Note 8. Common Stock and Preferred Stock

9 Months Ended

Sep. 30, 2011

Stockholders' Equity Note Disclosure [Text Block]

Note 8.  Common Stock and Preferred Stock

The Company’s authorized capital consisted of 600,000,000 shares of common stock, $0.001 par value per share, at September 30, 2011 and December 31, 2010, respectively, and 50,000,000 shares of preferred stock, $0.001 par value per share, at September 30, 2011 and December 31, 2010, respectively.  There were 562,466,285 and 472,237,565 shares of common stock outstanding at September 30, 2011 and December 31, 2010, respectively, and 1,500,000 shares of preferred stock outstanding at September 30, 2011 and December 31, 2010, respectively.

Shares Issued in Capital-Raising Transactions

A summary of the shares of common stock issued by the Company in capital-raising transactions during the nine months ended September 30, 2011 is provided below.

In February 2011, the Company sold 300,000 shares of common stock and Class A warrants exercisable into 300,000 shares of common stock to an accredited investor for aggregate gross proceeds of $3,000.  The Class A warrants have an exercise price of $0.025 per share, are exercisable during the period commencing on the date of grant and ending December 31, 2011, and expire at the end of the exercise period.

Shares Issued for Services

A summary of the shares of common stock issued by the Company for services during the nine months ended September 30, 2011 is provided below.

In January 2011, the Company entered into a consulting agreement with an accredited investor pursuant to which the Company agreed to issue 3,166,667 shares of common stock to the consultant and to compensate the consultant $5,000 per month payable in cash or common stock in the Company’s discretion.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $69,667, all of which was recognized as expense during the three months ended March 31, 2011.

In January 2011, the Company entered into a consulting agreement with an accredited investor pursuant to which the Company agreed to issue 3,000,000 shares of common stock to the consultant, to pay $8,650 to the consultant in cash or common stock in the Company’s discretion immediately upon execution of the agreement, and to compensate the consultant $5,000 per month payable in cash or common stock in the Company’s discretion.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $76,456, all of which was recognized as expense during the three months ended March 31, 2011.

In January 2011, the Company and a consultant mutually agreed to terminate a consulting agreement that the parties had entered into in December 2009.  Pursuant to the terms of the consulting agreement, the Company had issued a restricted stock award for 6,000,000 shares of common stock.  Upon termination of the consulting agreement, the restricted stock award terminated automatically by its terms.  On the date of termination, 2,000,000 shares of common stock had vested.  The remaining 4,000,000 shares that had not yet vested were cancelled in their entirety.

In March 2011, the Company issued 3,461,539 shares of common stock to a consultant in full payment of outstanding fees payable in the amount of $28,199 performed during the three months ended March 31, 2011.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $48,462.  The Company recorded a loss on settlement of debt in the amount of $20,263, all of which was recognized during the three months ended March 31, 2011.

In March 2011, the Company issued a total of 10,820,132 shares of common stock to various consultants as payment for services performed during the three months ended March 31, 2011 in accordance with the terms of the consultants’ respective consulting agreements.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $158,551, all of which was recognized as expense during the three months ended March 31, 2011.

During the three month period ended June 30, 2011, the Company issued a total of 9,577,113 shares of common stock to various consultants as payment for services performed during that period in accordance with the terms of the consultants’ respective consulting agreements.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $91,594, all of which was recognized as expense during the three months ended September 30, 2011.  The Company also issued 1,930,000 shares of common stock to a consultant in full payment of outstanding fees payable of $19,300 for services provided in a prior period.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $24,125.  The Company recorded a loss on settlement of debt in the amount of $4,825, all of which was recognized during the three months ended June 30, 2011.

During the three month period ended September 30, 2011, the Company issued a total of 5,900,000 shares of common stock to the Company’s legal counsel for prior period services performed.  The shares were valued at the closing price of the Company’s common stock on the date the issuance of shares was approved by the Company’s board of directors for total consideration of $59,000.  Also, in conjunction with this payment the Company recorded a gain on settlement of debt in the amount of $5,900 all of which was recognized during the three months ended September 30, 2011.

Shares Issued in Settlement of Litigation

In February 2011, the Company entered into a settlement agreement with John Ginzler pursuant to which the Company agreed to issue 12,285,714 shares of its common stock to him in full payment of all amounts owed to him under the employment agreement and for a full release from all claims filed by him against the Company.  The Company recorded a contingent loss in the amount of $161,044 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.

In March 2011, the Company entered into a settlement agreement with Rockmore pursuant to which the Company agreed to issue 12 million shares of its common stock to Rockmore in full payment of the outstanding balance of the debenture and accrued interest thereon, and for a full release from all claims filed by Rockmore against the Company.  The Company recorded a contingent loss in the amount of $169,818 in its financial statements for the year ended December 31, 2010 in accordance with the provisions of ASC 450.

On July 22, 2011, Transgenomic, Inc. and the Company entered into mediation in an attempt to resolve an existing lawsuit. Based on the mediation outcome with Transgenomic, the Company recorded a loss of $44,444 which represented 5,555,556 shares.  These shares were issued on September 26, 2011.  Also, as a result of this litigation, the Company was ordered to issue an additional 2,000,000 shares of common stock valued at $16,000 to legal counsel associated with this action and such shares were issued on September 26, 2011.

During the nine months ended September 30, 2011, Rozetta-Cell Life Sciences, Inc., a Nevada corporation that the Company is proposing to acquire (“Rozetta-Cell”), made loans to the Company for a total of $71,451 in addition to the prior notes payable balance of $154,482 for aggregate notes payable of $225,933.  During the three months ended September 30, 2011, the Company provided Waco Capital, Inc. (“Waco”), an affiliate of Rozetta-Cell, with 24,232,000 shares of common stock as payment for $199,135 of Rozetta-Cell notes payable leaving a balance due of $26,798 and reducing the amount owed to Waco of $24,232.  The Rozetta-Cell loans are interest free and payable on demand.  The Company incurred $5,557 of imputed interest during the nine months ended September 30, 2011 which resulted in an increase in additional paid-in capital since the interest is not payable.  A gain of $17,396 was also recorded as an increase in additional paid-in capital due to the related party nature of the transaction.