3 SHAREHOLDERS DEFICIT

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

3 SHAREHOLDERS DEFICIT

NOTE 3 – SHAREHOLDERS’ DEFICIT

Preferred stock

We are authorized to issue 1,000,000 shares of no par value preferred stock; the classes and features of which will be determined by the Board of Directors.

Common stock

We are authorized to issue 50,000,000 shares of no par value common stock. The shares do not have preemptive rights and cumulative voting is not permitted.

During October 2008, we issued 5,000 shares of common stock to a vendor in exchange for payment of professional fees. The transaction was recorded based on the fair value of the services rendered, which totaled $500, or $0.10 per share.

During March 2009 and September 2009, we issued 25,000 and 10,000 shares of common stock, respectively, to our stock transfer agent, X-Pedited Transfer Corp., an affiliate, for payment of professional services. 25,000 shares were issued as payment for a December 31, 2008 liability related to services rendered during 2008. 10,000 shares were issued for services performed during 2009. The transactions were recorded based on the fair value of the services rendered, which totaled $3,500, or $0.10 per share.

During March 2011 we issued 40,000 shares of common stock to our stock transfer agent, Island Capital Management, for payment of professional services.

Warrant to purchase our common stock

On November 29, 2007 the Board of Directors unanimously approved the granting of a warrant to A-Squared Holdings, Inc. in exchange for providing a one-year, $200,000 credit facility to the Company (See Note 5).

The warrant vested as of the date of the grant and expires in five years. On November 28, 2012 the Board of Directors approved an extension of the warrant expiration date for another three years to November 29, 2015. All 200,000 shares underlying the warrant are exercisable at $0.001 per share. The Board of Directors valued the shares of common stock at the fair value of $0.00005 per share on the date of grant using the Black-Scholes option pricing model. Compensation expense totaling $10 was recognized during the period ended December 31, 2007. No warrants had been exercised through December 31, 2012.

The status of the Company’s outstanding warrant is as follows:

	Number of Shares		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at November 29, 2007 (inception)	$	-	$	-
Granted		200,000		0.001	4.9 years
Exercised		-		-
Cancelled		-		-
Outstanding at December 31, 2007	$	200,000	$	-	4.9 years	$	-
Granted		-		-
Exercised		-		-
Cancelled		-		-
Outstanding at December 31, 2008	$	200,000	$	-	3.9 years	$	-
Granted		-		-
Exercised		-		-
Cancelled		-		-
Outstanding at December 31, 2009	$	200,000	$	-	2.9 years	$	-
Granted		-		-
Exercised		-		-
Cancelled		-		-
Outstanding at December 31, 2010	$	200,000	$	-	1.9 years	$	-
Granted		-		-
Exercised		-		-
Cancelled		-		-
Outstanding at December 31, 2011	$	200,000	$	-	.9 years	$	-
Granted		-		-
Exercised		-		-
Cancelled		-		-
Outstanding at December 31, 2012		200,000		-	2.9 years		-
Exercisable at December 31, 2007	$	200,000	$	-		$	-
Exercisable at December 31, 2008	$	200,000	$	-		$	-
Exercisable at December 31, 2009	$	200,000	$	-		$	-
Exercisable at December 31, 2010	$	200,000	$	-		$	-
Exercisable at December 31, 2011	$	200,000	$	-		$	-
Exercisable at December 31, 2012	$	200,000	$	-		$	-

The weighted average fair value of the warrant granted on November 29, 2007 was estimated on the date of grant using the Black-Sholes option-pricing model at $0.00035 per share or $10. The fair value of the warrants granted is estimated on the date of grant using the following assumptions: dividend yield of zero, expected volatility of 100%, risk free interest rate of 3.42%, and an expected life of five years.