 2011 note for 15,714,286 shares at a price of $0.00056 per share.  The remaining balance of the note after the conversion was $31,200. A $44,629 loss on the conversion of the shares was recorded as the note was in default and a derivative liability was no longer recorded at the point of conversion.

 

On February 13, 2012 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $27,500 with an interest rate of 8% per annum due on November 13, 2012. The note is convertible by the holder after 180 days at 45% of the average of the lowest three closing bid prices in the ten trading day period before the conversion. The note is currently in default.

 

On June 15, 2012 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $83,500 with an interest rate of 8% per annum that is due on March 9, 2013. The note is convertible by the holder after 180 days at 35% of the lowest trading price in the sixty trading days before the conversion.

 

On August 1, 2012 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $20,000 with an interest rate of 8% per annum due on August 3, 2013. The note is convertible by the holder after 180 days at 35% of the lowest trading price in the thirty trading days before the conversion. The note was not yet convertible as of December 31, 2012.

 

On August 21, 2012, the Company issued a convertible promissory note in the amount of $1,500.  The note is unsecured, due on demand and bears interest at 8% per annum. The note is convertible into shares of common stock at the market price.

 

Total interest expense on these notes was $15,260 and $3,345 for the years ended December 31, 2012 and 2011, respectively.