SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2011

SHAREHOLDERS' EQUITY

7.  SHAREHOLDERS’ EQUITY

On March 2, 2011, the Company issued 5,000,000 shares of common stock for the conversion of $50,000 of principal of the 10% Subordinated Convertible Notes Payable.

On July 6, 2011, the Company issued 9,000,000 shares of common stock for the conversion of $90,000 of principal of the 10% Subordinated Convertible Notes Payable.

On September 20, 2011, the Company issued 7,000,000 shares of common stock for the conversion of $70,000 of principal of the 10% Subordinated Convertible Notes Payable.

On September 14, 2011, the Company issued 1,500,000 shares of common stock for consulting services.  The stock was valued at $0.014 per share based on the market price of the stock on the date the agreement was made to issue the stock.  The Company recognized stock-based compensation expense of $210,000 as a result of this issuance.

The Company has imputed interest on advances in the amount of $76,331 for the nine months ended September 30, 2011.  The imputed interest was recorded as an increase in additional paid-in capital.