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8. GAIN ON DEBT EXTINGUISHMENT	12 Months Ended
Dec. 31, 2012
Notes to Financial Statements
8. GAIN ON DEBT EXTINGUISHMENT	On May 18, 2012, the Company negotiated the conversion of two debt holders’ promissory notes totaling $1,667,750 in exchange for 3,335,500 shares of the Company’s common stock and warrants for 3,335,500 shares of common stock with an exercise price of $0.50 expiring May 31, 2015. As a result of the conversion of the two debt holders’ notes, the Company recognized a gain on debt extinguishment of $1,136,055 during the year ended December 31, 2012 based on the fair value of both the common stock and warrants issued. The common shares were valued at $300,195 and warrants valued at approximately $231,500 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $0.09 per share; 3 year life; discount rate of 2.50%; and volatility rate of 228%. In October 30, 2012 the Company negotiated the conversion of a debt holder’s promissory note totaling $25,000 plus accrued interest of $11,778, in exchange for 50,000 shares of the Company’s common stock and warrants for 50,000 shares of common stock with an exercise price of $0.50 expiring October 30, 2015. As a result of the conversion of the debt holder’s notes, the Company recognized a gain on debt extinguishment of $9,778 during the twelve months ended December 31, 2012 based on the fair value of both the common stock and warrants issued. The common shares were valued at $13,500 and warrants valued at approximately $13,500 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $0.27 per share; 3 year life; discount rate of 2.50 %; and volatility rate of 555%. During 2012, the Company wrote-off various notes and the related accrued interest approximating $150,000 and recognized a gain on debt extinguishment in the same amount.

8. GAIN ON DEBT EXTINGUISHMENT

12 Months Ended

Dec. 31, 2012

On May 18, 2012, the Company negotiated the conversion of two debt holders’ promissory notes totaling $1,667,750 in exchange for 3,335,500 shares of the Company’s common stock and warrants for 3,335,500 shares of common stock with an exercise price of $0.50 expiring May 31, 2015. As a result of the conversion of the two debt holders’ notes, the Company recognized a gain on debt extinguishment of $1,136,055 during the year ended December 31, 2012 based on the fair value of both the common stock and warrants issued. The common shares were valued at $300,195 and warrants valued at approximately $231,500 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $0.09 per share; 3 year life; discount rate of 2.50%; and volatility rate of 228%.

In October 30, 2012 the Company negotiated the conversion of a debt holder’s promissory note totaling $25,000 plus accrued interest of $11,778, in exchange for 50,000 shares of the Company’s common stock and warrants for 50,000 shares of common stock with an exercise price of $0.50 expiring October 30, 2015. As a result of the conversion of the debt holder’s notes, the Company recognized a gain on debt extinguishment of $9,778 during the twelve months ended December 31, 2012 based on the fair value of both the common stock and warrants issued. The common shares were valued at $13,500 and warrants valued at approximately $13,500 using the Black-Scholes options pricing model under the following assumptions: stock price at issuance of $0.27 per share; 3 year life; discount rate of 2.50 %; and volatility rate of 555%.

During 2012, the Company wrote-off various notes and the related accrued interest approximating $150,000 and recognized a gain on debt extinguishment in the same amount.