Series B Redeemable Convertible Preferred Stock	6 Months Ended
Jun. 30, 2015
Notes to Financial Statements
Note 9 - Series B Redeemable Convertible Preferred Stock	The Board of Directors has designated 40,000 shares of 10% redeemable convertible Series B par value $.001 preferred stock. Commencing on July 1, 2011, cumulative dividends on each share accrue at a rate of 10% of the $30 liquidation amount. Dividends are payable quarterly in cash when and if declared by the Board of Directors. The dividends accrue whether or not they have been declared by the board of directors and whether or not there are profits or other funds legally available. During the three and six months ended June 30, 2014, there were $29,969 and $59,938, respectively, of preferred stock dividends accumulated for Series B preferred stock, and of those, during the three months ended June 30, 2014, $29,969 were declared and paid. During the three and six months ended June 30, 2015, $53,944 and $107,888 of preferred stock dividends accumulated for the Series B preferred. At June 30, 2015 and December 31, 2014, there were cumulative unpaid dividends of $287,670 and $179,782, respectively, for the Series B preferred stock. Each share of Series B preferred stock has a liquidation preference equal to $30 per share plus any accrued or declared and unpaid dividends owed to holders of shares. In the event of a liquidation, winding up, or dissolution of the Company, the Series B ranks senior to the common stock and junior to the Series A, A-1 and A-2 preferred stock. The holder of Series B preferred stock has the right, at any time, to convert each share into common stock at a conversion ratio of one share of Series B preferred stock to 30 shares of common stock conversion price of $1 per common share. The conversion ratio is subject to adjustment when the Company declares or pays dividends, makes a distribution on common stock payable in common shares, or affects a subdivision, split, consolidation, combination, or reverse split of outstanding common shares into a greater or lesser number of common shares. The Series B holder would be entitled to receive the number of common stock or securities or property that such holder would have owned or been entitled to receive upon the happening of such event had the Series B preferred been converted immediately prior to the record or effective date of such event. The Company, at its option, may require conversion of all or any pro-rata portion of shares of Series B preferred stock outstanding into common stock if at any time i) the common stock is listed for trading on a national securities exchange, an inter-dealer automated quotation system, or over the counter bulletin board, ii) the Company shall have prepared and filed with the Securities and Exchange Commission a registration statement covering the shares of common stock to be issued upon due conversion of preferred stock, and such registration statement shall have been declared effective under the Securities Act of 1933, iii) during any preceding period of twenty consecutive trading days (while i) and ii) are fulfilled) the closing price equals or exceeds 166 2/3% of the conversion price then in effect, and iv) the Company is current on its dividends on the Series B preferred stock. The holders of Series B preferred stock have the right to one vote for each share of common stock into which such share of preferred stock could then be converted. On or after May 31, 2016, a holder can request the Company repurchase on the date which is 30 calendar days thereafter, all shares of Series B preferred stock held by the holder for cash equal to $30 per share plus accrued and unpaid dividends as of the repurchase date. The Company has the option whether or not to agree to the repurchase. In the event the Company fails to repurchase, or payment of Series B dividends is six quarters in arrears, the conversion price shall decrease to $0.85, and in addition, until such failure or arrearage is cured, the dividend rate will increase to 18% and the majority holders of Series B preferred stock have the right to elect the majority of the board of directors. At December 31, 2014, the Company became six quarters in arrears and, as a result, the conversion price decreased to $0.85. In addition, the dividend rate has increased to 18% for periods subsequent to December 31, 2014 until such time as the Company reduces the arrearages to less than six quarters. Warrants - In connection with the Series B preferred stock subscription agreements, purchasers’ acquired ten detachable warrants for each share of purchased Series B preferred. Each warrant entitles the holder to acquire three shares of $.001 par value common stock at an exercise price of $1 per common share, and expires on the earlier of March 31, 2015 or such date after June 30, 2012 at which i) the common stock is listed on the OTCBB and ii) the shares to be acquired by exercise of the warrants have been registered under the Securities Act of 1933, for 60 consecutive days. All of these warrants expired unexercised on March 31, 2015. Registration rights - In connection with the Series B preferred stock subscription agreement, the Company agreed to pay subscribers 1/2% of the liquidation preference of shares held by subscribers each month beginning on dates varying from January 1, 2012 to September 1, 2012 until i) the common shares are eligible for trading on the OTCBB and ii) the common shares issuable upon conversion of the shares shall be registered under the Securities Act of 1933 or the subscriber is able to sell such common shares under Rule 144. In May 2015 the Company’s common shares became eligible to trade on the OTCBB. Because the transfer of consideration is probable and reasonably estimable at inception of the arrangement, the contingent liability related to registration rights was included in the allocation of proceeds in accordance with GAAP. As of June 30, 2015 and December 31, 2014, the estimated liability amounted to $215,489 and $212,401, respectively, and the change in the estimated liability for the three and six months ended June 30, 2015 amounting to $3,089 is included in other expense of the accompanying statements of operations. The arrangement provides for no limitation as to the maximum potential consideration to be transferred.

Series B Redeemable Convertible Preferred Stock

6 Months Ended

Jun. 30, 2015

Note 9 - Series B Redeemable Convertible Preferred Stock

The Board of Directors has designated 40,000 shares of 10% redeemable convertible Series B par value $.001 preferred stock.

Commencing on July 1, 2011, cumulative dividends on each share accrue at a rate of 10% of the $30 liquidation amount. Dividends are payable quarterly in cash when and if declared by the Board of Directors. The dividends accrue whether or not they have been declared by the board of directors and whether or not there are profits or other funds legally available. During the three and six months ended June 30, 2014, there were $29,969 and $59,938, respectively, of preferred stock dividends accumulated for Series B preferred stock, and of those, during the three months ended June 30, 2014, $29,969 were declared and paid. During the three and six months ended June 30, 2015, $53,944 and $107,888 of preferred stock dividends accumulated for the Series B preferred. At June 30, 2015 and December 31, 2014, there were cumulative unpaid dividends of $287,670 and $179,782, respectively, for the Series B preferred stock.

Each share of Series B preferred stock has a liquidation preference equal to $30 per share plus any accrued or declared and unpaid dividends owed to holders of shares. In the event of a liquidation, winding up, or dissolution of the Company, the Series B ranks senior to the common stock and junior to the Series A, A-1 and A-2 preferred stock.

The holder of Series B preferred stock has the right, at any time, to convert each share into common stock at a conversion ratio of one share of Series B preferred stock to 30 shares of common stock conversion price of $1 per common share. The conversion ratio is subject to adjustment when the Company declares or pays dividends, makes a distribution on common stock payable in common shares, or affects a subdivision, split, consolidation, combination, or reverse split of outstanding common shares into a greater or lesser number of common shares. The Series B holder would be entitled to receive the number of common stock or securities or property that such holder would have owned or been entitled to receive upon the happening of such event had the Series B preferred been converted immediately prior to the record or effective date of such event.

The Company, at its option, may require conversion of all or any pro-rata portion of shares of Series B preferred stock outstanding into common stock if at any time i) the common stock is listed for trading on a national securities exchange, an inter-dealer automated quotation system, or over the counter bulletin board, ii) the Company shall have prepared and filed with the Securities and Exchange Commission a registration statement covering the shares of common stock to be issued upon due conversion of preferred stock, and such registration statement shall have been declared effective under the Securities Act of 1933, iii) during any preceding period of twenty consecutive trading days (while i) and ii) are fulfilled) the closing price equals or exceeds 166 2/3% of the conversion price then in effect, and iv) the Company is current on its dividends on the Series B preferred stock. The holders of Series B preferred stock have the right to one vote for each share of common stock into which such share of preferred stock could then be converted.

On or after May 31, 2016, a holder can request the Company repurchase on the date which is 30 calendar days thereafter, all shares of Series B preferred stock held by the holder for cash equal to $30 per share plus accrued and unpaid dividends as of the repurchase date. The Company has the option whether or not to agree to the repurchase. In the event the Company fails to repurchase, or payment of Series B dividends is six quarters in arrears, the conversion price shall decrease to $0.85, and in addition, until such failure or arrearage is cured, the dividend rate will increase to 18% and the majority holders of Series B preferred stock have the right to elect the majority of the board of directors. At December 31, 2014, the Company became six quarters in arrears and, as a result, the conversion price decreased to $0.85. In addition, the dividend rate has increased to 18% for periods subsequent to December 31, 2014 until such time as the Company reduces the arrearages to less than six quarters.

Warrants - In connection with the Series B preferred stock subscription agreements, purchasers’ acquired ten detachable warrants for each share of purchased Series B preferred. Each warrant entitles the holder to acquire three shares of $.001 par value common stock at an exercise price of $1 per common share, and expires on the earlier of March 31, 2015 or such date after June 30, 2012 at which i) the common stock is listed on the OTCBB and ii) the shares to be acquired by exercise of the warrants have been registered under the Securities Act of 1933, for 60 consecutive days. All of these warrants expired unexercised on March 31, 2015.

Registration rights - In connection with the Series B preferred stock subscription agreement, the Company agreed to pay subscribers 1/2% of the liquidation preference of shares held by subscribers each month beginning on dates varying from January 1, 2012 to September 1, 2012 until i) the common shares are eligible for trading on the OTCBB and ii) the common shares issuable upon conversion of the shares shall be registered under the Securities Act of 1933 or the subscriber is able to sell such common shares under Rule 144. In May 2015 the Company’s common shares became eligible to trade on the OTCBB. Because the transfer of consideration is probable and reasonably estimable at inception of the arrangement, the contingent liability related to registration rights was included in the allocation of proceeds in accordance with GAAP.

As of June 30, 2015 and December 31, 2014, the estimated liability amounted to $215,489 and $212,401, respectively, and the change in the estimated liability for the three and six months ended June 30, 2015 amounting to $3,089 is included in other expense of the accompanying statements of operations. The arrangement provides for no limitation as to the maximum potential consideration to be transferred.