STOCKHOLDERS EQUITY

9 Months Ended

Sep. 30, 2011

STOCKHOLDERS EQUITY

STOCKHOLDERS EQUITY

NOTE 8 - STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 10,000,000 shares of Preferred Stock, par value $.001 per share. The Company has designated 300,000 shares as Class B Voting Preferred Stock, and at September 30, 2011 and December 31, 2010 there were 70,000 shares outstanding.  Accrued, but unpaid, dividends totaled $33,750 at September 30, 2011 and December 31, 2010. 

Common Stock

The Company is authorized to issue 100,000,000 common shares, par value $0.001 per share.  These shares have full voting rights.  At September 30, 2011, there were 88,919,076 shares issued and outstanding.  At December 31, 2010, there were 84,776,718 shares issued and outstanding.

During the first quarter of 2011, the Company issued 1,181,818 shares of common stock valued at $92,090 to an unrelated party for payment of debt and accrued interest in the amount of $52,000 and, as a result, a loss on settlement was recognized in the amount of $40,090.

There were no stock issuances for the second quarter of 2011.

During the third quarter of 2011, the Company issued 629,540 shares of common stock valued at $46,131 to an unrelated party for payment of debt and accrued interest in the amount of $26,000 and, as a result, a loss on settlement was recognized in the amount of $20,131.  The Company issued 1,875,000 shares of common stock valued at $150,000 to unrelated parties for loan origination fees valued at $158,250 based on the market value of the common stock on the date of the agreements.  At the time the stock was issued the fair market value of the Company’s stock had decreased, resulting in a gain on settlement of $8,250.  The Company also recorded loan origination fees in the amount of $6,240, the fair market value of 80,000 shares of common stock that were not issued until October 2011. The Company also issued 200,000 shares of common stock valued at $17,000 to an employee as part of an employment agreement and recorded a loss on settlement of $1,000.    The Company also issued 256,000 common shares valued at $25,600 to unrelated parties for extension fees valued at $23,040 and recorded a loss on settlement in the amount of $2,560.

Warrants

In July 2011, the Company issued 1,250,000 three-year warrants to purchase shares of common stock at an exercise price of $.08.  The fair market value of the warrants, calculated using the Black Scholes model, was recorded at $71,869.  As of September 30, 2011 all 1,250,000 warrants remain outstanding.