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7. COMMON STOCK.
9 Months Ended
Sep. 30, 2011
Stockholders' Equity Note Disclosure [Text Block]
7.           COMMON STOCK

Stock issued in cash sales

During the nine months ended September 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 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.

In August 2011, the Company issued 1,000,000 shares of common stock with a per share value of $0.27 (based on market price at time of transaction) or $270,000, for professional consulting services.  The value of these services was recorded as prepaid expense and is being expensed over the five month service period of the contract.

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 the 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. The Company paid the initial $50,000 payment and recorded an additional $58,841 of expense in the three month period ended March 31, 2011 related to this liability. Further, during the three and nine months ended September 30, 2011, the Company issued 215,285 and 413,564 shares of common stock, respectively, as payment of this obligation consistent with the settlement agreement.  The Company reduced the outstanding debt by $175,000 and recorded a gain on settlement of debt of $35,602 related to this transaction. See Note 6.

In September 2011, the Company issued a convertible note for $16,140 in a dollar for dollar exchange of an accounts payable balance.  The convertible note called for a conversion to common stock at a price of $0.30 per share.  There was no beneficial conversion value at the note date.  Immediately after issuance of the note, the note was converted to 53,800 shares of common stock with a per share value of $0.30 (based on the contractual terms of the note) or $16,140.  There was no gain or loss recorded in this transaction.

In September 2011, the Company agreed to the return of 30,000 shares of common stock with a per share value of $0.29 (based on market price) or $8,700 as settlement of a dispute with a vendor for services previously paid and expensed but never rendered to the satisfaction of the Company.  A gain on debt settlement of $8,700 was recorded in this transaction.

Other

In August 2011, the Company signed an agreement which it pledged newly issued shares of common stock to be valued at market prices as collateral for any claims made against a performance bond issued on behalf of the Company.  The bond is expected to be in place through the 2011.  There are not expected to be any claims that would cause such collateral to be called.