NOTE 7: NOTES PAYABLE

12 Months Ended

Mar. 31, 2012

Notes to Financial Statements

NOTE 7: NOTES PAYABLE

	March 31, 2012		March 31, 2011
On May 8, 2006, the Company entered into a convertible note payable agreement with a shareholder in the amount of $100,000.  The note carries an interest rate of 10% per annum and matures of November 8, 2006.  The note holder has the right to convert the note and accrued interest at a rate of $0.01 per share.  The value of this conversion feature was treated as a loan discount for the full $100,000 of the loan and was amortized to interest expense over the life of the loan.   On May 8, 2007 the note was extended for one year.  The conversion feature of the note was valued at $25,852 and was treated as a prepaid loan costs.  The prepaid loan costs have been amortized over the life of the new note. On October 19, 2007, the note holder converted $30,000 of principal plus accrued interest of $16,152 for 1,350,000 shares of common stock. On November 30, 2007, the note holder converted $10,000 of principal for 950,000 shares of common stock. On January 31, 2008, the note holder converted $10,000 of principal and accrued interest of $600 for 1,250,000 shares of common stock. On February 29, 2008, the note holder converted $8,000 of principal for 1,250,000 shares of common stock. On March 31, 2008, the note holder converted $5,000 of principal for 1,250,000 shares of common stock. On March 31, 2008, the note holder converted $5,000 of principal for 1,250,000 shares of common stock. On June 6, 2008, the note holder converted $7,000 of principal and $1,372 of accrued interest for 1,550,000 shares of common stock. On June 23, 2008, the note holder converted $10,000 of principal and $395 of accrued interest for 1,500,000 shares of common stock. On October 15, 2008, the note holder converted $5,000 of principal and $10,000 of interest for 3,300,000 shares of common stock. On December 3, 2008, the note holder converted $3,000 of principal and $201 of interest for 2,000,000 shares of common stock. On February 24, 2009, the note holder converted $2,000 of principal and $167 of accrued interest into 4,000,000 shares of common stock During the three months ended September 30, 2009, the Company issued 33,000,000 shares for the conversion of $2,000 of principal and $367 of accrued interest on this note, and for other consideration.  During the three months ended December 31, 2009, the Company issued 30,000,000 shares of common stock for the conversion of $1,000 principal and $361 of accrued interest on this note and for other considerations. During the period ended March 31, 2012, the Company issued 466,640 shares of common stock for the conversion of $500 principal and $407 of accrued interest. Interest in the amount of $339 and $530 was accrued on this note during the year ended March 31, 2012 and 2011, respectively.   The maturity of this note has been extended until April 1, 2013.	$	4,500	$	5,000

On November 11, 2008, the Company issued a convertible promissory note to an investor in the amount of $50,000.  The note carries an interest rate of 10% per annum and a maturity date of  October 1, 2009.  The note holder has the right to convert the note and accrued interest into shares of the Company’s common stock at a rate of $0.10 per share.  In addition to the note, the investor received three-year warrants to purchase 500,000 shares of the Company’s common stock at a price of $0.10 per share.  The Company valued these warrants using the Black-Sholes valuation model, and charged the fair value of the warrants in the amount of $11,310 as a discount on notes payable.  The discount is being amortized to interest expense over the life of the note via the effective interest method. Interest in the amount of $3,008 and $3,044 was accrued on this note during the year ended March 31, 2012 and 2011, respectively. Accrued interest was $5,876 and $2,868 respectively at March 31, 2012 and 2011   During the This note has been extended until April 1, 2013. 30,000 30,000

On December 22, 2008, the Company issued a promissory note to an investor in the amount of $150,000.  This note carries an interest rate of 10% per annum and matures of December 15, 2009.  In addition to the note payable, the Company issued 7,500,000 shares of common stock to the note holder.  The shares are considered a discount to the note payable. At the time of the issuance of the shares to the note holder, the market price of the shares exceeded the fair value of the note payable; as a result the value of the discount was capped at the face value of the note, $150,000.  The discount will be amortized to interest expense over the life of the note, 1 year, via the effective interest method.  Interest in the amount of $15,042 and $15,000 was accrued on this note during the year ended March 31, 2012 and 2011, respectively. Accrued interest was $49,109 and $34,068 at March 31, 2012 and 2011 respectively. This note has been extended until April 1, 2013.	150,000	150,000
On December 31, 2008, the Company received a cash advance from an investor in the amount of $100,000.  On January 1, 2009, the Company received an additional $50,000 and the Company entered into a note payable agreement in the amount of $150,000.  The note bears interest at a rate of 10% per annum and matures on December 15, 2009.  In additional to the note payable, the Company issued 7,500,000 shares of common stock to the note holder.  The shares are considered a discount to the note payable.  At the time of issuance of the shares to the note holders, the market price of the shares exceeded the fair value of the note payable; as a result the value of the discount was capped at the face value of the note, $150,000.  The discount will be amortized over the life of the note via the effective interest method. Interest in the amount of $15,042 and $15,000 was accrued on this note during the year ended March 31, 2012 and 2011, respectively.   Accrued interest was $48,123 and $33,0821at March 31, 2012 and 2011 respectively. This note has been extended until Apri1 1, 2013.	150,000	150,000

On January 27, 2009, the Company issued a promissory note to an investor in the amount of $50,000.  The note carries an interest rate of 10% per annum and matures on December 15, 2009.  In addition to the note payable, the Company issued 1,000,000 shares of common stock to the note holder.  The shares are considered a discount to the note payable.  The shares are value using the closing market price on the date the note was signed and have a value of $25,000.  The discount will be amortized over the life of the note via the effective interest method.  Interest in the amount of $5,000 and $5,000 was accrued on this note during the year ended March 31, 2012 and 2011, respectively. . Accrued interest was $10,863 and $15,863 at March 31, 2012 and 2011 respectively. This note has been extended until Apri1 1, 2013 50,000 50,000

On March 24, 2010, the Company issued a convertible note payable in the amount of $50,000.  The note carries an interest rate of 8% per annum and matures on December 26, 2010. The note holder has the right to convert the note and accrued interest at a rate of $0.005 per share. The beneficial conversion feature created a discount on the note in the amount of $15,000 and is being amortized using the effective interest method over the term of the note.  Interest in the amount of $254 and $2,738 was recorded for the year ended March 31, 2012 and 2011, respectively. In June 2011, the note was paid off  with the issuance of 8,847,059 shares of common stock.	-0-	15,000
On November 28, 2006, Oiltek, of which the Company has a majority interest in, issued a convertible note payable in the amount of $2,500.  This note bears interest at a rate of 8% per annum and matures on October 1, 2007.  The principal amount of the note and accrued interest are convertible into shares of the Company’s common stock at a price of $0.01 per share.  A beneficial conversion feature in the amount of $2,500 was recorded as a discount to the note and was amortized to interest expense during the period ended December 31, 2006.   Interest in the amount of $200 and $200 was accrued on this note during the twelve months ended March 31, 2012 and 2011, respectively. In December 2008, this note extended its maturity date until December 31, 2012.	2,500	2,500
On November 28, 2006, Oiltek, of which the Company has a majority interest in, issued a convertible note payable in the amount of $5,000.  This note bears interest at a rate of 8% per annum and matured on October 1, 2007.  The principal amount of the note and accrued interest are convertible into shares of the Company’s common stock at a price of $0.01 per share.  A beneficial conversion feature in the amount of $5,000 was recorded as a discount to the note and was amortized to interest expense during the period ended December 31, 2006.   Interest in the amount of $400 and $400 was accrued on this note during the twelve months ended March 31, 2012 and 2011, respectively. In December 2008, this note extended its maturity date until December 31, 2012.	5,000	5,000
On December 9, 2010, the Company issued a convertible note payable in the amount of $25,000.  This note bears interest at a rate of 8% per annum and matures on September 6, 2011.  Interest in the amount of $664 and $986 was recorded for the year ended March 31, 2012 and 2011, respectively. In August of 2011, the note was paid off with the issuance of 19,134,615 shares of common stock.	-0-	25,000

On January 1, 2011 the Company issued a convertible note payable in the amount of $250,000.  This note bears interest at a rate of 8% per annum and will be matured on January 15, 2014.   The principal amount of the note and accrued interest are convertible into shares of the Company’s common stock at a price of $0.01 per share.  A beneficial conversion feature in the amount of $95,000 was recorded as a discount to the note and is being amortized to interest expense during the period ended March 31, 2011. A discount of $94,050 and $950 was deducted for the years ended March 31, 2012 and 2011 respectively.  Interest in the amount of $20,054 and $4,329 was accrued on this note during the twelve months ended March 31, 2012 and 2011, respectively. Accrued interest was $4,329 and $24,384 at March 31, 2012 and 2011 respectively.		250,000		250,000
On January 1, 2011 the Company issued a convertible note payable in the amount of $200,000.  This note bears interest at a rate of 8% per annum and will be matured on January 16,, 2014.   The principal amount of the note and accrued interest are convertible into shares of the Company’s common stock at a price of $0.01 per share.  A beneficial conversion feature in the amount of $60,000 was recorded as a discount to the note and is being amortized to interest expense during the period ended March 31, 2011. A discount of $59,400 and $600 was deducted for the years ended March 31, 2012 and 2011 respectively.  Interest in the amount of $16,044 and $3 463 was accrued on this note during the twelve months ended March 31, 2011 and 2010, respectively.  Accrued interest was $19,507 and $3,463 at March 31, 2012 and 2011 respectively.		200,000		200,000
On February 8, 2011, the Company issued a convertible note payable in the amount of $50,000.  This note bears interest at a rate of 8% per annum and matured on November 8, 2011. The principal amount of the note and accrued interest are convertible into shares of the Company’s common stock at a price of $0.01 per share.  A beneficial conversion feature in the amount of $21,000 was recorded as a discount to the note and was amortized to interest expense during the period ended March 31, 2012.  Interest in the amount of $611 and $997 was accrued on this note during the twelve months ended March 31, 2012 and 2011, respectively. In August of 2011, the note was paid off with the issuance of 54,777,777 shares of common stock.		-0-		50,000
On August 4, 2011 the Company issued a promissory note to an investor in the amount of $30,000.  The note carries an interest rate of 8% per annum and matures on June 20, 2012. The discount of $12,600 will be amortized over the life of the note via the effective interest method.  Interest in the amount of $1,361was accrued on this note during the year ended March 31, 2012. In February 2012, the note was paid off with the issuance of 47,108,138 shares of common stock.		-0-		-0-
On January 27, 2012 the Company issued a convertible note payable in the amount of $200,000.  This note bears interest at a rate of 8% per annum and will be matured on January 15, 2015. Interest in the amount of $3,057 was accrued on this note during the twelve months ended March 31, 2012.  Accrued interest was $3,507 at March 31, 2012.		200,000		-0-
On August 4, 2011 the Company issued a promissory note to an investor in the amount of $50,000.  The note carries an interest rate of 8% per annum and matures on June 20, 2012. The discount of $21,000 will be amortized over the life of the note via the effective interest method.  Interest in the amount of $2,159 was accrued on this note during the year ended March 31, 2012. Accrued interest was $2,159 at March 31, 2012. In February 2012, the $10,000 of the note was paid with the issuance of 15,151,151 shares of common stock. This note has been extended until April 1, 2013.		40,000		-0-
On March 6, 2012 the Company issued a promissory note to an investor in the amount of $42,500.  The note carries an interest rate of 8% per annum and matures on June 20, 2012. The discount of $12,750 will be amortized over the life of the note via the effective interest method.  Interest in the amount of $233 was accrued on this note during the year ended March 31, 2012. Accrued interest was $233 at March 31, 2012. This note has been extended until April 1, 2013.		42,500		-0-
Total outstanding	$	1,124,500	$	932,500

	Note		Unamortized			Net of
March 31, 2012:	Amount		Discounts			Discount
Notes payable – long-term portion	$	474,500	$	(0	)	$	474,500
Notes payable – current portion		650,000		(29,069	)		620,931
Total	$	1,124,500	$	(29,069	)	$	1,095,431

	Note		Unamortized			Net of
March 31, 2011:	Amount		Discounts			Discount
Notes payable – long-term portion	$	450,000	$	(153,450)		$	296,550
Notes payable – current portion		482,500		(33,238	)		449,262
Total	$	932,500	$	(186,688	)	$	745,812

	Twelve months ended March 31,
	2012		2011
Discount on Notes Payable amortized to interest expense	$	203,969	$	28,313

Total notes payable of $474,500 will become due on April 1, 2013.