Note 5. Preferred Stock and Common Stock

Preferred stock dividends for Series A Preferred stock are accrued for the semi-annual periods ending June 30 and December 31. For the nine months ended September 30, 2015 dividends in the amount of $77,820 were accrued. During 2012, due to the lack of cash flow, the Company offered to pay the accrued dividends in common stock in lieu of cash. In January and September of 2015, we issued 47,959 and 10,921 shares of common stock in lieu of $29,250 of cash dividends for dividends accrued through June 30, 2015 and December 31, 2014, respectively. Substantially all preferred shareholders accepted the common stock in lieu of cash and the common shares for these dividends.

Also on July 7, 2015, the Company issued 125,000 Shares for $0.18 a share to an accredited investor, pursuant to a private placement for $22,500. The Company intends to use the proceeds from the private placement for general working capital purposes.

On September 18, 2015, pursuant to subscription agreements, the Company issued an aggregate of 441,667 shares of Common Stock (“Shares”) for $0.18 a share, or $79,500 total, to accredited investors in a private placement (“Private Placement”). The Company intends to use the proceeds from the Private Placement for general working capital purposes.

As of September 30, 2015, directors owned 6,872,375 shares of Common stock or 67.1% of all outstanding common shares.