STOCKHOLDER’S EQUITY

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

STOCKHOLDER’S EQUITY

NOTE 7. STOCKHOLDER’S EQUITY

During March 2012, the Company converted approximately $265,000 of accrued Series B Preferred Stock dividends by issuing 1,765,333 shares of its common stock.

During March 2012, the Company converted approximately $3,544,000 of debt and $33,000 of interest payable to certain directors and significant shareholders of the Company and other private lenders by issuing 23,843,429 unregistered shares of its common stock that are restricted subject to Rule 144 with the Securities and Exchange Commission.