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NOTE 7. COMMON STOCK.
 6 Months Ended
Jun. 30, 2011
Stockholders' Equity Note Disclosure [Text Block]
7.
COMMON STOCK

Stock issued in cash sales

During the six months ended June 30th, 2011 pursuant to a private placement, the Company issued 4,906,430 shares of common stock for cash with a per share price of $0.35 per share or $1,717,251, and the Company incurred $254,515 of capital raising fees that were paid in cash.  The $254,515 was charged to additional paid-in capital.

Stock issued for services

In May 2011, the Company issued 4,167 shares of common stock with a per share value of $0.35 (based on contemporaneous cash sales prices) or $1,458, for professional services rendered.  The shares were fully vested and expensed during the three months ended June 30, 2011.

Stock issued for debt settlement

In May 2011, the Company issued 100,000 shares of common stock with a per share value of $0.35 (based on contemporaneous cash sales prices) or $35,000 as a partial payment of outstanding debt.  The Company recorded a reduction of notes payable of $15,616, a reduction of accrued interest of $17,384 and a gain on debt settlement of $2,000 related to this transaction.  See note 5.

On March 24, 2011 the Company agreed to settle a lawsuit filed in July 2009 by a company owned by one of its shareholders primarily related to past due obligations. The settlement calls for a payment of $50,000 upon signing the settlement agreement and future payments in each of the subsequent five months of either 1) $35,000 in cash or 2) stock equivalent to $35,000 based on the end of day closing price of the Company’s stock on the first trading day of said month, at the Company’s option. During the three months ended June 30, 2011, the Company issued 198,279 shares of common stock with a per share value of $0.35 (based on contemporaneous cash sales prices) or $69,398, as payment of this obligation consistent with the settlement agreement.  The Company reduced the outstanding debt by $105,000 and recorded a gain on settlement of debt of $35,602 related to this transaction.  See Note 7.