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7. RELATED PARTY
 6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
NOTE 7. RELATED PARTY

In February 2011, the Company entered into a new employment agreement with its CEO.  The agreement calls for annual base compensation of $20,000, subject to Consumer Price Index increases, incentive performance bonuses equal to 12% of the Company’s annual GAAP earnings for the year 2011 to 2015 and discretionary bonuses, as well as expense reimbursements and certain employee benefits.  The agreement terminates December 31, 2015.  During the three and six months ended June 30, 2012 and June 30, 2011, a total of $5,000 and $10,000, respectively, was recorded as compensation for the Company’s CEO.

 

In February 2011, the Company issued 14,076,923 shares of common stock with a fair market value of $563,077 to the CEO as consideration for payment of $366,000 accrued compensation; the excess fair market value of $197,077 was recorded as share-based compensation during the three months ended M<arch 31, 2011.  Further, the CEO forgave accrued compensation due him amounting to $700,269.  The compensation forgiven by the CEO has been treated as a capital contribution to the Company and therefore has been recorded as additional paid-in capital in February 2011.

 

As of June 30, 2012, the Company has accrued $30,000 for unpaid wages under the employment agreement.