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CONVERTIBLE NOTE PAYABLE

3 Months Ended

Mar. 31, 2013

Debt Disclosure [Abstract]

CONVERTIBLE NOTE PAYABLE

3.

CONVERTIBLE NOTES PAYABLE

The holders of the $517,673 Convertible Note Payable elected to convert principal as follows:

Date		Principal Converted				Common stock issued upon conversion
January 14, 2013		$	84,000				2,800,000
February 28, 2013			18,000				600,000
March 11, 2013			57,000				1,900,000
March 18, 2013			36,303				1,210,088
Total		$	195,303				6,510,088

As a result of these conversions, unamortized discount in the total amount of $73,315 was immediately amortized to interest expense. The converted amount of principal and accrued unpaid interest in the total amount of $195,303 was recognized as an increase in stockholders’ equity as a result of these conversions. There was no gain or loss on these conversions, because they were effected in accordance with the terms of the convertible note agreement.

On February 28, 2013, the holder of the 10% Subordinated Convertible Note Payable dated May 23, 2010 elected to convert principal in the amount of $7,632 into 763,184 shares of common stock. There was no gain or loss on the conversion, because it was effected in accordance with the terms of the convertible note agreement.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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