Annual report pursuant to Section 13 and 15(d)

Note 8- Convertible Note Payable

Note 8- Convertible Note Payable	12 Months Ended
Dec. 31, 2012
Notes
Note 8- Convertible Note Payable	NOTE 8 CONVERTIBLE NOTE PAYABLE On December 11, 2012, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $58,000 (the "Note"). The financing closed on December 11, 2012 . The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on September 13, 2013. The Note is convertible into common stock, at Ashers option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 115% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 120% if prepaid 31 days following the closing through 60 days following the closing, (iii) 125% if prepaid 61 days following the closing through 90 days following the closing and (iv) 130% if prepaid 91 days following the closing through 120 days following the closing. (v) 135% if prepaid 121 days following the closing through 150 days following the closing, (vi) 150% if prepaid 151 days following the closing through 180 days following the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment. The Company has identified the embedded derivatives related to the above described Notes. This embedded derivative included variable conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivative as of the inception date of the Note and to fair value as of each subsequent reporting date. At the inception of the Note, the Company determined the aggregate fair value of $78,770 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 258.65%, (3) weighted average risk-free interest rate of 0.16%, (4) expected life of 0.76 years, and (5) estimated fair value of the Companys common stock of $0.011 per share. The determined fair value of the embedded derivative of $78,770 was charged as a debt discount up to the net proceeds of the note with the remainder $20,770 charged to current period operations as non-cash interest expense. At December 31, 2012, the Company marked to market the fair value of the embedded derivatives and determined a fair value of $80,039. The Company recorded a loss from change in fair value of derivative liability of $1,269 for the year ended December 31, 2012. The fair value of the embedded derivatives was determined using Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 258.86%, (3) weighted average risk-free interest rate of 0.11%, (4) expected life of 0.71 years, and (5) estimated fair value of the Companys common stock of $0.012 per share. The charge of the amortization of debt discounts and costs for the year ended December 31, 2012 was $5,708, which was accounted for as interest expense.

Note 8- Convertible Note Payable

12 Months Ended

Dec. 31, 2012

NOTE 8 CONVERTIBLE NOTE PAYABLE

On December 11, 2012, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $58,000 (the "Note"). The financing closed on December 11, 2012 .

The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on September 13, 2013. The Note is convertible into common stock, at Ashers option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 115% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 120% if prepaid 31 days following the closing through 60 days following the closing, (iii) 125% if prepaid 61 days following the closing through 90 days following the closing and (iv) 130% if prepaid 91 days following the closing through 120 days following the closing. (v) 135% if prepaid 121 days following the closing through 150 days following the closing, (vi) 150% if prepaid 151 days following the closing through 180 days following the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.

The Company has identified the embedded derivatives related to the above described Notes. This embedded derivative included variable conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivative as of the inception date of the Note and to fair value as of each subsequent reporting date.

At the inception of the Note, the Company determined the aggregate fair value of $78,770 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 258.65%, (3) weighted average risk-free interest rate of 0.16%, (4) expected life of 0.76 years, and (5) estimated fair value of the Companys common stock of $0.011 per share.

The determined fair value of the embedded derivative of $78,770 was charged as a debt discount up to the net proceeds of the note with the remainder $20,770 charged to current period operations as non-cash interest expense.

At December 31, 2012, the Company marked to market the fair value of the embedded derivatives and determined a fair value of $80,039. The Company recorded a loss from change in fair value of derivative liability of $1,269 for the year ended December 31, 2012. The fair value of the embedded derivatives was determined using Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 258.86%, (3) weighted average risk-free interest rate of 0.11%, (4) expected life of 0.71 years, and (5) estimated fair value of the Companys common stock of $0.012 per share.

The charge of the amortization of debt discounts and costs for the year ended December 31, 2012 was $5,708, which was accounted for as interest expense.