NOTE 9: COMMON STOCK

3 Months Ended

Nov. 30, 2011

Notes to Financial Statements

NOTE 9: COMMON STOCK

The Company has 100,000,000 shares of $0.00001 par value common stock authorized.

On January 1, 2010, the Company sold 875,000 shares of its common stock in a private offering at $0.60 per share for total cash of $525,000. 275,387 of those shares came from the treasury.

The Company purchased back 20,500 shares for a total cost of $9,017 during year ended May 31, 2010 and returned them to treasury.

On April 12, 2011, the Company sold 3,000,000 shares of its common stock in a private offering at $0.05 per share for a total cash value of $150,000. The Company collected $94,700 and recorded the balance of $55,300 as a stock

subscription receivable. The Company determined the balance of $55,300 to be uncollectable at May 31, 2011 and wrote off the balance against additional paid-in capital.

On May 26, 2011, the Company sold 650,000 shares of its common stock in a private offering at $0.10 per share for a total cash value of $65,000.

The Company issued shares at various times to employees for services rendered. During the years ended May 31, 2011 and 2010, 1,682,499 and 373,333 shares were issued to employees for total value of $758,246 and $280,000, respectively. The shares were valued at the market price on the grant date.

In April and May 2011, the Company issued 6,396,250 anti-dilution shares of common stock to two officers under the terms of their employment agreements. The share issuances were recorded at par value.

During the year ended May 31, 2011, the Company entered into two agreements to purchase back stock into treasury.

The Company agreed to purchase back 833,333 shares of common stock for a total cost of $500,000 in accordance with a settlement agreement with a shareholder. The Company paid $200,000 and recorded the remaining $300,000 as a payable as of May 31, 2011, which remains payable at August 31, 2011.

The Company also agreed to purchase back 6,835,425 shares of common stock for a total cost of $500,000 in accordance with a settlement agreement with a departing officer of the Company. The Company paid $100,000 and recorded the remaining $400,000 as a payable as of May 31, 2011. The remaining $400,000 payable was paid during the three months ending August 31, 2011.

The company retired 7,078,539 of treasury stock during the three months ended August 31, 2011 that had previously been acquired for $645,868.

The Company also agreed to purchase back 650,000 shares of common stock from a shareholder, as well as 213,813 shares of common stock from Philippine employees as part of the Company’s stock buyback program. The program was complete during the three months ended November 30, 2011.