Equity

3 Months Ended

Mar. 31, 2012

Equity:

Stockholders' Equity Note Disclosure

NOTE 13– STOCKHOLDERS’ EQUITY

Common Stock

On January 4, 2012, the Company, pursuant to a Legal Services Agreement, dated January 1, 2012, by and between the Company and the Shanghai Hai Mai Law Firm (“Shanghai Hai Mai”), agreed to issue to Shanghai Hai Mai the aggregate amount of 6,000,000 restricted shares (pre-Reverse Stock Split) of the Company’s common stock, $0.0005 par value per share. The shares were issued as compensation for legal services to be provided by Shanghai Hai Mai during the two-year term of the Agreement. The value of 6,000,000 restricted shares is $180,000 based on the stock price at January 4, 2012.  The Company recorded deferred stock compensation of $158,301 at March 31, 2012, which was net of stock compensation expense of $21,699 for the three months ending March 31, 2012.

On February 13, 2012, the Company’s Board of Directors adopted and approved an amendment (the “Charter Amendment”) to the Company’s Articles of Incorporation, as amended, to effect a reverse split of the Company’s common stock, par value $0.0005 per share (the “Common Stock”) of one share for every thirty outstanding shares (the “Reverse Stock Split”), so that every thirty outstanding shares of Common Stock before the Reverse Stock Split shall represent one share of Common Stock after the Reverse Stock Split. The Reverse Stock Split was retroactively reflected in the Company’s consolidated financial statements for the years presented. However, due to the reverse acquisition of Metamining Nevada, as described below, the Board of Directors has determined not to proceed with the 1:30 reverse stock split

On March 12, 2012 and March 29, 2012, the Company issued 5 million restricted shares (pre-Reverse Stock Split) each to a professional business consulting company for advising the Company on strategic growth, merger and acquisition, and investor relationship. The term of the service is two years. The value of 10,000,000 restricted shares is $250,000 based on the stock price at March 12 and March 29, 2012, respectively. The Company recorded deferred stock compensation of $243,151 at March 31, 2012, which was net of stock compensation expense of $6,849 for the three months ending March 31, 2012.

On March 29, 2012, the Company issued 7,000,000 (pre-Reverse Stock Split) and 2,000,000 shares of common stock to one senior officer and one employee, respectively, under the Company’s 2005 Equity Compensation Plan, as amended, for services they provided to the Company. The stock was valued at stock issuance date at $0.03 per share, and $270,000 was recorded as stock based compensation.

In conjunction with the reverse acquisition of Metamining Nevada, the Company issued 9,000,000 shares of Series C convertible preferred stock and 3,000,000 Series C common stock purchase warrants to the shareholder of Metamining Nevada, Metamining, as part of consideration offered and 581,973 shares of Series C convertible preferred stock to China Direct Investments, Inc. for acquisition services. The shares of Series C convertible preferred stock, with a par value of $0.0005, are convertible to our common shares on a 1 to 1 basis after the completion of the planned Reverse Stock Split, and are being charged to additional paid in capital in accordance with ASC 805-40 Reverse Acquisitions. In addition, we issued  Series C common stock purchase warrants to Metamining as part of consideration offered. The Series C common stock warrants become exercisable for five years at any time, following the Reverse Stock Split of our common stock, into 3,000,000 shares of our post-split common stock at an exercise price of $5.00 per share.  The warrants contains customary anti-dilution protection in the event of stock splits, recapitalizations and similar corporate events. The warrants are accounted for as additional paid in capital.

Series C convertible stock and related Series C common stock purchase warrant.

The stated value of the Series C convertible preferred stock is $0.0005 per share and each share of Series C preferred stock entitles the holder to one vote for every share of common stock into which such Series C preferred stock is convertible.  The Series C common stock purchase warrants entitle the holder, Metamining, Inc., the right to purchase 3,000,000 shares of the Company’s common stock (after giving effect to the planned 1:200 reverse stock split) at the exercise price of $5.00 per share.

The 3,000,000 Series C common stock purchase warrants are separate from the Series C convertible preferred stock. In accordance with ASC 815 Derivatives and Hedging, Series C convertible preferred stock and purchase warrants are accounted for as equity separately and are not re-measured every reporting period as re-measurement requirement applies only to securities accounted for as liability. As a result, there is no other value contained in the Series C convertible preferred stock that requires bifurcation. The Company valued the warrant under Black-Scholes model based on historical data, as follows:

Asset Price on grant date (March 30, 2012) *	$	9.00
Exercise Price	$	5.00
Years until expiration		5.00
Volatility **		157	%
Risk Free Rate		1.04	%
Dividend Yield		0	%

*           Asset price was after giving effect to the planned 1:200 reverse stock split.

**           Volatility was based on the prices of the Company’s common stock in the past five years.