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8. Convertible notes payable

3 Months Ended

Mar. 31, 2013

The notes are convertible at the option of the holder up to the maturity date; any convertible debentures still outstanding as at their maturity date will automatically convert into common shares of the Company. Accordingly, these convertible notes payable are considered current liabilities by nature. The Company has adequate common shares in its treasury to cover the conversions if all notes are exercised.

The Company has the following convertible notes outstanding.

Note	Amount	Issuance Date	Conversion Price in USD	Number of Shares	Effect on Dilution	Maturity Date
1	$16,017	June 15, 2011	$0.10	59,016	0.24%	June 15, 2013
2	7,869	June 15, 2011	$0.10	78,688	0.31%	June 15, 2013
3	3,934	June 15, 2011	$0.10	39,344	0.16%	June 15, 2013
4	196,720	June 24, 2011	$0.15	1,311,467	5.00%	June 24, 2013
5	29,508	June 30, 2011	$0.15	196,720	0.78%	June 30, 2013
6	15,738	June 30, 2011	$0.15	104,917	0.42%	June 30, 2013
7	68,852	June 30, 2011	$0.15	459,013	1.81%	June 30, 2013
8	14,262	June 30, 2011	$0.15	95,081	0.38%	June 30, 2013
9	49,180	June 30, 2011	$0.15	327,867	1.30%	June 30, 2013
10	142,622	June 30, 2011	$0.15	950,813	3.67%	June 30, 2013
11	4,918	July 30, 2011	$0.15	32,787	0.13%	July 30, 2013
12	4,918	July 30, 2011	$0.15	32,787	0.13%	July 30, 2013
13	4,918	July 30, 2011	$0.15	32,787	0.13%	July 30, 2013
14	10,000	July 30, 2011	$0.15	66,667	0.27%	July 30, 2013
15	9,836	July 30, 2011	$0.15	65,573	0.26%	July 30, 2013
16	8,852	July 30, 2011	$0.15	59,016	0.24%	July 30, 2013
17	2,213	July 30, 2011	$0.15	14,754	0.06%	July 30, 2013
18	49,180	October 26, 2011	$0.10	491,800	1.93%	October 26, 2013
19	98,360	October 31, 2011	$0.15	655,733	2.56%	October 31, 2013
20	68,852	November 24, 2011	$0.15	459,013	1.81%	November 24, 2013
21	14,754	November 30, 2011	$0.15	98,360	0.39%	November 30, 2013
22	14,754	November 30, 2011	$0.15	98,360	0.39%	November 30, 2013
23	23,213	November 30, 2011	$0.15	154,753	0.62%	November 30, 2013
24	25,160	December 31, 2011	$0.15	167,733	0.67%	December 31, 2013
25	19,672	December 31, 2011	$0.15	131,147	0.52%	December 31, 2013
26	9,836	December 31, 2011	$0.15	65,573	0.26%	December 31, 2013
27	22,131	December 31, 2011	$0.15	147,540	0.59%	December 31, 2013
28	44,262	December 31, 2011	$0.15	295,080	1.17%	December 31, 2013
29	49,180	December 31, 2011	$0.15	327,867	1.30%	December 31, 2013
30	19,672	December 31, 2011	$0.15	131,147	0.52%	December 31, 2013
31	14,754	December 31, 2011	$0.15	98,360	0.39%	December 31, 2013
32	50,000	January 15, 2012	$0.20	250,000	0.99%	January 15, 2014
33	9,836	January 24, 2012	$0.20	49,180	0.20%	January 24, 2014
34	7,377	January 26, 2012	$0.20	36,885	0.15%	January 26, 2014
35	29,508	January 31, 2012	$0.20	147,540	0.59%	January 31, 2014
36	9,836	February 10, 2012	$0.20	49,180	0.20%	February 10, 2014
37	98,360	March 4, 2012	$0.20	491,800	1.93%	March 4, 2014
38	98,360	April 18, 2012	$0.45	218,578	0.87%	April 18, 2014
39	49,180	May 31, 2012	$1.00	49,180	0.20%	May 31, 2014
	$1,407,742			8,542,106

*The actual number of shares issued if converted will vary depending on the exchange rate at time of conversion.

During the three month period ended March 31, 2013, the Company issued 2,512,389 common shares from convertible notes payable at an average conversion rate of $0.078 per share.

On March 31, 2013 convertible debentures totaling $352,878 had matured and were to be converted to restricted shares. This is dependent on a Directors Resolution being issued by the Company. As of the date of our report a Directors Resolution had not been formally issued. The Board of Directors has indicated that in due time they will pass the resolution. Since the convertible debentures include an automatic conversion on maturity feature, and to accurately reflect the maturity of the debt and conversion to shares as of March 31, 2013, the financial information presented in these consolidated interim financial statements has treated the debt of $352,878 as matured and converted into restricted shares totaling 2,512,389.