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Notes Payable Short Term Notes Payable
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9 Months Ended |
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Sep. 30, 2011
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| Convertible Notes Payable [Abstract] | |
| Convertible Notes Payable [Text Block] | 4. NOTES PAYABLE – SHORT TERM NOTES PAYABLE
Short-term notes consist of funds borrowed for three to six months at an annual interest rate of 10%, payable upon maturity from shareholders. At September 30, 2011 $200,056, net of a discount of $19,944, of these notes remain outstanding. The notes mature between October 28, 2011 and March 23, 2012.
On September 23, 2011, as additional incentive for a $100,000 six month loan include herein, the Company issued 100,000 warrants to acquire common stock and agreed to issue 5,000 shares of common stock (at a charge of $1.20 per share) resulting in a discount of $20,751. The discount is amortized to interest over the term of the loan.
NOTES PAYABLE - CONVERTIBLE NOTES PAYABLE
All 6% Convertible Notes, which were payable upon maturity on September, 25 2011, have a conversion price of $.0025 for both principal and interest.
During June, 2010, $5,000 of these notes was converted to 40,000 common shares.
During July, 2010, $10,000 of these notes was converted to 80,000 common shares.
During January, 2011. $4,000 of these notes was converted to 32,000 common shares.
During March, 2011, $50,000 of these notes together with $4,441 of accrued interest were converted to 21,776,544 common shares
On March 18, 2011, the Company issued 21,776,544 common shares pursuant to the conversion of $50,000 in notes payable together with $4,441of accrued interest. The conversion of the remaining $3,750 of convertible notes, together with interest thereon.
During the 2nd quarter of 2011 $4,000 of these notes were converted to 1,600,000 common shares.
During July, 2011, $12,500 of these notes were converted to 5,000,000 shares.
During September, 2011, $10,750 of these notes were converted to 4,300,000 shares.
At September 30, 2011, $3,750 of these notes= and remain outstanding.
Derivative analysis
Upon their origination these notes were determined to have had full reset adjustments based upon the issuance of equity securities by the Company in the future, This feature subjected the notes to derivative liability treatment under Section 815-40-15 of the FASB Accounting Standard Codification (“Section 815-40-15”) (formerly FASB Emerging Issues Task Force (“EITF”) 07-5). The notes have been measured at fair value using a lattice model at each reporting periods with gains and losses from the change in fair value of derivative liabilities recognized on the consolidated statement of operations. The convertible notes gave rise to a derivative liability which was recorded as a discount to the notes upon origination.
In March 2011, agreements between the Company and the note holders to fix the conversion rate stated in the convertible notes effectively removed the embedded derivative from the convertible notes. Accordingly, as future conversions were no longer subject to reset, the derivative liability related to the notes was adjusted to $0 at and the Company recognized a gain on the change in value of the derivative liability of $2,701,894 upon execution. |