Common stock

12 Months Ended

Dec. 31, 2011

Common stock

7 Common stock:

On November 15, 2010 the Company effected a 1 for 7 reverse stock split. All references to shares in the statement of changes in stockholders equity and elsewhere in the financial statements and footnotes have been retroactively adjusted to reflect the reverse split.

The following common stock issuances were made during the year ended December 31, 2010 and give effect to our 1 for 7 reverse stock split:

· The Company issued 904,878 shares of common stock in satisfaction of an outstanding note payable. Pursuant to a Debt Conversion Agreement: (i) we forgave accounts receivable for licensing fees of $23,232 in exchange for a $23,232 reduction of the principal balance of a note payable in the original principal amount of $815,000, and (ii) we converted the remaining principal balance of $791,768 by issuing 904,878 shares of common stock. The shares were issued to the former Chairman and CEO of the Company, valued at $791,768 or $.875 per share, on April 29, 2010 the closing trading price on the date of issuance.

· The Company issued 136,550 shares of common stock in satisfaction of outstanding Officer Cash Advances. Pursuant to a Debt Conversion Agreement that we entered into, we converted the outstanding principal balance of $119,482 by issuing 136,550 shares of common stock. The shares were issued to our current Chairman and CEO, valued at $119,482 or $.88 per share, on April 29, 2010 the closing trading price on the date of issuance.

Each of these issuances of common stock was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.