8. ACCRUED INTEREST

6 Months Ended

Jun. 30, 2011

Other Liabilities Disclosure [Text Block]

8. ACCRUED INTEREST

Accrued interest on the Company’s convertible notes payable is convertible at the option of the note holders into the Company’s common stock at price ranging from of $0.005 to $0.010 per share.  There is a beneficial conversion feature embedded in the convertible accrued interest, which can be exercised at any time by the note holders. The Company is amortizing this beneficial conversion feature over the life of the related notes payable.  Certain of the notes payable have exceeded their stated terms, and are still outstanding; in those instances, the Company expenses the value of the beneficial conversion feature on the accrued interest immediately.

During the three months ended June 30, 2011 and 2010, the amounts of $29,050 and $33,732, respectively, were credited to additional paid-in capital as a discount on convertible interest. The aggregate amount of discounts on convertible interest charged to operations during the three months ended June 30, 2011 and 2010 was $43,498 and $31,196, respectively.

During the six months ended June 30, 2011 and 2010, the amounts of $60,783 and $67,852, respectively, were credited to additional paid-in capital as a discount on convertible interest. The aggregate amount of amortization of discounts on accrued convertible interest charged to operations during the six months ended June 30, 2011 and 2010 was $82,800 and $61,744, respectively.

At June 30, 2011 and December 31, 2010, the Company has the following accrued interest on its balance sheet:

June 30, 2011:	Gross		Discount			Net
Non-related parties	$	667,648	$	(16,555	)	$	651,093
Related parties		36,190		-			36,190
Total	$	703,838	$	(16,555	)	$	687,283

December 31, 2010:	Gross		Discount			Net
Non-related parties	$	685,448	$	(38,572	)	$	646,876
Related parties		197,786		-			197,786
Total	$	883,234	$	38,572		$	844,662

Certain of the accrued interest is convertible in to shares of the Company’s common stock at $0.005 per share. At June 30, 2011, convertible accrued interest was $703,837 which is convertible into 140,767,400 shares of common stock; at December 31, 2010, convertible accrued interest was $844,662 which was convertible into 165,053,920 shares of common stock.