STOCKHOLDERS' DEFICIT - Note 6

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

STOCKHOLDERS' DEFICIT - Note 6

NOTE 6 - STOCKHOLDERS' DEFICIT

Preferred Stock

The Company has 5,000,000 shares of preferred stock authorized. As of September 30, 2012, and December 31, 2011, there were no shares of preferred stock issued and outstanding.

Common Stock

As of September 30, 2012, we are authorized to issue 950,000,000 shares of common stock.

On May 24, 2012, the Company filed a Form S-1 related to the offer and resale of up to 100,000,000 shares of our common stock by Granite. Granite has agreed to purchase all 100,000,000 shares pursuant to the CIA, and an additional 1,000,000 shares were issued to Granite as partial consideration for the preparation of the documents for its investment in the Company. Subject to the terms and conditions of the CIA, the Company has the right to put up to $15 million in shares of our common stock to Granite. As of September 30, 2012, the amount available under the equity line facility was $15 million; however, that amount could be reduced based on the market price of our stock at the time any shares are sold.

As of September 30, 2012, the total shares of our common stock issued and outstanding amounted to 467,328,116.