12. COMMON STOCK

12 Months Ended

Dec. 31, 2011

Stockholders' Equity Note Disclosure [Text Block]

12.  COMMON STOCK

Recapitalization

On February 11, 2010, (the “recapitalization date”), the Company was acquired by an inactive publicly-held company in a transaction treated as a recapitalization of the Company. Just subsequent to consummation of the acquisition, the shareholders of the Company retained approximately 67% of the voting common stock of the public company before consideration of unexercised common stock options and warrants.  The publicly-held entity had $200,000 of cash and no liabilities on the recapitalization date.  The Company is deemed to have issued 13,000,000 common shares to the pre-recapitalization shareholders of the publicly-held entity.  In connection with the recapitalization, the Company increased its’ authorized shares to 162,500,000 in February 2010.  The effects of the recapitalization based on a combination exchange ratio and forward-split of the common shares aggregating 30.5428526 have been retrospectively applied to all periods presented in the accompanying consolidated financial statements and footnotes.  The consolidated financial statements include the historical operations of the Company and the operations of the publicly-held entity from the date of the recapitalization and the balance sheets of both entities, as consolidated, beginning on the recapitalization date.

Shares Issued

Issuances of the Company’s common stock during the years ended December 31, 2011 and 2010, respectively, are as follows:

2011

Stock Issued in Cash Sales

During the year ended December 31, 2011 pursuant to private placements, 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 $254,513 of capital raising fees that were paid in cash and 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 in Conversion of Convertible Note

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.

Stock Issued in Settlement of Note Payable

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 loss on debt settlement of $2,000 related to this transaction.

Stock Issued for Debt Settlement

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 2011, the Company issued 413,564 shares of common stock as payment of this obligation consistent with the settlement agreement. The per share values of these 413,564 shares issued consisted of:  198,279 shares at $0.35 (based on contemporaneous cash sales prices), 94,595 shares at $0.37 (based on market price), and 120,690 shares at $0.29 (based on market price).  The Company reduced the outstanding debt by $175,000 and recorded a gain on settlement of debt of $35,602 related to these transactions. (See note 11)

In December of 2011, the Company issued 86,957 shares of common stock with a per share price of $0.23 (based on market price at time of transaction) or $20,000 as full payment of amounts owed to a former employee.  There was no gain or loss recorded in this transaction.

Return of Stock in Settlement

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 in 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 first quarter of 2012.  The project for which the bond was issued is complete as of December 31, 2011 and there are not expected to be any claims that would cause such collateral to be called.

2010

Stock Issued in Cash Sales

During the year ended December 31, 2010 pursuant to private placements, the Company issued 3,009,814 shares of common stock for cash with a per share price of $0.35 per share or $1,053,435, and the Company incurred $140,766 of capital raising fees that were paid in cash and charged to additional paid-in capital.

Stock Issued for Services

In April 2010, the Company issued 400,000 shares of common stock with a per share value of $0.35 (based on contemporaneous cash sales prices) or $140,000, for professional services rendered.  The shares were fully vested and expensed during the year ended December 31, 2010.

In May 2010, the Company entered into a consulting agreement whereby the Company was obligated to issue 30,000 shares of common stock to a consultant. The shares were valued at $0.35 (based on contemporaneous cash sales prices) or $10,500.  The value of the stock was recorded as a prepaid expense and is being amortized over the one year term of the contract.

In November 2010, the board of directors approved the issuance of 120,000 shares of common stock valued at $0.35 a share (based on contemporaneous cash sales prices) or $42,000 for services provided.  These shares were expensed by the Company during the year ended December 31, 2010 as services under the contract have been fully rendered.

Stock Issued for Debt Settlement

In October 2010, the board of directors approved the issuance of 37,000 shares of common stock valued at $0.35 per share (based on contemporaneous cash sales prices) or $12,950 for a settlement of outstanding payables of $12,950.  Accordingly, there was no gain or loss on settlement.

In December 2010, the board of directors approved the issuance of 204,000 shares of common stock valued at $0.35 a share (based on contemporaneous cash sales prices) or $71,400 for settlement of outstanding payables of $71,400. Accordingly, there was no gain or loss on settlement.

Stock Offering Costs

In April 2010, the Company entered into a legal services agreement with an attorney to provide legal services for work done on the private placement mentioned above. Under the agreement, the Company issued 70,000 shares of common stock. The Company valued the shares on themeasurement date and recorded the fair value of the grant of $24,500, or $0.35 per share (based on contemporaneous cash sales prices) as a charge to additional paid-in capital as offering costs as of December 31, 2010 as the contractual period had expired.