8) Loans Payable

6 Months Ended

Jun. 30, 2012

8) Loans Payable:

8) LOANS PAYABLE:

Loans payable consist of the following at June 30, 2012 and December 31, 2011:

			June 30, 2012		December 31, 2011

Loan payable to Louis Savaglio			$ 1,000		$ 1,000
Loan payable to Brett Hamburger			-		4,000
Loan payable to unrelated parties			150,000		150,000
Loan payable to unrelated parties			75,000		50,000
Total			$ 226,000		$ 205,000

(a) The Company borrowed the sum of $16,000 from Louis Savaglio, an independent third party. The loan is payable on demand and bears interest at the rate of 6.75% per annum. On November 30, 2009, the Company had repaid $5,000 with the issuance of 99,100 shares of common stock. On July 14, 2011 Mr. Savaglio assigned $10,000 of his debt together with accrued interest of $3,156 to four entities unrelated to the Company. Each new entity has a note for $3,289 carrying interest at 6%. Subsequently those four entities converted their loans into 13,462,000 shares of the Company’s common stock. The balance due to Mr. Savaglio as of June 30, 2012 and December 31, 2011 was $1,000.

(b) During August 2008, the Company borrowed the sum of $4,000 from Brett Hamburger, a consultant to the Company on a non-interest bearing basis. The loan is payable upon demand and as of June 30, 2012, it remained unpaid. On June 21, 2012, Brett Hamburger elected to convert his outstanding loan into common stock of the Company and received 4,000,000 shares of common stock in exchange for the loan and no accrued interest. The Company recorded a loss on debt conversion of approximately $1.4 million. Additionally during 2009, the Company borrowed $2,900 from Christine Mulijono, the wife of Brett Hamburger. This loan was payable on demand and carried an interest rate of 10% per annum. This loan and its accumulated interest was converted into 3,764,000 shares of the Company’s common stock on November 23, 2011 for the settlement of $2,900 and $864 of principal and accrued interest, respectively. As of June 30, 2012 and December 31, 2011 the amount payable under this loan was $0 and $4,000, respectively.

(c) On September 15, 2011, the Company borrowed $150,000 from an unrelated third party. The loan was due on October 15, 2011 together with interest at a rate of 25% per annum. As of June 30, 2012, the accumulated interest on this loan was $18,750. The Company is not in compliance with the repayment terms of the loan as it was not repaid on its maturity date and is currently in technical default.

(d) On November 15, 2011, the Company borrowed $75,000 from an unrelated third party. The loan was due and payable upon the Company filing its Regulation D Offering with the SEC which occurred on August 1, 2011. The note accrues interest at a rate of 4.0% per annum. As of June 30, 2012, the Company is not in compliance with the repayment terms of the loan and is currently in technical default.