STOCKHOLDERS' DEFICIENCY

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

STOCKHOLDERS' DEFICIENCY

NOTE 7: STOCKHOLDERS' DEFICIENCY.

Debt

During the three months ended March 31, 2012, the Company issued total 2,763,285 shares of common stock upon the requests from a note holder to convert partial principal plus accrued interest totaling $106,137 into the company’s common stock based on the term set forth in the loan. The conversion rates were from $0.036 to $0.044.

Cash

Through Equity Financing:

During the three months ended March 31, 2012, for gross proceeds of $30,000 the Company sold 500,000 shares of common stock and warrants to purchase additional 125,000 shares of common stock at exercise price of $0.072.  The warrants have a term of three years.

Services

On January 23, 2012, the Company issued 1,000,000 shares of common stock to the Company’s Chief Executive Officer per grant that was approved by the Company’s Board of directors on January 11, 2012.  The shares were fully vested on the date of the grant and accordingly, the Company recorded $65,000 of stock-based compensation in connection with this issuance.

On January 23, 2012, the Company issued 1,000,000 shares of common stock to the Company’s Chief Financial Officer per grant that was approved by the Company’s Board of directors on January 11, 2012.  The shares were fully vested on the date of the grant and accordingly, the Company recorded $65,000 of stock-based compensation in connection with this issuance.

On January 24, 2012, the Company issued an aggregate 300,000 shares of common stock to multiple employee and contractors per grant that was approved by the Company’s Board of directors on January 11, 2012.  The shares were fully vested on the date of the grant and accordingly, Company recorded $19,500 of stock-based compensation in connection with this issuance.

On February 7, 2012, the Company issued 86,538 shares of common stock as part of the retainer fee we paid to a consultant for their service rendered. The Company recorded $4,500 consultant fee in connection with this issuance.

On March 2, 2012, the Company issued 100,000 shares of common stock as part of the consultant fee we paid to a consultant for service rendered. The Company recorded $6,400 marketing fee in connection with this issuance.