| Document and Entity Information (USD $) | 12 Months Ended | |
| Dec. 31, 2011 | Mar. 29, 2012 | |
| Document And Entity Information | ||
| Entity Registrant Name | TURBODYNE TECHNOLOGIES, INC | |
| Entity Central Index Key | 1022097 | |
| Document Type | 10-K | |
| Document Period End Date | 31-Dec-11 | |
| Amendment Flag | FALSE | |
| Current Fiscal Year End Date | -19 | |
| Is Entity a Well-known Seasoned Issuer? | No | |
| Is Entity a Voluntary Filer? | No | |
| Is Entity's Reporting Status Current? | No | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Public Float | $246,523 | |
| Entity Common Stock, Shares Outstanding | 1,000,000,000 | |
| Document Fiscal Period Focus | FY | |
| Document Fiscal Year Focus | 2011 |
| Consolidated Balance Sheets (USD $) | Dec. 31, 2011 | Dec. 31, 2010 |
| ASSETS | ||
| Cash and cash equivalents | $20,612 | $244 |
| Total current assets | 20,612 | 244 |
| Property and equipment, net of accumulated depreciation of $67,838 and $63,418 | 4,568 | 8,988 |
| Total assets | 25,180 | 9,232 |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
| Accounts payable | 776,229 | 784,795 |
| Accounts payable related party | 707,307 | |
| Accrued liabilities | 620,338 | 609,657 |
| Short-term convertible debt, net of unamortized discount of $0 and $8,750 | 65,000 | 131,250 |
| Short-term convertible debt related party, net of unamortized discount of $268,928 and $750 | 664,161 | 95,250 |
| Derivative liability | 294,338 | |
| Current portion of deferred licensing fee | 22,224 | 22,224 |
| Total current liabilities | 2,442,290 | 2,350,483 |
| Deferred licensing fee | 185,934 | 208,158 |
| Reserve for lawsuits | 5,740,596 | 5,299,336 |
| Total liabilities | 8,368,820 | 7,857,977 |
| Contingencies and commitments | ||
| Stockholders' Deficit | ||
| Preferred Stock, $0.001 par value, 1,000,000 shares authorized, 12,675 shares issued and outstanding December 31, 2011 and 2010 | 12 | 12 |
| Common Stock, $0.001 par value, 1,000,000,000 shares authorized, 1,000,000,000 (December 31, 2010 - 661,973,358) shares issued and outstanding | 1,000,000 | 661,974 |
| Additional paid-in capital | 128,666,542 | 128,598,433 |
| Other comprehensive income - foreign exchange translation gain | 35,119 | 35,119 |
| Treasury stock, at cost - 5,278,580 common shares | -1,963,612 | -1,963,612 |
| Accumulated deficit | -136,081,701 | -135,180,671 |
| Total stockholders' deficit | -8,343,640 | -7,848,745 |
| Total liabilities and stockholders' deficit | $25,180 | $9,232 |
| Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2011 | Dec. 31, 2010 |
| Statement of Financial Position [Abstract] | ||
| Accumulted depreciation | $67,838 | $63,418 |
| unamortized discount | 0 | 8,750 |
| Net of unamortized discount | $268,928 | $750 |
| Preferred Stock, par value | $0.00 | $0.00 |
| Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
| Preferred Stock, Shares Issued | 12,675 | 12,675 |
| Preferred Stock, Shares Outstanding | 12,675 | 12,675 |
| Common Stock, par value | $0.00 | $0.00 |
| Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
| Common Stock, Shares issued | 1,000,000,000 | 661,973,358 |
| Common Stock, Shares Outstanding | 1,000,000,000 | 661,973,358 |
| Treasury stock | 5,278,580 | 5,278,580 |
| Consolidated Statements of Operations (USD $) | 12 Months Ended | |
| Dec. 31, 2011 | Dec. 31, 2010 | |
| Expenses | ||
| Selling, general and administrative expenses | $314,758 | $390,093 |
| Litigation expense | 467,100 | 424,636 |
| Depreciation and amortization | 4,420 | 4,420 |
| Total Expenses | 786,278 | 819,149 |
| Loss from operations | -786,278 | -819,149 |
| Other income (expenses) | ||
| Licensing fees | 22,224 | 22,224 |
| Interest expense | -31,324 | -146,902 |
| Inducement expense | -211,456 | |
| Gain on change in fair value of derivative | 42,362 | |
| Gain on settlement of derivatives | 1,160 | |
| Gains on settlement of debt and debt relief | 62,282 | 41,374 |
| Net loss | ($901,030) | ($902,453) |
| Loss per share - basic and diluted | $0 | $0 |
| Basic weighted average common shares outstanding | 730,674,000 | 632,920,000 |
| Diluted weighted average common shares outstanding | 730,674,000 | 632,920,000 |
| Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
| Dec. 31, 2011 | Dec. 31, 2010 | |
| Operating Activities | ||
| Net loss | ($901,030) | ($902,453) |
| Adjustment to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 4,420 | 4,420 |
| Amortization of convertible note discounts and warrants | 13,760 | 113,467 |
| Gain on settlement of liabilities | -62,282 | -41,374 |
| Gain on change in fair value of derivative | -42,362 | |
| Gain on settlement of derivatives | -1,160 | |
| Inducement expense | 211,456 | |
| Stock-based compensation | 32,356 | 86,356 |
| Share issuance obligation with related party | 10,588 | |
| Changes in operating assets and liabilities: | ||
| Accounts payable | 18,852 | 15,249 |
| Accounts payable - related parties | 189,120 | 197,730 |
| Deferred income | -22,224 | -22,224 |
| Reserve for lawsuits | 467,100 | 424,636 |
| Accrued expenses | 41,700 | 65,812 |
| Net Cash Used in Operating Activities | -50,294 | -47,793 |
| Financing Activities | ||
| Repayment of convertible debt related party | -9,338 | |
| Proceeds from exercise of warrants | 20,000 | |
| Proceeds from issuance of convertible debt | 80,000 | 25,000 |
| Net Cash Provided by Financing Activities | 70,662 | 45,000 |
| Net Change in Cash | 20,368 | -2,793 |
| Cash and cash equivalents - beginning of period | 244 | 3,037 |
| Cash and cash equivalents - end of period | 20,612 | 244 |
| Supplemental Disclosures: | ||
| Interest paid | 7,648 | |
| Income taxes paid | ||
| Non-Cash Transactions: | ||
| Debt discounts due to derivative liabilities | 268,928 | |
| Accounts payable with related parties - settled by issuance of convertible debt | 896,427 | |
| Beneficial conversion feature of convertible debt | 4,260 | 10,000 |
| Beneficial conversion feature from debt modification | 4,000 | |
| Derivative reclassification | 68,932 | |
| Conversion of convertible debt and accrued interest | $226,995 | $395,967 |
| Consolidated Statements of Stockholders' Equity (USD $) | Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Deficit | Other Comprehensive Income | Total |
| Beginning Balance. Amount at Dec. 31, 2009 | $12 | $577,580 | ($1,963,612) | $128,155,916 | ($134,278,218) | $35,119 | ($7,473,203) |
| Beginning Balance, Shares at Dec. 31, 2009 | 12,675 | 577,580,158 | 5,278,580 | ||||
| Issuance of stock upon the exercise of warrants, Share | 2,000,000 | ||||||
| Issuance of stock upon the exercise of warrants, Amount | 2,000 | 18,000 | 20,000 | ||||
| Issuance of stock for services, Share | 6,000,000 | ||||||
| Issuance of stock for services, Amount | 6,000 | 48,000 | 54,000 | ||||
| Conversion of note payable, Share | 76,393,200 | ||||||
| Conversion of note payable, Amount | 76,394 | 319,573 | 395,967 | ||||
| Debt discount from beneficial conversion feature with issuance of warrants | 10,000 | 10,000 | |||||
| Debt discount from beneficial conversion feature with debt modification | 4,000 | 4,000 | |||||
| Stock-based compensation | 32,356 | 86,356 | |||||
| Share issuance obligation | 10,588 | 10,588 | |||||
| Net loss for the year | -902,453 | -902,453 | |||||
| Ending Balance. Amount at Dec. 31, 2010 | 12 | 661,974 | -1,963,612 | 128,598,433 | -135,180,671 | 35,119 | -7,848,745 |
| Ending Balance, Shares at Dec. 31, 2010 | 12,675 | 661,973,358 | 5,278,580 | ||||
| Conversion of convertible debt and interest, Share | 338,026,642 | ||||||
| Conversion of convertible debt and interest, Amount | 338,026 | -111,031 | 226,995 | ||||
| Conversion of note payable, Amount | 4,260 | 4,260 | |||||
| Debt discount from beneficial conversion feature with issuance of warrants | 211,456 | 211,456 | |||||
| Reclassification of derivative from additional paid in capital | -68,932 | -68,932 | |||||
| Stock-based compensation | 32,356 | 32,356 | |||||
| Net loss for the year | -901,030 | -901,030 | |||||
| Ending Balance. Amount at Dec. 31, 2011 | $12 | $1,000,000 | ($1,963,612) | $128,666,542 | ($136,081,701) | $35,119 | ($8,343,640) |
| Ending Balance, Shares at Dec. 31, 2011 | 12,675 | 1,000,000,000 | 5,278,580 |
| Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||||||||||||||
| Dec. 31, 2011 | |||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||
| Note 1. Summary of Significant Accounting Policies | a) Nature of Business | ||||||||||||||||||||||||
| Turbodyne Technologies, Inc., a Nevada corporation, and its subsidiaries (collectively, the "Company") engineer, develop and market products designed to enhance performance and reduce emissions of internal combustion engines. | |||||||||||||||||||||||||
| b) Going Concern | |||||||||||||||||||||||||
| The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered net operating losses in recent periods, is subject to lawsuit settlements and has a working capital deficit of $2,421,678 at December 31, 2011. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s operations have been financed principally through a combination of private and public sales of equity and debt securities. If the Company is unable to raise equity capital or generate revenue to meet its working capital needs, it may have to cease operating and seek relief and protection under appropriate legal statutes. These consolidated financial statements have been prepared on the basis that the Company will be able to continue as a going concern and realize its assets and satisfy its liabilities and commitments in the normal course of business and do not reflect any adjustment which would be necessary if the Company is unable to continue as a going concern. | |||||||||||||||||||||||||
| c) Principles of Consolidation | |||||||||||||||||||||||||
| The accompanying consolidated financial statements, stated in United States dollars, include the accounts of Turbodyne Technologies, Inc. and its wholly owned subsidiaries, Turbodyne Systems, Inc., Turbodyne Germany Ltd., Electronic Boosting Systems Inc. and Pacific Baja Light Metals Corp. ("Pacific Baja"). All intercompany accounts and transactions have been eliminated on consolidation. | |||||||||||||||||||||||||
| d) Use of Estimates | |||||||||||||||||||||||||
| The preparation of consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, stock-based compensation expense, deferred income tax asset valuations and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |||||||||||||||||||||||||
| e) Cash and Cash Equivalents | |||||||||||||||||||||||||
| The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. | |||||||||||||||||||||||||
| f) Basic and Diluted Net Income (Loss) Per Share | |||||||||||||||||||||||||
| Earnings (loss) per share is calculated by dividing the net income (loss) available to common stockholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity. In a loss year, dilutive common equivalent shares are excluded from the loss per share calculation as the effect would be anti-dilutive. | |||||||||||||||||||||||||
| A reconciliation of the components of basic and diluted net income (loss) per common share is presented in the tables below: | |||||||||||||||||||||||||
| For the Year Ended December 31, | |||||||||||||||||||||||||
| 2011 | 2010 | ||||||||||||||||||||||||
| Income | Weighted Average Common Shares Outstanding | Per | Income | Weighted Average Common Shares Outstanding | Per | ||||||||||||||||||||
| (Loss) | Share | (Loss) | Share | ||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| Income (loss) attributable to common stock | $ | (901,030 | ) | 730,674,000 | $ | (0.00 | ) | $ | (902,453 | ) | 632,920,000 | $ | (0.00 | ) | |||||||||||
| Effective of Dilutive Securities: | |||||||||||||||||||||||||
| Preferred shares, stock options, warrants and convertible notes | – | – | – | – | – | – | |||||||||||||||||||
| Diluted: | |||||||||||||||||||||||||
| Income (loss) attributable to common stock, including assumed conversions | $ | (901,030 | ) | 730,674,000 | $ | (0.00 | ) | $ | (902,453 | ) | 632,920,000 | $ | (0.00 | ) | |||||||||||
| g) Property and Equipment | |||||||||||||||||||||||||
| Depreciation and amortization of property and equipment is computed using the straight-line method over estimated useful lives as follows: | |||||||||||||||||||||||||
| Computers and measurement equipment | 3 years | ||||||||||||||||||||||||
| Machinery and equipment | 7 to 15 years | ||||||||||||||||||||||||
| Furniture and fixtures | 5 to 10 years | ||||||||||||||||||||||||
| During the year ended December 31, 2011, the Company recorded depreciation expense of $4,420 (2010 - $4,420). | |||||||||||||||||||||||||
| Property and equipment, at cost, is summarized as follows: | |||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||
| 2011 | 2010 | ||||||||||||||||||||||||
| Machinery and equipment | $ | 72,406 | $ | 72,406 | |||||||||||||||||||||
| Less accumulated depreciation | (67,838 | ) | (63,418 | ) | |||||||||||||||||||||
| Net capitalized costs | $ | 4,568 | $ | 8,988 | |||||||||||||||||||||
| h) Long-lived Assets | |||||||||||||||||||||||||
| The Company periodically and at least, annually, reviews the carrying value of long-lived assets for indications of impairment in value and recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the estimated undiscounted future cash flows attributable to such assets. Long-lived assets to be disposed of by sale are to be measured at the lower of carrying amount or fair value less cost of sale whether reported in continuing operations or in discontinued operations. No impairment was required to be recognized during 2011 and 2010. | |||||||||||||||||||||||||
| i) Income Taxes | |||||||||||||||||||||||||
| Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. | |||||||||||||||||||||||||
| j) Financial Instruments | |||||||||||||||||||||||||
| ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Fair value is the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants. A liability is quantified at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability with the creditor. | |||||||||||||||||||||||||
| Fair Value Hierarchy | |||||||||||||||||||||||||
| ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 establishes three levels of inputs that may be used to measure fair value. | |||||||||||||||||||||||||
| Level 1 | |||||||||||||||||||||||||
| Level 1 applies to assets and liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment. | |||||||||||||||||||||||||
| Level 2 | |||||||||||||||||||||||||
| Level 2 applies to assets and liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |||||||||||||||||||||||||
| Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: | |||||||||||||||||||||||||
| Determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and Determining whether a market is considered active requires management judgment. | |||||||||||||||||||||||||
| Level 3 | |||||||||||||||||||||||||
| Level 3 applies to assets and liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. | |||||||||||||||||||||||||
| An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. | |||||||||||||||||||||||||
| All financial liabilities that are measured at fair value have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts payable and accrued liabilities, amounts due to related parties and notes and loans payable. The fair value of the Company’s convertible note payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value. | |||||||||||||||||||||||||
| The following table presents the derivative financial instruments, the Company’s only financial liabilities measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of December 31, 2011: | |||||||||||||||||||||||||
| Amount | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Embedded conversion derivative liabilities | $ | 275,629 | $ | – | $ | – | $ | 275,629 | |||||||||||||||||
| Warrant derivative liabilities | 9,985 | – | – | 9,985 | |||||||||||||||||||||
| Option derivative liabilities | 8,324 | – | – | 8,324 | |||||||||||||||||||||
| Shares issuable | 400 | – | – | 400 | |||||||||||||||||||||
| Exercisable, December 31, 2011 | $ | 294,338 | $ | – | $ | – | $ | 294,338 | |||||||||||||||||
| Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 5 for additional information. | |||||||||||||||||||||||||
| k) Legal Fees | |||||||||||||||||||||||||
| The Company records interest, legal and settlement costs as litigation expense. The Company expenses legal fees in connection with litigation as incurred. During the year ended December 31, 2011, the Company recorded $467,100 (2010 - $424,636) of interest expense relating to settlements as litigation expenses. | |||||||||||||||||||||||||
| l) Research and Development | |||||||||||||||||||||||||
| Research and development costs related to present and future products are charged to operations in the period incurred. Previously, research prototypes were sold and proceeds reflected by reductions in our research and development costs. As new technology pre-production manufacturing units are produced and related non-recurring engineer services are delivered we will recognize the sales proceeds as revenue. The Company did not record any research or development costs during the years ended December 31, 2011 and 2010. | |||||||||||||||||||||||||
| m) Derivative Liabilities | |||||||||||||||||||||||||
| The Company accounts for derivative instruments in accordance with ASC Topic 815, Derivatives and Hedging and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. | |||||||||||||||||||||||||
| The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at December 31, 2011 and 2010, the company had a $294,338 and $Nil derivative liability, respectively. | |||||||||||||||||||||||||
| n) Stock-based Compensation | |||||||||||||||||||||||||
| The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. | |||||||||||||||||||||||||
| o) Recent Accounting Pronouncements | |||||||||||||||||||||||||
| The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. | |||||||||||||||||||||||||
| p) Reclassifications | |||||||||||||||||||||||||
| Certain reclassifications have been made to the prior period’s consolidated financial statements to conform to the current years presentation. | |||||||||||||||||||||||||
| Short Term Convertible Notes Payable | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 2. Short Term Convertible Notes Payable | (a) On November 23, 2005, the Company issued a $25,000 convertible note. The note bears interest at the rate of 5% per annum, is due and payable on November 23, 2006, and convertible into the Company’s common shares at $0.005 per share. The convertible note was issued with detachable warrants to purchase 500,000 shares of the Company’s common stock at $0.01 per share for five years. |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2011 and 2010, the debt discount from the warrants and the beneficial conversion feature has been fully amortized and the note is in default. | |
| During the year ended December 31, 2011, the Company no longer had enough available common stock to issue in satisfaction of all common stock equivalents. As a result, the Company reclassified the fair value of the conversion option as a derivative liability in accordance with ASC 815-15, Embedded Derivatives. | |
| (b) On March 9, 2006, the Company issued a $20,000 convertible note. The note bears interest at the rate of 5% per annum, is due and payable on March 9, 2007, and convertible into the Company’s common shares at the lower of 70% of the previous day’s market price (to a minimum of $0.003) or $0.025 per share. The convertible note was issued with detachable warrants to purchase 400,000 shares of the Company’s common stock at $0.025 per share for five years. | |
| In connection with the issuance of the convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the minimum conversion price provides a determinate number of shares issuable upon conversion and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2009, debt discount from the warrants and the beneficial conversion feature had been fully amortized. On April 23, 2010, the Company issued 400,000 shares upon the conversion of the note and $4,075 of interest. | |
| (c) On July 19, 2006, the Company issued a $10,000 convertible note. The note bears interest at the rate of 5% per annum, is due and payable on July 19, 2007, and convertible into the Company’s common shares at $0.005 per share. The convertible note was issued with detachable warrants to purchase 200,000 shares of the Company’s common stock at $0.01 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2011 and 2010, debt discount from the warrants and the beneficial conversion feature have been fully amortized and the note is in default. | |
| During the year ended December 31, 2011, the Company no longer had enough available common stock to issue in satisfaction of all common stock equivalents. As a result, the Company reclassified the fair value of the conversion option as a derivative liability in accordance with ASC 815-15, Embedded Derivatives. | |
| (d) On May 26, 2006, the Company issued a $30,000 convertible note. The note bears interest at the rate of 5% per annum, is due and payable on October 31, 2007, and convertible into the Company’s common shares at $0.005 per share. The convertible note was issued with detachable warrants to purchase 600,000 shares of the Company’s common stock at $0.01 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, “Embedded Derivatives”, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2011 and 2010, debt discount from the warrants and the beneficial conversion feature have been fully amortized and the note is in default. | |
| During the year ended December 31, 2011, the Company no longer had enough available common stock to issue in satisfaction of all common stock equivalents. As a result, the Company reclassified the fair value of the conversion option as a derivative liability in accordance with ASC 815-15, Embedded Derivatives. | |
| (e) On May 21, 2008, the Company issued a $200,000 convertible note. The note bears interest at the rate of 18% per annum, is due and payable on May 21, 2009, and convertible into the Company’s common shares at $0.02 per share. The convertible note was issued with detachable warrants to purchase 4,000,000 shares of the Company’s common stock at $0.02 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2009, debt discount from the warrants and the beneficial conversion feature have been fully amortized and the note is in default. | |
| During 2010, the note was modified to reduce the conversion price from $0.02 per share to $0.005 per share. The Company analyzed the modification as prescribed by ASC 470-50 to determine whether it was substantial. Based on the analysis, the Company determined that the modification was substantial and thus resulted in an extinguishment of the existing loan. Consequently, the old debt, along with any unamortized discount, is removed and the new debt is recorded at its fair value. | |
| The Company evaluated the conversion option in the amended note for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| Additionally it was determined that the amended note contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature, $4,000, was expensed immediately because the maturity date of the loan had passed. | |
| On April 23, 2010, the Company issued 53,600,000 shares upon the conversion of $200,000 of principal and $68,000 of interest. | |
| (f) On April 7, 2009, the Company issued a $100,000 convertible note. The note bears interest at the rate of 12% per annum, is due and payable on April 7, 2011, and convertible into the Company’s common shares at $0.01 per share. The convertible note was issued with detachable warrants to purchase 2,000,000 shares of the Company’s common stock at $0.01 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. | |
| During 2009, the note was modified to reduce the conversion price from $0.01 per share to $0.005 per share. The Company analyzed the modification as prescribed by ASC 470-50 to determine whether it was substantial. Based on the analysis, the Company determined that the modification was substantial and thus resulted in an extinguishment of the existing loan. Consequently, the old debt, along with any unamortized discount, is removed and the new debt is recorded at its fair value. Unamortized discount of $6,250 was recognized as a loss on extinguishment. | |
| The Company evaluated the conversion option in the amended note for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| Additionally it was determined that the amended note contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature, $100,000, was recorded as a discount to convertible notes and was amortized over the term of the note using the straight-line method. | |
| On April 6, 2010, the Company issued 22,393,200 shares upon the conversion of the $100,000 note and accrued interest of $11,966. The then-unamortized discount of $80,000 was written off on the conversion date. | |
| (g) On November 6, 2009, the Company issued a $50,000 convertible note. The note bears interest at the rate of 12% per annum, is due and payable on November 6, 2011, and convertible into the Company’s common shares at $0.01 per share. The convertible note was issued with detachable warrants to purchase 1,000,000 shares of the Company’s common stock at $0.01 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2011, the remaining debt discount from the warrants and the beneficial conversion feature is $Nil (2010 -$2,917) and the note is in default. | |
| On September 9, 2011, the Company issued 6,105,000 shares upon the conversion of $50,000 of principal and $11,050 of interest. | |
| (h) On March 3, 2010, the Company issued a $25,000 convertible note. The note bears interest at the rate of 12% per annum, is due and payable on March 3, 2012, and convertible into the Company’s common shares at $0.01 per share. The convertible note was issued with detachable warrants to purchase 500,000 shares of the Company’s common stock at $0.01 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2010, the remaining debt discount from the warrants and the beneficial conversion feature was $5,833 and the note was in default. | |
| During the year ended December 31, 2011, the Company entered into an amendment which reduced the conversion price of the note to $0.0005 and the exercise price of the warrants to $0.005. On October 7, 2011, the Company issued 59,566,660 common shares upon the conversion of $25,000 of the note and $4,783 of interest at $0.0005 per share. The then-unamortized discount was written off on the conversion date. | |
| The conversion qualified for accounting as an induced conversion under ASC 470-20. The Company recognized an inducement expense equal to the fair value of common shares issued in excess of the fair value of securities issuable pursuant to the original conversion terms of $50,930. | |
| (i) On August 26, 2011, the Company issued a $27,500 convertible note and 550,000 warrants to purchase common shares at an exercise price of $0.002 per share. The note bears interest at 12% per annum, matures on August 26, 2013 and is convertible into common shares at $0.001 per share. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. | |
| During the year ended December 31, 2011, the Company entered into an amendment to reduce the conversion price of the notes to $0.0005. On October 3, 2011, the Company issued 55,357,500 common shares upon the conversion of the $27,500 convertible note and $179 of interest at $0.0005 per share. The then-unamortized discount was written off on the conversion date. | |
| The conversion qualified for accounting as an induced conversion under ASC 470-20. The Company recognized an inducement expense equal to the fair value of common shares issued in excess of the fair value of securities issuable pursuant to the original conversion terms of $27,679. | |
| (j) On September 19, 2011, the Company issued a $12,500 convertible note and 250,000 warrants to purchase common shares at an exercise price of $0.002 per share. The note bears interest at 12% per annum, matures on September 19, 2013 and is convertible into common shares of the Company at $0.001 per share. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. | |
| During the year ended December 31, 2011, the Company entered into an amendment to reduce the conversion price of the notes to $0.0005. On October 4, 2011, the Company issued 25,062,511 common shares upon the conversion of the $12,500 convertible note and $31 of interest at $0.0005 per share. The then-unamortized discount was written off on the conversion date. | |
| The conversion qualified for accounting as an induced conversion under ASC 470-20. The Company recognized an inducement expense equal to the fair value of common shares issued in excess of the fair value of securities issuable pursuant to the original conversion terms of $12,500. | |
| (k) On October 14, 2011, the Company issued a $40,000 convertible note and 800,000 warrants to purchase common shares at an exercise price of $0.002 per share. The note bears interest at 12% per annum, matures on October 14, 2013 and is convertible into common shares of the Company at $0.001 per share. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. | |
| During the year ended December 31, 2011, the Company entered into an amendment to reduce the conversion price of the notes to $0.0005. On October 14, 2011, the Company issued 80,000,000 common shares upon the conversion of the $40,000 at $0.0005 per share. The then-unamortized discount was written off on the conversion date. | |
| The conversion qualified for accounting as an induced conversion under ASC 470-20. The Company recognized an inducement expense equal to the fair value of common shares issued in excess of the fair value of securities issuable pursuant to the original conversion terms of $36,000. |
| Short Term Convertible Notes Related Party | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 3. Short Term Convertible Notes Related Party | (a) On June 15, 2006, the Company issued a $15,000 convertible note to ICMC Holdings LLC, a company controlled by Jason Meyers. The note bears interest at the rate of 5% per annum, is due and payable on June 15, 2007, and convertible into the Company’s common shares at the lower of 70% of the previous day’s market price (to a minimum of $0.003) or $0.025 per share. |
| In connection with the issuance of the convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the minimum conversion price provides a determinate number of shares issuable upon conversion and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature was recorded as a discount to convertible notes and was amortized over the term of the notes using the straight-line method. As of December 31, 2011 and 2010, the debt discount from the warrants and the beneficial conversion feature have been fully amortized and the note is in default. | |
| During the year ended December 31, 2011, the Company no longer had enough available common stock to issue in satisfaction of all common stock equivalents. As a result, the Company reclassified the fair value of the conversion option as a derivative liability in accordance with ASC 815-15, Embedded Derivatives. | |
| (b) On January 17, 2007 and February 1, 2007, the Company issued convertible notes of $15,000 and $16,000, respectively to Aspatuck Holdings Ltd. The notes bear interest at a rate of 5% per annum, are due and payable one year following issuance, and convertible into the Company’s common shares at convertible into the Company’s common shares at the lower of 70% of the previous day’s market price (to a minimum of $0.003) or $0.025 per share. The convertible notes were issued with detachable warrants to purchase 620,000 shares of the Company’s common stock at $0.025 per share for five years. | |
| In connection with the issuance of the convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the minimum conversion price provides a determinate number of shares issuable upon conversion and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2009, debt discount from the warrants and the beneficial conversion feature have been fully amortized and the note is in default. | |
| In December 2009, the notes were modified to reduce the conversion price from the provision discussed above to a set amount of $0.005 per share. The Company analyzed the modification as prescribed by ASC 470-50 to determine whether it was substantial. Based on the analysis, the Company determined that the modifications were substantial and thus resulted in an extinguishment of the existing loans. Consequently, the old debt, along with any unamortized discount, is derecognized and the new debt is recorded at its fair value. | |
| The Company evaluated the conversion option in the amended note for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| Additionally it was determined that the amended notes contained beneficial conversion features since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion features, $31,000, was expensed immediately because the maturity date of the loan had passed. | |
| During the year ended December 31, 2011, the Company repaid $9,338 of the notes and $7,648 of interest. As a result at December 31, 2011, the outstanding principal amount of the notes was reduced to $10,222 and $11,440. | |
| During the year ended December 31, 2011, the Company no longer had enough available common stock to issue in satisfaction of all common stock equivalents. As a result, the Company reclassified the fair value of the conversion option as a derivative liability in accordance with ASC 815-15, Embedded Derivatives. | |
| (c) On June 1, 2009, the Company issued a $50,000 convertible note to Mr. Robert Roche. Mr. Roche became a related party upon the conversion of debt into common shares exceeding 10% of the total shares outstanding on November 10, 2011. The note bears interest at the rate of 12% per annum, is due and payable on June 1, 2011, and convertible into the Company’s common shares at $0.01 per share. The convertible note was issued with detachable warrants to purchase 1,000,000 shares of the Company’s common stock at $0.01 per share for five years. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature did not qualify as derivatives. The conversion feature did not qualify as a derivative because the note is convertible into a fixed number of shares and the Company had enough available common stock to issue in satisfaction of all common stock equivalents. | |
| In recording the transaction, the Company allocated the value of the proceeds to the convertible notes and the warrants based on their relative fair values. Fair value of the warrants was determined using the Black-Scholes valuation model. It was also determined that the convertible notes contained a beneficial conversion feature since the fair market value of the common stock issuable upon the conversion of the notes exceeded the value allocated to the notes. The value of the beneficial conversion feature and the value of the warrants were recorded as a discount to convertible notes and were amortized over the term of the notes using the straight-line method. As of December 31, 2010, the remaining debt discount from the warrants and the beneficial conversion feature is $750 and the note was in default. | |
| On November 10, 2011, the Company amended the convertible note and warrants held by Mr. Roche. Pursuant to the amendment, the conversion price of the note was reduced from $0.01 to $0.0005 and the exercise price of the warrant was reduced from $0.01 to $0.005. A total of 130,433,333 shares were issuable by the Company to Mr. Roche as a result of the amendment, conversion and warrant exercise. On November 10, 2011, the Company issued 111,904,471 common shares upon the conversion of $50,000 of the convertible note and $5,952 of interest at $0.0005 per share (additional accrued interest of $9,025 was forgiven). As of December 31, 2011 the Company owed Mr. Roche 18,528,862 shares of common stock as the result of the amendment, conversion and warrant exercise but could not issue the additional shares as it has insufficient authorized shares. The then-unamortized discount was written off on the conversion date. | |
| The conversion qualified for accounting as an induced conversion under ASC 470-20. The Company recognized an inducement expense equal to the fair value of common shares issued in excess of the fair value of securities issuable pursuant to the original conversion terms of $84,347. | |
| (d) On December 31, 2011, issued a convertible note to Aspatuck Holdings having a face value of $652,267 in satisfaction of consulting fees owed to it. Aspatuck Holdings is obligated to provide the services of Jason Meyers to the Company. The note bears interest at 5% per annum and is due on December 31, 2014. The noteholder can convert the note and interest into common shares of the Company at $0.001. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature qualified as derivatives. The conversion feature qualified as a derivative because the note is convertible the Company did not have enough available common stock to issue in satisfaction of all common stock equivalents. The Company classified the conversion feature as a derivative liability at fair value. | |
| The fair value of the conversion feature was determined to be $195,680 using a Black-Scholes option-pricing model. Upon the issuance dates of the $195,680 was recorded as debt discount. As of December 31, 2011, the aggregate unamortized discount is $195,680 and the carrying value of the note was $456,587. | |
| (e) On December 31, 2011, issued a convertible note to Debi Kokinos, the Company’s chief financial officer, having a face value of $244,160 in satisfaction of consulting fees owed to her. The loan bears interest at 5% per annum and is due on December 31, 2014. The noteholder can convert the note and interest into common shares of the Company at $0.001. | |
| In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Embedded Derivatives, and determined the note and conversion feature qualified as derivatives. The conversion feature qualified as a derivative because the note is convertible the Company did not have enough available common stock to issue in satisfaction of all common stock equivalents. The Company classified the conversion feature as a derivative liability at fair value. | |
| The fair value of the conversion feature was determined to be $73,248 using a Black-Scholes option-pricing model. Upon the issuance dates of the $73,248 was recorded as debt discount. As of December 31, 2011, the aggregate unamortized discount is $73,248 and the carrying value of the note was $170,912. |
| Derivative Liability | 12 Months Ended | |||
| Dec. 31, 2011 | ||||
| Notes to Financial Statements | ||||
| Note 4. Derivative Liability | On November 10, 2011, upon the amendment and conversion of the convertible note payable described in Note 4(c), the Company had issued the maximum number of common shares the Company is authorized to issue. As a result the Company no longer had enough authorized and unissued common shares to satisfy the conversion of outstanding convertible notes, warrants and options. As the Company no longer had enough authorized and unissued common shares to satisfy these conversions the Company was required to reclassify all embedded conversion features and non-employee warrants and options as derivative liabilities and record them at their fair values at each balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. | |||
| The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities: | ||||
| Balance at December 31, 2010 | $ | – | ||
| Reclassification of fair value of conversion features | 17,865 | |||
| Reclassification of fair value of stock options | 21,852 | |||
| Reclassification of fair value of warrants | 28,148 | |||
| Reclassification of fair value of shares issuable | 1,067 | |||
| Fair value of conversion features issued | 268,928 | |||
| Change in fair value of conversion features | -11,166 | |||
| Change in fair value of warrants | -17,002 | |||
| Change in fair value of options | -13,527 | |||
| Change in fair value of shares issuable | -667 | |||
| Fair value of warrants settled | -1,160 | |||
| Balance at December 31, 2011 | $ | 294,338 | ||
| Share Capital | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 5. Share Capital | Authorized Capital |
| a) At the Annual General Meeting held on June 30, 2004, the shareholders approved an increase of authorized capital to 1,000,000,000 common shares. | |
| Preferred Shares | |
| a) The Company has 1,000,000 preferred shares authorized with a par value of $0.001. | |
| b) In 2003, 150,000 of the 1,000,000 preferred shares were designated as Series X preferred shares. The Series X preferred shares have a par value of $0.001 per share, do not have voting rights, and holders are entitled to receive dividends pro-rata with the issued and outstanding shares of the Company’s common stock on an if converted basis when and if dividends are declared on the outstanding shares of the Company’s common stock. The Series X preferred shares are each convertible into 100 common shares at the discretion of the holder. As of December 31, 2011 and 2010, 12,675 of Series X preferred shares convertible into 1,267,500 common shares are outstanding. | |
| Common Shares | |
| a) During 2002, in addition to 378,580 common shares acquired under the 1998 Share Buy-Back Plan, the Company entered into an agreement to acquire from a director for cancellation, 3,500,000 common shares for $152,078. The Company paid $152,078 in connection with the acquisition of the 3,500,000 common shares and has recorded amounts paid as a charge to Treasury shares. The related common shares have not yet been received or cancelled. | |
| b) In addition to outstanding shares of common stock, options and warrants described in these notes; additional shares are issuable in connection with the change of control transaction in September 2005 in the event the Company issues any securities directly or indirectly related to pre-merger events. | |
| c) On September 1, 2011, the Company issued 6,105,000 common shares upon the conversion of $50,000 of the convertible note described in Note 2(g) and $11,050 of interest at $0.01 per share. | |
| d) On October 7, 2011, the Company issued 59,566,660 common shares upon the conversion of $25,000 of the note and $4,783 of interest at $0.005 per share. Refer to Note 2(h). | |
| e) On October 3, 2011, the Company issued 55,357,500 common shares upon the conversion of the $27,500 convertible note and $179 of interest at $0.0005 per share. Refer to Note 2(i). | |
| f) On October 4, 2011, the Company issued 25,062,500 common shares upon the conversion of the $12,500 convertible note and $31 of interest at $0.0005 per share. Refer to Note 2(j). | |
| g) On October 14, 2011, the Company issued 80,000,000 common shares upon the conversion of the $40,000 at $0.0005 per share. Refer to Note 2(k). | |
| h) On November 10, 2011, the Company issued 111,904,471 common shares upon the conversion of $50,000 of the convertible note and $5,952 of interest at $0.005 per share. Refer to Note 3(c). | |
| i) On April 6, 2010, the Company issued 2,000,000 common shares upon the exercise of warrants for cash proceeds of $20,000. | |
| j) During April 2010, the Company issued 76,393,200 common shares upon the conversion of notes payable of $395,967. | |
| k) On February 8, 2010, the Company issued 6,000,000 common shares to a consultant in consideration for services with a fair value of $54,000, based on the grant date market price of $0.009 per share. | |
| l) At December 31, 2011, the Company owed 1,333,333 common shares to the former co-CEO of the Company in consideration for services during fiscal 2010 with a fair value of $10,588 based on vesting date market prices from $0.0019 to $0.013 per share. | |
| m) During the year ended December 31, 2011, the Company recorded stock-based compensation of $32,356 (2010 - $86,356) consisting of shares issued with a fair value of $Nil (2010 - $54,000 as described in Note 5(e)) and $32,356 (2010 - $32,356) of stock-based compensation related to the vesting of stock options as described in Note 6. | |
| n) During the year ended December 31, 2011, the Company issued 30,511 shares to a noteholder as a result of an over accrual of interest. |
| Stock Options | 12 Months Ended | ||||||||||||||||
| Dec. 31, 2011 | |||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||
| Note 6. Stock Options | 2003 Stock Incentive Plan | ||||||||||||||||
| On August 12, 2003, the Company established the 2003 Stock Incentive Plan (the "2003 Plan"). Under the 2003 Plan, the Company may grant common stock or incentive stock options to its directors, officers, employees and consultants for up to 15,000,000 common shares. The maximum term of the 2003 Plan is ten years. The Board of Directors will determine the terms and matters relating to any awards under the 2003 Plan including the type of awards, the exercise price of the options and the number of common shares granted. | |||||||||||||||||
| The value of the shares of common stock used in determining the awards shall not be less than 85% of the fair market value of the common shares of the Company on the date of grant. As of December 31, 2011, the number of unoptioned shares available for granting of options under the plan was 7,197,759 (2010 - 7,197,759). | |||||||||||||||||
| 2004 Nevada Stock Incentive Plan | |||||||||||||||||
| On March 31, 2004, the Company established the 2004 Nevada Stock Incentive Plan (the "2004 Plan"). Under the 2004 Plan, the Company may grant common stock or incentive stock options to its directors, officers, employees and consultants for up to 15,000,000 common shares. The maximum term of the 2004 Plan is ten years. The Board of Directors will determine the terms and matters relating to any awards under the 2004 Plan including the type of awards, the exercise price of the options and the number of common shares granted. The value of the shares of common stock used in determining the awards shall not be less than 85% of the fair market value of the common shares of the Company on the date of grant. As of December 31, 2011, the number of unoptioned shares available for granting of options under the plan was 1,703,500 (2010 - 1,703,500). | |||||||||||||||||
| All options granted under the above plans are fully vested and exercisable immediately. | |||||||||||||||||
| The determination of fair value of share-based payment awards to employees, directors and non-employees on the date of grant using the Black-Scholes model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Management has used historical data to estimate forfeitures. The risk-free rate is based on U.S. Treasury rates in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of the Company’s stock price. | |||||||||||||||||
| On January 31, 2009, the Company granted 10,666,666 options to the President of the Company and 3,200,000 options to the Company’s Chief Financial Officer. The options are exercisable at $0.0117 per share for 7 years and vest 1/36 per month for 36 months and had a fair value of $0.007 per share. During the year ended December 31, 2011, the Company recorded $32,356 (2010 - $32,356) of stock-based compensation relating to the vesting of stock options. | |||||||||||||||||
| A summary of the Company’s stock option activity is as follows: | |||||||||||||||||
| Number | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate | ||||||||||||||
| of Options | Intrinsic Value | ||||||||||||||||
| Outstanding, December 31, 2009 | 28,633,332 | $ | 0.014 | ||||||||||||||
| Expired | (500,000 | ) | 0.02 | ||||||||||||||
| Outstanding, December 31, 2010 and 2011 | 28,133,332 | $ | 0.013 | 2.7 | $ | – | |||||||||||
| Exercisable, December 31, 2011 | 27,748,133 | $ | 0.013 | 2.68 | $ | – | |||||||||||
| A summary of the changes of the Company’s non-vested stock options is presented below: | |||||||||||||||||
| Non-vested stock options | Number | Weighted Average Grant Date Fair Value | |||||||||||||||
| of Options | |||||||||||||||||
| Non-vested at December 31, 2009 | 9,629,629 | $ | 0.018 | ||||||||||||||
| Vested | (4,622,220 | ) | 0.005 | ||||||||||||||
| Non-vested at December 31, 2010 | 5,007,409 | $ | 0.005 | ||||||||||||||
| Vested | (4,622,220 | ) | 0.005 | ||||||||||||||
| Non-vested at December 31, 2011 | 385,189 | $ | 0.005 | ||||||||||||||
| As at December 31, 2011, there was $2,696 (2010 - $35,052) of unrecognized compensation cost related to non-vested stock option agreements to be recognized over .08 years. | |||||||||||||||||
| Warrants | 12 Months Ended | ||||||||||||||||
| Dec. 31, 2011 | |||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||
| Note 7. Warrants | A summary of the changes in the Company’s common share purchase warrants is presented below: | ||||||||||||||||
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate | ||||||||||||||
| Intrinsic Value | |||||||||||||||||
| Outstanding, December 31, 2009 | 35,484,444 | $ | 0.01 | ||||||||||||||
| Issued | 500,000 | $ | 0.01 | ||||||||||||||
| Expired | (2,000,000 | ) | $ | 0.01 | |||||||||||||
| Outstanding, December 31, 2010 | 33,984,444 | $ | 0.01 | 2.3 | $ | – | |||||||||||
| Issued | 1,600,000 | $ | 0.002 | ||||||||||||||
| Expired | (2,300,000 | ) | $ | 0.019 | |||||||||||||
| Outstanding, December 31, 2011 | 33,284,444 | $ | 0.017 | 1.49 | $ | – | |||||||||||
| As at December 31, 2011, the following common share purchase warrants were outstanding: | |||||||||||||||||
| Number of Warrants | Exercise Price | Remaining Contractual Life (years) | |||||||||||||||
| 3,916,671 | $ | 0.0117 | 1.33 – 2.33 | ||||||||||||||
| 4,445,373 | $ | 0.0117 | 2.42 – 3.42 | ||||||||||||||
| 549,072 | $ | 0.0117 | 3.50 – 4.16 | ||||||||||||||
| 833,328 | $ | 0.04 | 1.84 – 3.00 | ||||||||||||||
| 1,620,000 | $ | 0.025 | 0.05 – 0.13 | ||||||||||||||
| 18,820,000 | $ | 0.02 | 0.16 – 1.46 | ||||||||||||||
| 1,000,000 | $ | 0.01 | 2.89 | ||||||||||||||
| 500,000 | $ | 0.005 | 3.19 | ||||||||||||||
| 1,600,000 | $ | 0.002 | 4.66 – 4.79 | ||||||||||||||
| 33,284,444 | |||||||||||||||||
| Commitments | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 8. Commitments | Litigation |
| (a) TST, Inc. | |
| In March 2000, TST, Inc. (“TST”), a vendor to a subsidiary of Pacific Baja filed an action against the Company alleging that in order to induce TST to extend credit to a subsidiary of Pacific Baja, the Company executed guarantees in favor of TST. TST alleged that the subsidiary defaulted on the credit facility and that the Company is liable as guarantor. | |
| The Company agreed to the immediate entry of judgment against the Company in the amount of $2,068,078 plus interest from the date of entry at the rate of 10% per annum. The amount of this judgment would immediately increase by any amount that TST is compelled by judgment or court order or settlement to return as a preferential transfer in connection with the bankruptcy proceedings of Pacific Baja; and | |
| TST cannot execute on its judgment until Turbodyne either: (a) files a voluntary bankruptcy case; (b) is the subject of an involuntary case; or (c) effects an assignment for the benefit of creditors. | |
| Any proceeds received by TST or its president from the sale of the issued shares will be automatically applied as a credit against the amount of the judgment against the Company in favor of TST. Prior to March 31, 2004, 147,000 shares issued in connection with the TST settlement had been sold which have reduced the provision for lawsuit settlement by $23,345. | |
| At December 31, 2011, the Company has included $5,138,097 ($4,670,997 in 2010) in regard to this matter in provision for lawsuit settlements. It was determined that TST received payment in preference to other creditors before Pacific Baja filed its Chapter 11 petition in bankruptcy. TST and Pacific Baja settled the preference payment issue with TST paying $20,000 to Pacific Baja and TST relinquishing the right to receive $63,000 therefore; an additional $83,000 has also been included in the provision for lawsuit settlements. | |
| (b) Pacific Baja Bankruptcy | |
| In July 1999, a major creditor of the Company's wholly-owned major subsidiary, Pacific Baja, began collection activities against Pacific Baja which threatened Pacific Baja's banking relationship with, and source of financing from, Wells Fargo Bank. As a result, Pacific Baja and its subsidiaries commenced Chapter 11 bankruptcy proceedings on September 30, 1999. | |
| In September 2001, the Pacific Baja Liquidating Trust (the “Trust”) commenced action against us in the aforesaid Bankruptcy Court. The Trust was established under the Pacific Baja bankruptcy proceedings for the benefit of the unsecured creditors of Pacific Baja. | |
| The Company vigorously contested the Complaint until April 22, 2005 when the Company entered into a stipulation for entry of judgment and assignment in the Pacific Baja bankruptcy proceedings for $500,000 to be issued in common stock or cash or a combination. Additionally the Company assigned to the bankruptcy Trust the rights to $9,500,000 claims under any applicable directors and officers liability insurance policies. The bankruptcy Trust also agreed to a covenant not to execute against the Company regardless of the outcome of the insurance claims. | |
| The Company has completed the assignment of its insurance claims, but has not completed the cash/stock payment that was to be paid to the Trust by December 9, 2005. | |
| (c) In February 2007, we entered into a patent assignment agreement with four of our consultants relating to the assignment of patent rights. The four consultants, including our then President Albert Case, are joint inventors of certain inventions and/or improvements for which they have filed a provisional application in the United States Patent and Trademark Office. Under the terms of the agreement, the co-inventors assigned the rights to the patent application to the Company .The Company is required to pay all accrued and unpaid compensation owed under existing agreements to each inventor and keep payments to them current under such agreements. Failure to make these payments may result in the return of the Patent to the inventors. | |
| (d) The Company has reserved $15,000 (2010 – $45,340) in association with several other matters. | |
| (e) Other | |
| The Company is currently involved in various collection claims and other legal actions. It is not possible at this time to predict the outcome of the legal actions. |
| Related Party Transactions | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 9. Related Party Transactions | (a) The Company owes Aspatuck Holdings Ltd. and another entity affiliated with Jason Meyers an aggregate of $688,929 (2010 - $46,000) plus related accrued interest expense of $4,156 at December 31, 2011 (2010 - $9,504). Refer to Note 3. As December 31, 2010 the Company also owed Aspatuck Holdings Ltd consulting fees of $537,437 included in accounts payable related party in the balance sheet, for the services of Jason Meyers. During the year ended December 31, 2011, the Company secured the amounts payable through the issuance of the convertible note described in Note 3(d). The Company has included $120,000 of consulting compensation in the general and administrative expense for the years ended December 31, 2011 and 2010. The Company also included $24,889 and $24,889 of non cash warrant expense for the year ended December 31, 2011 and 2010 respectively. |
| (b) As of December 31, 2010, the Company owed Debi Kokinos, CFO, consulting fees of $169,870 which were included in accounts payable related party. During the year ended December 31, 2011, the Company secured $244,160 of amounts payable through the issuance of the convertible note described in Note 3(e). The Company has included $77,520 of consulting compensation in the general and administrative expense for the years ended December 31, 2011 and 2010. The Company also included $7,467 and $7,467 of noncash stock-based compensation for the year ended December 31, 2011 and 2010 respectively. |
| Income Taxes | 12 Months Ended | ||||||||
| Dec. 31, 2011 | |||||||||
| Notes to Financial Statements | |||||||||
| Note 10. Income Taxes | Pursuant to ASC 740, the Company is required to compute tax asset benefits for non-capital losses carried forward. Potential benefit of non-capital losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the losses carried forward in future years. | ||||||||
| Significant components of the Company’s deferred tax assets and liabilities, after applying enacted corporate income tax rates, are as follows: | |||||||||
| 2011 | 2010 | ||||||||
| Deferred income tax assets: | |||||||||
| Net losses carried forward | $ | 32,072,239 | $ | 31,322,977 | |||||
| Deferred tax asset | 11,225,284 | 10,963,042 | |||||||
| Valuation allowance | (11,225,284 | ) | (10,963,042 | ) | |||||
| Net deferred income tax asset | $ | – | $ | – | |||||
| The net operating loss carryforwards expire from 2013 to 2030. Income tax periods from 2003 to 2010 are open for examination by taxing authorities. Internal Revenue Section 382 restricts the ability to use these carryforwards whenever an ownership change, as defined, occurs. The Company may have incurred such an ownership change as a result of a merger in September 2005. If the 2005 merger is deemed to be an ownership change pursuant to Internal Revenue Section 382, use of net operating losses will be restricted. The valuation allowance reflects the Company’s estimate that the tax assets, more likely than not, will not be realized and consequently have not been recorded in these financial statements. | |||||||||
| Debt Settlements | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 11. Debt Settlements | (a) During the year ended December 31, 2011, the Company recorded a gain on settlement of debt and debt relief of $25,840 (2010 - $Nil) related to the write-off of provisions for lawsuit settlements. These write-offs related to liabilities, the collection of which is time barred by applicable statute of limitations based on a review and an opinion of counsel with respect to each state that has jurisdiction over the transactions. |
| (b) During the year ended December 31, 2011, a note holder agreed to settle $50,000 note payable and $14,977 of interest for the issuance of 111,904,471 common shares. As of December 31, 2011 the Company owes the related party 18,528,862 shares of common stock as the result of the amendment and resulting conversion and warrant exercise but could not issue the shares as it has insufficient authorized shares. Prior to conversion the note holder was not a related party, but became a related party upon the conversion into common shares exceeding 10% of the total shares outstanding. The Company recorded a gain on settlement of debt and debt relief of $9,024 upon settlement. | |
| (c) During the year ended December 31, 2011, the Company recorded a gain on settlement of debt and debt relief of $27,418 (2010 - $33,299) related to the write-off of accounts payable, the collection of which is time barred by applicable statute of limitations based on a review and an opinion of counsel with respect to each state that has jurisdiction over the transactions. | |
| (d) During the year ended December 31, 2010, a note holder agreed to settle $20,000 note payable and $4,075 of interest for the issuance of 400,000 common shares. The Company recorded a gain on settlement of debt and debt relief of $8,075 upon settlement. |
| Subsequent Events | 12 Months Ended |
| Dec. 31, 2011 | |
| Notes to Financial Statements | |
| Note 12. Subsequent Events | (a) On October 17, 2012, the Company issued a $25,000 convertible note. The note bears interest at 12% per annum, matures on October 17, 2014, and is convertible into common shares of the Company at $0.004 per share. |
| (b) On January 23, 2013, the Company issued a $15,000 convertible note. The note bears interest at 12% per annum, matures on January 23, 2015 and is convertible into common shares of the Company at $0.004 per share. | |
| (c) On April 18, 2013, the Company issued a $75,000 convertible note. The note bears interest at 12% per annum, matures on October 19, 2013, and is convertible in minimum conversion amounts of $10,000 into common shares of the Company at $0.004 per share subject to adjustment. | |
| (d) On August 5, 2013, the Company issued a $25,000 convertible note. The note bears interest at 12% per annum, matures on February 5, 2014, and is convertible in minimum conversion amounts of $10,000 into common shares of the Company at $0.004 per share subject to adjustment. | |
| (e) On October 15 2013, the Company issued a $10,000 convertible note. The note bears interest at 12% per annum, matures on April 15, 2014, and is convertible in minimum conversion amounts of $10,000 into common shares of the Company at $0.004 per share subject to adjustment. | |
| (f) On October 16, 2013, the Company entered into an amendment with the note holder described in Note 3(c). Pursuant to the amendment, the noteholder agreed to waive the 17,528,862 additional shares issuable upon the conversion of the note plus the 1,000,000 shares issuable by the Company in connection with the warrant exercise and additionally return to the Company 32,471,138 of the Company’s common shares held by the note holder. The amendment becomes effective at the time that the Company amends its certificate of incorporation effecting a reverse split. | |
| (g) On November 21, 2013, the Company issued a $25,000 convertible note and a $15,000 convertible note. The notes bear interest at 12% per annum, mature on November 21, 2015, and are convertible in minimum conversion amounts of $10,000 into common shares of the Company at $0.004 per share subject to adjustment. | |
| (h) During the years ended December 31, 2013 and 2012, the Company wrote off an aggregate of $5,489,678 of liabilities and reserves written off the collection of which is time barred by applicable statute of limitations based on a review and an opinion of counsel with respect to each state that has jurisdiction over the transactions. | |
| (i) During 2014, we sold $150,000 of convertible notes payable. The notes bear interest of 12%, are convertible at $0.004, and maturing with dates ranging from January 2016 to December 2016. |
