STOCKHOLDER'S EQUITY

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

STOCKHOLDER'S EQUITY

NOTE 8– STOCKHOLDER'S EQUITY

The Company is authorized to issue 800,000,000 shares of common stock with $0.0001 par value per share. As of December 31, 2012 and 2011, the Company has issued and outstanding 564,374,057 and 263,523,057 shares of common stock, respectively.

On May 12, 2011, the Company entered into an agreement with G&A Capital Development LLC (“G& A Capital”), a related party, whereby the Company issued 200,000,000 shares of Series A Preferred shares and a warrant to purchase 496,277,915 shares of common stock for an aggregate price of $2,000,000. The warrant shall have an exercise term of two years. Upon the Company increasing their number of authorized shares, the 200,000,000 shares of Series A Preferred shares were agreed to be exchanged for 164,402,076 shares of common stock. The share and warrant issuances were in consideration of G&A Capital making previous payments on the Company’s behalf totaling $662,540 ($245,000 subscription received in 2010 and $417,540 expenses paid by G&A Capital in 2011) and an agreement that G&A Capital will assume the outstanding financial obligations incurred by the Company up to $8,000,000 as long as the liability was incurred on or before September 11, 2011. in accounts payable and officers compensation packages. During the year ended December 31, 2011, G&A Capital had settled $372,500 of the Company's financial obligations by transferring common stock previously received from the May 12, 2011 agreement.

 

As of September 11, 2011, the Company had recorded a subscription receivable of $ 6,300 000 related to the liabilities that were ultimately settled by G&A Capital in 2012. In 2012, G&A Capital settled approximately $2,663,563 of accrued liabilities by transferring 24,000,000 shares of the Company’s common stock. As a result, the Company recorded a bad debt charge in 2011 related to the remaining $3,636,437 that was not subsequently settled.

On May 15, 2012, G & A Capital exercised a cashless provision related to the warrants issued in May 2011. The Company issued 300,851,000 common shares. Subsequent to the issuance of the 300,851,000 common shares, G & A Capital distributed such number of shares of the Common Stock it owned to our executive officers and key employees and other service providers on behalf of the Company. The majority of the common stock transferred was distributed to related parties including our Chairman of the Board, Chief Executive Officer and Chief Financial Officer. Accordingly, the Company has recorded a stock based compensation charge related to the shares issued for services rendered of $8,971,615 for the year ended December 31, 2012.