SHAREHOLDERS' EQUITY (DEFICIT)

19 Months Ended

Dec. 31, 2011

SHAREHOLDERS' EQUITY (DEFICIT)

8.      SHAREHOLDERS’ EQUITY (DEFICIT)

No dividends were declared or paid by the Company during the year ended December 31, 2011 and 2010.

On November 19, 2010, the Company effected a one-for-200 reverse stock split.  All share and per share amounts in this report have been retroactively restated for the effect of this reverse split.

On January 21, 2012, the Company effected a one-for-300 reverse stock split.  All share and per share amounts in this report have been retroactively restated for the effect of this reverse split.

On July 20, 2010, the Company issued 50 shares of common stock for the conversion of $30,000 of principal of a 10% Subordinated Convertible Note Payable.

On November 23, 2010, the Company issued 50,000 shares of common stock for the conversion of $150,000 of principal of a 10% Subordinated Convertible Note Payable.

On December 6, 2010, the Company issued 13,334 shares of common stock for the conversion of $40,000 of principal of a 10% Subordinated Convertible Note Payable.

On December 6, 2010, the Company issued 3,333 shares of common stock for the conversion of $10,000 of principal of a 10% Subordinated Convertible Note Payable.

On March 2, 2011, the Company issued 16,667 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 30,000 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 23,333 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 5,000 shares of common stock for consulting services.  The stock was valued at $42 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 $84,126 for the year ended December 31, 2011.  The imputed interest was recorded as an increase in additional paid-in capital.