STOCKHOLDERS DEFICIENCY

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

NOTE 8 - STOCKHOLDERS DEFICIENCY

Preferred Stock

The Company authorized 50,000,000 shares of preferred stock and has designated seven Series as Series A, B, C, D, E, F and G. Series A, B, C and D of preferred stock are non-voting and have liquidation preference over common stock with liquidation preference value equal to the price paid for each preferred share. The Series A, B, C and D preferred stock are mandatorily and automatically convertible on a one for one basis to common stock upon the earlier of (i) the effectiveness of the sale of the Company’s common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, other than a registration relating solely to a transaction under rule 145 under the Securities Act or to an employee benefit plan of the corporation, with aggregate proceeds to the Company and/or selling stockholders (prior to deduction of underwriter commissions and offering expenses) of at least $20,000,000, (ii) a sale of substantially all assets of the Company, (iii) the event whereby the average closing price per share of common stock of the Company, as reported by such over-the-counter market, interdealer quotation service or exchange on which shares of common stock of the Company are primarily traded (if any), equals or is greater than $10.00 per share, for thirty (30) consecutive trading days or (iv) twelve months after the April 12, 2010 merger. Upon the automatic conversion of Series A, B, C, and D preferred stock to common stock, the shares are entitled to piggyback registration rights.

On August 12, 2010, the Company’s Board of Directors approved the filing of a Certificate of Designation of the Preferences and Rights of Series E Preferred Stock of eLayaway, Inc. (“Certificate of Designation”) with the Department of State of the State of Delaware authorizing the creation of a new series of preferred stock designated as “Series E Preferred Stock” pursuant to the authority granted to the Board of Directors under the Company’s Amended and Restated Certificate of Incorporation and Section 151 of the Delaware General Corporation Law. The Certificate of Designation was filed with the Delaware Department of State on August 13, 2010. The Certificate of Designation created 2,500,000 shares of Series E Preferred Stock. Each holder of Series E Preferred Stock will be entitled to participate in dividends or distributions payable to holders of the Company’s common stock at a rate of the dividend payable to each share of Common Stock multiplied by the number of shares of Common Stock that each share of such holder’s Series E Preferred Stock is convertible into. Each share of Series E Preferred Stock is convertible, at the option of the holder of the Series E Preferred Stock, into three (3) shares of the Company’s common stock. Shares of the Series E Preferred Stock will be issued to certain officers of the Company as the Board determines if (i) the average closing price per share of the Company’s Common Stock equals or is greater than $50 per share for the preceding 20 trading days, (ii) the Company earns $0.50 per share EBITDA in any twelve consecutive months, (iii) the Company stock is trading on a U.S. Exchange such as AMEX, NASDAQ, or NYSE, or (iv) controlling interest of the Company is acquired by a third party. Each shares of Series E Preferred Stock will be entitled to three (3) votes on all matters submitted to a vote of the stockholders of the Company (“Enhanced Voting Rights”). Upon the liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will participate in the distribution of the Company’s assets with the holders of the Company’s Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all shares of Series E Preferred Stock). Due to the Enhanced Voting Rights, following the issuance of shares of Series E Preferred Stock, the holders of the Series E Preferred Stock may be able to exercise voting control over the Company. In such case, the holders of the Series E Preferred Stock may gain the ability to control the outcome of corporate actions requiring stockholder approval, including mergers and other changes of corporate control, going private transactions, and other extraordinary transactions. The concentration of voting control in the Series E Preferred Stock could discourage investments in the Company, or prevent a potential takeover of the Company which may have a negative impact on the value of the Company’s securities. In addition, the liquidation rights granted to the holders of the Series E Preferred Stock will have a dilutive effect on the distributions available to the holders of the Company’s common stock.

On April 12, 2011, the series A, B, C, and D of preferred stock were automatically converted to common stock based upon the twelve month automatic conversion provision.

On September 8, 2011, the Company’s Board of Directors approved the filing of an Amended Certificate of Designation of the Preferences and Rights of Series E Preferred Stock of eLayaway, Inc. (“Amended Certificate of Designation”) with the Department of State of the State of Delaware authorizing the amended terms of the Series E Preferred Stock pursuant to the authority granted to the Board of Directors under the Company’s Amended and Restated Certificate of Incorporation and Section 151 of the Delaware General Corporation Law. The Certificate of Designation was filed with the Delaware Department of State on September 26, 2011. The Certificate of Designation removed the various conditions associated with the issuance, changed the conversion rate to one common share for one preferred share and the voting rights to provide 15 votes for each Series E preferred share. The liquidation preference is the amount paid for the shares.

On September 26, 2011, as approved by the Board of Directors on September 8, 2011, the Company issued 1,450,603 shares of the Series E Preferred Stock to Messrs. Salie, Harmon, and Pinon in exchange for the conversion of accrued payroll in the amount of $120,050. The Series E Preferred Stock is immediately convertible into common stock therefore the preferred shares are valued at the $0.12 per share or $174,072 which was the closing price of the common stock on the date of this transaction. The Company recorded a loss of $54,022 which is included in Other Expense - Gain (Loss) on settlement of liabilities.

On October 26, 2011, as approved by the Board of Directors, the Company issued 1,374,551 shares of the Series E Preferred Stock to Bruce Harmon in exchange for the conversion of accrued payroll in the amount of $48,500, a note with Lakeport in the amount of $20,325, a line of credit with Lakeport in the amount of $25,000, and accrued interest in the amount of $6,685. The Series E Preferred Stock is immediately convertible into common stock, therefore the preferred shares are valued at the $0.089 per share closing price of the common stock on the date of this transaction or $122,335. The Company recorded a loss of $21,825 which is included in Other Expense – Gain (loss) on settlement of liabilities.

On November 23, 2011, as approved by the Board of Directors, the Company issued 385,182 shares of the Series E Preferred Stock to Bruce Harmon in exchange for the conversion of accrued payroll in the amount of $10,000 and accrued interest in the amount of $6,685. The Series E Preferred Stock is immediately convertible into common stock, therefore the preferred shares are valued at the $0.055 per share closing price of the common stock on the date of this transaction or $21,185. The Company recorded a loss of $4,500 which is included in Other Expense – Gain (loss) on settlement of liabilities.

On December 21, 2011, as approved by the Board of Directors, the Company issued 385,486 shares of the Series E Preferred Stock to Sergio Pinon and Bruce Harmon in exchange for the conversion of accrued payroll, net of an adjustment for the duplicate conversion of accrued interest of $6,685 in October 2011 and November 2011, in the amount of $5,982. The Series E Preferred Stock is immediately convertible into common stock, therefore the preferred shares are valued at the $0.0221 per share closing price of the common stock on the date of this transaction or $8,502. The Company recorded a loss of $2,520 which is included in Other Expense – Gain (loss) on settlement of liabilities.

On March 26, 2012, as approved by the Board of Directors, the Company issued 1,190,476 shares of the Series E Preferred Stock to Susan Jones in exchange for the conversion of accrued payroll in the amount of $30,000. The Series E Preferred Stock is immediately convertible into common stock, therefore the preferred shares are valued at the $0.0252 per share closing price of the common stock on the date prior to this transaction. Accordingly, there is no beneficial conversion value recorded.

On August 21, 2012, as approved by the Board of Directors, the Company issued 5,213,702 shares of the Series E Preferred Stock to Bruce Harmon in exchange for the conversion of accrued payroll in the amount of $27,990 and accounts payable in the amount of $10,701. The Series E Preferred Stock is immediately convertible into common stock; the preferred shares are valued at the $0.011 per share closing price of the common stock on the date of this transaction or $57,351. The Company recorded a loss of $18,660 which is included in Other Expense – Gain (loss) on settlement of liabilities.

On September 12, 2012, the Company’s Board of Directors approved the filing of a Certificate of Designation of the Preferences and Rights of Series F Preferred Stock of eLayaway, Inc. (“Certificate of Designation”) with the Department of State of the State of Delaware authorizing the creation of a new series of preferred stock designated as “Series F Preferred Stock” pursuant to the authority granted to the Board of Directors under the Company’s Amended and Restated Certificate of Incorporation and Section 151 of the Delaware General Corporation Law. The Certificate of Designation was filed with the Delaware Department of State on September 12, 2012. The Certificate of Designation created 10,000,000 shares of Series F Preferred Stock. Each holder of Series F Preferred Stock will be entitled to participate in dividends or distributions payable to holders of the Company’s common stock at a rate of the dividend payable to each share of Common Stock multiplied by the number of shares of Common Stock that each share of such holder’s Series F Preferred Stock is convertible into. Each share of Series F Preferred Stock is convertible, at the option of the holder of the Series F Preferred Stock, into one share of the Company’s common stock. Shares of the Series F Preferred Stock will be issued to certain officers of the Company as the Board determines for consideration of financial investment and/or forgiveness of liabilities of the Company to the officer. Each shares of Series F Preferred Stock will be entitled to one hundred (100) votes on all matters submitted to a vote of the stockholders of the Company (“Enhanced Voting Rights”). Upon the liquidation, dissolution or winding up of the Company, the holders of the Series F Preferred Stock will participate in the distribution of the Company’s assets with the holders of the Company’s Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all shares of Series F Preferred Stock). Due to the Enhanced Voting Rights, following the issuance of shares of Series F Preferred Stock, the holders of the Series F Preferred Stock may be able to exercise voting control over the Company. In such case, the holders of the Series F Preferred Stock may gain the ability to control the outcome of corporate actions requiring stockholder approval, including mergers and other changes of corporate control, going private transactions, and other extraordinary transactions. The concentration of voting control in the Series F Preferred Stock could discourage investments in the Company, or prevent a potential takeover of the Company which may have a negative impact on the value of the Company’s securities. In addition, the liquidation rights granted to the holders of the Series F Preferred Stock will have a dilutive effect on the distributions available to the holders of the Company’s common stock.

On September 10, 2012, as approved by the Board of Directors, the Company issued 3,787,826 shares of the Series F Preferred Stock to Harmon in exchange for the conversion of accounts payable in the amount of $10,765 related to advances by Harmon. The Series F Preferred Stock is immediately convertible into common stock; the preferred shares are valued at the $0.008 per share closing price of the common stock on the date of this transaction or $30,303. The Company recorded a loss of $19,538 which is included in Other Expense – Gain (loss) on settlement of liabilities. Harmon provided a proxy to Sergio Pinon (“Pinon”), CEO of the Company, for 50% of the votes of the Series F Preferred Stock held by Harmon.

On March 31, 2013, Harmon personally guaranteed approximately $20,000 in debt for the Company. In exchange for the personal guarantee, the board of directors agreed to the following: 1) issue an equivalent amount of Series F Preferred Stock based on the closing trading price on the previous day of $0.0033 or 6,060,606 shares. Harmon’s previous proxy to Mr. Pinon covers these shares also; 2) as a condition of previous conversions into Series E Preferred Stock of accrued payroll to Harmon, he is returning to the Company 2,060,276 shares and the Company will reestablish the liability of $157,260 on its books accordingly as a note payable (see Note 4). It is noted that Harmon has never received any cash compensation for his services for more than three years.

On January 22, 2013, the Company’s Board of Directors approved the filing of a Certificate of Designation of the Preferences and Rights of Series G Preferred Stock of eLayaway, Inc. (“Certificate of Designation”) with the Department of State of the State of Delaware authorizing the creation of a new series of preferred stock designated as “Series G Preferred Stock” pursuant to the authority granted to the Board of Directors under the Company’s Amended and Restated Certificate of Incorporation and Section 151 of the Delaware General Corporation Law. The Certificate of Designation was filed with the Delaware Department of State on January 22, 2013. The Certificate of Designation created 1,000,000 shares of Series G Preferred Stock. Each holder of Series G Preferred Stock will be entitled to participate in dividends or distributions payable to holders of the Company’s common stock at a rate of the dividend payable to each share of Common Stock multiplied by the number of shares of Common Stock that each share of such holder’s Series G Preferred Stock is convertible into. Each share of Series G Preferred Stock is convertible, at the option of the holder of the Series G Preferred Stock, into one share of the Company’s common stock. Shares of the Series G Preferred Stock will be issued to certain officers of the Company as the Board determines for consideration of financial investment and/or forgiveness of liabilities of the Company to the officer. Each shares of Series G Preferred Stock will be entitled to ten thousand (10,000) votes on all matters submitted to a vote of the stockholders of the Company (“Enhanced Voting Rights”). Upon the liquidation, dissolution or winding up of the Company, the holders of the Series G Preferred Stock will participate in the distribution of the Company’s assets with the holders of the Company’s Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all shares of Series G Preferred Stock). Due to the Enhanced Voting Rights, following the issuance of shares of Series G Preferred Stock, the holders of the Series G Preferred Stock may be able to exercise voting control over the Company. In such case, the holders of the Series G Preferred Stock may gain the ability to control the outcome of corporate actions requiring stockholder approval, including mergers and other changes of corporate control, going private transactions, and other extraordinary transactions. The concentration of voting control in the Series G Preferred Stock could discourage investments in the Company, or prevent a potential takeover of the Company which may have a negative impact on the value of the Company’s securities. In addition, the liquidation rights granted to the holders of the Series G Preferred Stock will have a dilutive effect on the distributions available to the holders of the Company’s common stock.

On February 25, 2013, the Company issued 1,000,000 shares of Series G Preferred Stock to Sergio Pinon as incentive compensation. The Series G Preferred Stock is immediately convertible into common stock therefore the preferred shares are valued at the $0.0006 per share closing price of the common stock on the date of this transaction or $600.

Common Stock

The Company is authorized to issue 5,000,000,000 shares of common stock, as amended on April 30, 2012, May 30, 2012, September 27, 2012, and February 22, 2013. The common stock is voting.

On January 30, 2012, the Company issued 69,444 shares of common stock to Evolution in exchange for legal fees (see Note 4).

On February 15, 2012, as part of the acquisition of CSP, the Company was obligated to issue 4,280,000 shares of common stock to the owners of CSP. As contractually obligated, 1,070,000 shares of common stock were issued with 3,210,000 issuable at various times.

On February 20, 2012, the Company entered into an investor relations contract with American Capital Ventures, Inc. for a term of one year. As part of the contract, the Company was obligated to pay $3,500 per month and to issue 1,750,000 shares of common stock, of which 1,250,000 were to be issued at the time of execution, and the remaining 500,000 shares of common stock to be issued on August 18, 2012. The Company valued the 1,250,000 shares at $50,000 or $0.0252 per share based on the quoted price and recorded a prepaid expense of $44,521. As of March 31, 2013, $30,411 was expensed. On May 21, 2012, the Company replaced the first contract with a new one for a term of nine months. The Company issued 500,000 shares of common stock on August 18, 2012. The Company valued the shares at $10,000 or $0.02 per share based on the quoted price and recorded a prepaid expense of $10,000. As of March 31, 2013, $1,569 was expensed.

On March 26, 2012, the Board of Directors of the Company issued common stock and converted options and warrants for common stock into common stock as part of the compensation plan for 2012 for its officers and directors. The actions were submitted to the Board of Directors from the Company’s Compensation Committee. As a result of the action, Messrs. Pinon and Harmon, the Company’s CEO and CFO, were each issued 2,000,000 shares of common stock, each valued at $50,400 based on the prior day’s closing price of $0.0252. The Company’s two independent directors, Messrs. Rees and Wittler, were each issued 250,000 shares of common stock for their services for 2012, each valued at $6,300 based on $0.0252 per share as previously stated. During prior periods, the officers and directors were all issued options for common stock and/or warrants for common stock, as previously disclosed, for services and/or conversion of liabilities to the officer and/or director. The Board of Directors converted each of their outstanding options and/or warrants to the same amount of common stock. As a result of this action, 3,040,314 options were converted to 3,040,314 shares of common stock and 1,225,000 warrants were converted to 1,225,000 shares of common stock. The conversions were recorded as an expense based on the $0.0252 per share or $107,486.

On March 26, 2012, the Company approved the issuance of 1,500,000 shares of common stock in exchange for legal services by Vincent and Rees for the period of June 6, 2012 through June 5, 2013. The issuance was based on the prior day’s closing price of $0.0252 or $37,800 and will be expensed appropriately throughout the contract year.

On March 26, 2012, the Company sold 4,666,667 shares of common stock in exchange for $70,000 which were issued in April 2012.

On April 2, 2012, Southridge converted $10,000 of their $56,000 note into 694,444 shares of common stock. On April 17, 2012, in conjunction with this conversion, as the closing trading price on the clearing date of the 694,444 shares of common stock was less than the closing trading price on the date of conversion, the Company was required to issue an addition 280,214 shares of common stock to Southridge. Since this was previously accounted for as stock settled debt, the $10,000 principal and $6,667 premium totaling $16,667 was reclassified to equity.

In April 2012, the Company sold 4,669,333 shares of common stock in exchange for $70,040.

On May 6, 2012, the Company issued 5,883,920 additional shares of common stock to Vincent & Rees in regards to its contractually obligated guaranteed issue value of $135,000 for the legal services provided from May 7, 2011 through May 6, 2012. On May 6, 2012, upon the expiration of the guarantee, 5,883,920 additional common shares were issued and the $135,000 liability was reclassified to equity.

On May 29, 2012, the Company converted $10,500 of accounts payable into 420,000 shares of common stock at a conversion price of $0.025 per share based on the prior day’s closing price of $0.025.

On June 25, 2012, the Company converted $5,000 of accounts payable into 200,000 shares of common stock at a conversion price of $0.025 per share. The Company recorded a gain on conversion of $1,600 based on the prior day’s closing price of $0.017.

On August 3, 2012, the Company issued Mr. Pinard and Mr. St. Cyr each 535,000 shares of common stock as contractually obligated in regards to the Company’s purchase of CSP (see Note 2). These shares were previously recorded as issuable common stock.

On August 9, 2012, Southridge converted $46,000 of its convertible promissory note into 6,666,667 shares of common stock at a conversion price of $0.0069 per share based on the conversion feature in the note.

On August 18, 2012, the Company issued to American Capital Ventures 500,000 shares of common stock as contractually obligated in regards to a consulting agreement. These shares were previously recorded as issuable common stock.

On August 27, 2012, Evolution converted $25,000 of its convertible promissory note into 3,246,753 shares of common stock at a conversion price of $0.0077 per share based on the conversion feature in the note.

 On September 6, 2012, Asher converted $10,000 of its convertible promissory note dated February 1, 2012 into 1,724,138 shares of common stock at a conversion price of $0.0058.

On September 18, 2012, the Company sold 37,500,000 shares of common stock in exchange for $150,000. The shares were sold at a 50% discount to the previous day’s closing price of $0.008.

On September 20, 2012, Southridge was issued 7,619,048 anti-dilutive shares of common stock in regards to a provision in their conversion of their note and its respective reset clause. An additional 7,619,048 shares of common stock remain issuable under this reset.

On September 27, 2012, SGI Group converted $6,100 of its Convertible Promissory Note into 4,206,896 shares of common stock. The conversion price was $0.00145 based on the conversion feature.

On September 27, 2012, Star City converted $12,200 of its $25,000 note into 8,413,793 shares of common stock at the discounted conversion price of $0.00145.

On October 12, 2012, due to the reset clause in the note with SGI Group, an additional anti-dilutive 2,969,574 shares of common stock were issued.

On October 12, 2012, due to the reset clause in the note with Star City, an additional anti-dilutive 5,939,148 shares of common stock were issued.

On October 17, 2012, as a condition of a settlement agreement with Pinard, the Company issued the remaining 1,070,000 contractually obligated shares of common stock. Additionally, the notes payable to Pinard in the amounts of $57,000 and $6,800, and their related accrued interest, was forgiven, in exchange for an agreement to pay Pinard $40,000 in installments starting on October 17, 2012 through November 15, 2012. As part of the settlement, an American Express credit card in the name of CSP which was personally guaranteed by Pinard prior to the acquisition of CSP by the Company, through a personal guarantee of Harmon, relinquished the personal liability maintained by Pinard.

On October 18, 2012, Southridge converted $5,480 of its note acquired on September 26, 2012 into 8,430,769 shares of common stock at a conversion price of $0.00065 per share.

On October 22, 2012, SGI converted $2,600 of principal and accrued interest of $18 of the note acquired on September 26, 2012 into 4,028,400 shares of common stock at a conversion price of $0.00065 per share.

On November 5, 2012, SGI converted $6,300 of principal and accrued interest of $85 of the note acquired on September 26, 2012 into 8,513,160 shares of common stock at a conversion price of $0.00075 per share.

On November 5, 2012, Star City converted $6,300 of principal and accrued interest of $85 of the note acquired on September 26, 2012 into 8,513,160 shares of common stock at a conversion price of $0.00075 per share.

On November 5, 2012, Southridge converted $6,325 of principal of its note acquired on September 24, 2012 into 8,433,333 shares of common stock at a conversion price of $0.00075 per share.

On November 9, 2012, Southridge converted $12,190 of principal of its note acquired on September 24, 2012 into 16,253,333 shares of common stock at a conversion price of $0.00075 per share.

On November 9, 2012, WHC converted $5,465 of principal of its note acquired on November 6, 2012 into 7,286,000 shares of common stock at a conversion price of $0.00075 per share.

On November 15, 2012, Southridge converted $5,685 of principal of its note acquired on September 24, 2012 into 16,242,857 shares of common stock at a conversion price of $0.00035 per share.

On November 16, 2012, SGI converted $6,500 of principal and accrued interest of $111 of the note acquired on September 26, 2012 into 18,889,371 shares of common stock at a conversion price of $0.00035 per share.

On November 16, 2012, Star City converted $6,500 of principal and accrued interest of $85 of the note acquired on September 26, 2012 into 18,889,371 shares of common stock at a conversion price of $0.00035 per share.

On November 21, 2012, Southridge converted $8,375 of principal of its note acquired on September 24, 2012 into 23,928,571 shares of common stock at a conversion price of $0.00035 per share.

On November 23, 2012, SGI Group converted $3,000 of principal and $33 of accrued interest of its note acquired on October 22, 2012 into 8,664,771 shares of common stock at a conversion price of $0.00035 per share.

On November 23, 2012, SGI converted $3,500 of principal and accrued interest of $68 of the note acquired on September 26, 2012 into 10,193,857 shares of common stock at a conversion price of $0.00035 per share.

On November 23, 2012, Sazer converted $3,250 of principal and accrued interest of $4 of the note acquired on November 26, 2012 into 9,297,943 shares of common stock at a conversion price of $0.00035 per share.

On November 26, 2012, WHC converted $6,982 of principal of its note acquired on November 6, 2012 into 12,695,000 shares of common stock at a conversion price of $0.00055 per share.

On November 29, 2012, Mauriello converted $6,500 of principal of its note acquired on November 20, 2012 into 18,583,657 shares of common stock at a conversion price of $0.00035 per share.

On November 30, 2012, Southridge converted $11,260 of principal of its note acquired on September 24, 2012 into 32,171,429 shares of common stock at a conversion price of $0.00035 per share.

On December 5, 2012, Southridge converted $5,685 of principal of its note acquired on September 24, 2012 into 4,373,077 shares of common stock at a conversion price of $0.0013 per share.

On December 5, 2012, Star City converted $5,000 of principal and accrued interest of $120 of the note acquired on September 26, 2012 into 3,938,246 shares of common stock at a conversion price of $0.0013 per share.

On December 5, 2012, Southridge converted $36,150 of principal of its note acquired on October 22, 2012 into 27,807,692 shares of common stock at a conversion price of $0.0013 per share.

On December 5, 2012, Southridge converted $19,300 of principal of its note acquired on November 8, 2012 into 32,166,667 shares of common stock at a conversion price of $0.0006 per share.

On December 11, 2012, Southridge converted $19,325 of principal of its note acquired on November 8, 2012 into 32,208,333 shares of common stock at a conversion price of $0.0006 per share.

On December 11, 2012, Marina converted $5,650 of principal of its note acquired on December 11, 2012 into 9,438,367 shares of common stock at a conversion price of $0.0006 per share.

On December 11, 2012, due to a reset clause in the note acquired on September 24, 2012, Southridge was issued an additional 1,311,923 shares of common stock.

On December 11, 2012, WHC converted $12,553 of principal and $182 of accrued interest of its note acquired on November 6, 2012 into 12,526,279 shares of common stock at a conversion price of $0.0010167 per share.

On December 11, 2012, Southridge converted $13,850 of principal of its note acquired on October 22, 2012 into 13,850,000 shares of common stock at a conversion price of $0.001 per share.

On December 11, 2012, due to a reset clause in the note acquired on October 22, 2012, Southridge was issued an additional 8,342,308 shares of common stock.

On December 11, 2012, SGI Group converted $2,000 of principal and $34 of accrued interest of its note acquired on October 22, 2012 into 3,389,433 shares of common stock at a conversion price of $0.0006 per share.

On December 12, 2012, SGI converted $9,000 of principal and accrued interest of $68 of the note acquired on November 20, 2012 into 15,113,467 shares of common stock at a conversion price of $0.0006 per share.

On December 13, 2012, Mauriello converted $8,500 of principal and $67 of accrued interest of its note acquired on November 20, 2012 into 14,278,267 shares of common stock at a conversion price of $0.0006 per share.

On December 17, 2012, Asher converted $9,000 of principal of its note dated June 7, 2012 into 9,473,684 shares of common stock at a conversion price of $0.00095 per share.

On December 17, 2012, Asher converted $9,000 of principal of its note dated June 7, 2012 into 9,473,684 shares of common stock at a conversion price of $0.00095 per share.

On December 17, 2012, Asher converted $9,000 of principal of its note dated June 7, 2012 into 9,473,684 shares of common stock at a conversion price of $0.00095 per share.

On December 19, 2012, Asher converted $8,600 of principal of its note dated June 7, 2012 into 9,247,312 shares of common stock at a conversion price of $0.00093 per share.

On December 20, 2012, Asher converted $8,600 of principal of its note dated June 7, 2012 into 9,450,549 shares of common stock at a conversion price of $0.00091 per share.

On December 20, 2012, due to a reset clause in the note acquired on September 26, 2012, Star City was issued an additional 3,754,061 shares of common stock.

On December 24, 2012, Asher converted $6,000 of principal of its note dated June 7, 2012 into 8,219,178 shares of common stock at a conversion price of $0.00073 per share.

On December 27, 2012, Asher converted $300 of principal and $1,300 of accrued interest of its note dated June 7, 2012 into 2,191,781 shares of common stock at a conversion price of $0.00073 per share.

On December 27, 2012, WHC converted $10,091 of principal of its note acquired on December 13, 2012 into 17,828,609 shares of common stock at a conversion price of $0.00057 per share.

On January 3, 2013, 17,828,609 shares were issued to WHC which were recorded as issuable as of December 31, 2013 (see Note 4).

On January 3, 2013, due to a reset clause in the note acquired on November 8, 2012 (see Note 4), Southridge was issued an additional 18,958,333 shares of common stock.

On January 3, 2013, Southridge converted $11,375 of the note dated November 8, 2012, into 18,958,333 shares of common stock (see Note 4) at a 50% discount, $0.0006. A loss on conversion will be recognized.

On January 3, 2013, Southridge converted $22,750 of the note dated November 30, 2012, into 37,916,667 shares of common stock (see Note 4) at a 50% discount, $0.0006. A loss on conversion will be recognized. Due to the deficiency of available shares to be issued at the time, the Company issued 12,000,000 shares on January 10, 2013 and the remaining 25,916,667 on January 24, 2013.

On January 8, 2013, due to a reset clause in the note acquired on September 26, 2012 (see Note 4), Star City was issued an additional 3,754,061 shares of common stock.

On January 9, 2013, due to a reset clause in the note acquired on November 8, 2012 (see Note 4), Southridge was issued an additional 3,791,667 shares of common stock.

On January 11, 2013, 20,358,000 shares of common stock were issued to WHC for a conversion of a note payable in December 2012 (see Note 4) which was recorded as issuable as of December 31, 2012.

On January 18, 2013, WHC converted $10,700 of the note dated December 13, 2012, into 21,400,000 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On January 23, 2013, Marina converted $15,000 of principal and $246.58 of accrued interest of the note dated December 5, 2012, into 30,493,151 shares of common stock (see Note 4) at a 50% discount, $0.0005.

On January 24, 2013, 14,278,267 shares of common stock were issued to Mauriello in regards to a conversion of a note payable on December 13, 2012 (see Note 4) which were recorded as issuable as of December 31, 2012.

On January 28, 2013, Southridge converted $28,100 of the note dated December 28, 2012, into 62,444,444 shares of common stock (see Note 4) at a 50% discount, $0.00045.

On January 28, 2013, due to a reset clause in the note acquired on September 26, 2012 (see Note 4), Star City was issued an additional 3,754,061 shares of common stock.

On January 28, 2013, due to a reset clause in the note acquired on November 30, 2012 (see Note 7), Southridge was issued an additional 5,183,333 shares of common stock.

On February 4, 2013, due to a reset clause in the note acquired on January 2, 2013 (see Note 4), Southridge was issued an additional 17,841,270 shares of common stock.

On February 5, 2013, Southridge converted $7,650 of the note dated December 28, 2012, into 25,500,000 shares of common stock (see Note 4) at a 50% discount, $0.0003.

On February 5, 2013, WHC converted $3,673 of the note dated December 13, 2012, into 11,019,480 shares of common stock (see Note 4) at a 50% discount, $0.000167.

 On February 6, 2013, Southridge converted $5,750 of the note dated December 28, 2012, into 23,000,000 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On February 7, 2013, SGI Group converted $6,419 of principal and $168.80 of accrued interest of the note dated November 20, 2012, into 26,351,200 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On February 11, 2013, due to a reset clause in the note acquired on November 20, 2012 (see Note 4), Mauriello was issued an additional 14,278,266 shares of common stock.

On February 11, 2013, Sazer converted $5,250 of principal and $145.32 of accrued interest of the note dated November 20, 2012, into 10,790,640 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On February 11, 2013, Southridge converted $14,400 of the note dated December 4, 2012, into 81,008,219 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On February 11, 2013, Star City converted $20,000 of principal and $743.54 of accrued interest of the note dated October 22, 2012, into 82,974,160 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On February 20, 2013, Southridge converted $20,255 of the note dated November 30, 2012, into 81,020,000 shares of common stock (see Note 4) at a 50% discount, $0.00025.

On February 26, 2013, Momoma Capital converted the $14,925 into 42,641,879 shares of common stock at a discount of 30%, $0.00035 (see Note 4).

On February 27, 2013, due to a reset clause in the note acquired on November 30, 2012 (see Note 4), Southridge was issued an additional 20,255,000 shares of common stock.

On February 27, 2013, Southridge converted $12,150 of the note dated November 30, 2012, into 60,750,000 shares of common stock (see Note 4) at a 50% discount, $0.0002.

On March 5, 2013, Southridge converted $20,375 of the note dated December 28, 2012, into 101,875,000 shares of common stock (see Note 4) at a 50% discount, $0.0002.

On March 6, 2013, the Board of Directors approved the grant of common stock to the officers and directors of the Company in consideration of the dilution of the Company’s outstanding common stock. Mr. Pinon and Mr. Harmon, the CEO and CFO, respectively, were each granted 50,000,000 shares of restricted common stock.

On March 6, 2013, the Board of Directors approved the compensation for 2013 for Vincent & Rees, legal counsel for the Company, thereby granting Vincent & Rees 50,000,000 shares of restricted common stock. Mr. Rees is a director of the Company.

On March 12, 2013, Southridge converted $24,430 of the note dated November 30, 2012, into 122,150,000 shares of common stock (see Note 4) at a 50% discount, $0.0002.

On March 18, 2013, due to a reset clause in the note acquired on November 30, 2012 (see Note 4), Southridge was issued an additional 40,716,667 shares of common stock.

On March 18, 2013, Southridge converted $12,990 of the note dated November 30, 2012, into 86,600,000 shares of common stock (see Note 4) at a 50% discount, $0.00015.

On March 22, 2013, Southridge converted $19,100 of the note dated November 30, 2012, into 127,333,333 shares of common stock (see Note 4) at a 50% discount, $0.00015.

On March 28, 2013, KAJ converted $15,000 of the note dated January 30, 2012, into 107,142,857 shares of common stock (see Note 4) at a 30% discount, $0.00014. The shares were recorded as issuable at March 31, 2013.

Stock Warrants

The Company has granted warrants to non-employee individuals and entities. Warrant activity for non-employees for the three months ended March 31, 2013 is as follows:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number		Exercise		Contractual		Intrinsic
	of Warrants		Price		Terms		Value
Outstanding at December 31, 2012		6,305,298	$	0.12
Granted		0
Reclassification		0
Outstanding and exercisable at March 31, 2013		6,305,298	$	0.12		3.91	$	-
Weighted Average Grant Date Fair Value			$	0.02

On January 15, 2012, the Company granted 142,857 fully-vested warrants with an exercise price of $0.035 per share for common stock to Catalyst Business Development, Inc. for services rendered. The warrants were valued at $0.039 per warrant or $5,571 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$	0.039
Expected Term	5 Years
Expected Volatility		239	%
Dividend Yield		0
Risk Free Interest Rate		0.29	%

The expected term equals the contractual term for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was thinly trading and had no historical volatility. The Company recognized an expense of $5,571 as of March 31, 2013, which is included in operations.

On June 25, 2012, the Company granted warrants for its common stock in the amount of 1,500,000 to Digital Farmstand, LLC. The 1,500,000 warrants, with an exercise price of $0.075, were issued as compensation for their services. The warrants were valued at $0.017 per warrant or $25,500 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$	0.017
Expected Term	2.5 Years
Expected Volatility		267	%
Dividend Yield		0
Risk Free Interest Rate		0.35	%

The expected term was computed using the simplified method for this director grant. The volatility is based on comparable volatility of other companies since the Company was thinly trading and had no reliable historical volatility. The Company recognized an expense of $25,500 on the issuance date since the warrant is earned.

The Company has granted warrants to employees. Warrant activity for employees the year ended March 31, 2013 is as follows:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number		Exercise		Contractual		Intrinsic
	of Warrants		Price		Terms		Value
Outstanding at December 31, 2012		218,422	$	0.25
Forfeited		0
Reclassification		0
Outstanding at March 31, 2013		218.422	$	0.25		2.62	$	-
Exercisable at March 31, 2013		218,422	$	0.25
Weighted Average Grant Date Fair Value			$	0.08

On March 26, 2012, three officers and/or directors, as a directive from the board of directors, forfeited 1,225,000 warrants for common stock in exchange for 1,225,000 shares of common stock. The Company recorded additional expense of $520 on the transaction.

Stock Options

eLayaway.com, Inc. approved the 2009 Stock Option Plan which had 5,831,040 options issued to management. As a condition of the reverse merger, these options were forfeited and the 2009 Stock Option Plan was discontinued at the time of the reverse merger in April 2010. The Company approved the 2010 Stock Option Plan in July 2010 under which 15,000,000 shares were reserved for issuance.

The Company has granted options to employees. Options activity for the year ended March 31, 2013 is as follows:

			Weighted			Weighted Average
			Average			Remaining		Aggregate
	Number		Exercise			Contractual		Intrinsic
	of Options		Price			Terms		Value
Outstanding at December 31, 2012		1,363,039		$	0.119
Granted		0
Forfeited		0
Outstanding at March 31, 2013		1,363,039		$	0.119		8.22		$	-
Exercisable at March 31, 2013		781,372		$	0.08
Weighted Average Grant Date Fair Value				$	0.03

On March 26, 2012, the Company granted various employees 1,900,000 options for common stock. The options are conditional based on various milestones. The options vest, after the milestones are met, over a three year period, have a ten year life, and have an exercise price of $0.03. The options were valued at $0.0252 per option or $47,880 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$	0.0252
Expected Term	6.5 Years
Expected Volatility		257	%
Dividend Yield		0
Risk Free Interest Rate		0.33	%

The expected term was computed using the simplified method for these employee grants. The volatility is based on comparable volatility of other companies since the Company was thinly trading and had no reliable historical volatility. The milestones associated with the issuance of these options were not met therefore they were forfeited on March 31, 2013.

On March 26, 2012, three officers of the Company forfeited 3,040,314 options for common stock in exchange for 3,040,314 shares of common stock. The Company recorded an additional expense of $608 on this transaction.