NOTE 7. DEBT MITIGATION PROGRAM

6 Months Ended

Mar. 31, 2012

OTHER (INCOME) AND EXPENSES

NOTE 7. DEBT MITIGATION PROGRAM

NOTE 7 – DEBT MITIGATION PROGRAM

The Company determined that the statute of limitations for certain of the Company’s creditors to enforce collection of any amounts they might be owed has now elapsed. Based on the determinations and findings, during the six months ended March 31, 2012, the Company wrote off $1,555,614 in creditor liabilities which were all previously included in current liabilities in the accompanying balance sheet. As a result of this write-off, the Company recognized a gain on the write off of liabilities in the amount of $332,802 for third party liabilities, which was recorded in discontinued operations, and additional paid-in capital of $1,222,812 for related party liabilities. The Company will continue to conduct this analysis going forward and write off obligations when such obligations are no longer enforceable based on applicable law.

The following liabilities, through the opinion of legal counsel, were determined by the Company as unenforceable.

	March 31, 2012
Debt Mitigation Program:
Accounts payable and accrued expenses	$	311,405
Disputed salaries & vacation of former officers		968,645
Disputed salary – former employee		20,256
Disputed payroll taxes for back pay of former officers		84,701
Disputed interest		68,939
Shareholders demand note payable at 12%		11,625
Shareholders demand note payable at 12%		20,000
Unsecured note payable at 8% interest due in November 2010, interest payments in default		175,000
Total debt mitigation program	$	1,555,614
Gain on write off of debt	$	(332,802	)
Additional paid-in capital (1)	$	1,222,812

(1) All amounts that were owed to related parties in prior years were recorded to paid-in-capital.