Note 6 - Equity Transactions

12 Months Ended

Dec. 31, 2012

Notes

Note 6 - Equity Transactions

NOTE 6 – EQUITY TRANSACTIONS

During 2012 the Company issued 30,000 shares of common stock to Andrew Barwicki in exchange for services valued at $15,000 for investor relation consulting services.  The valuation was based on the market price at the date of services.

During November 2012, the Company negotiated an extension of two notes payable.  As part of this negotiation to extend the note, the Company agreed to pay a total of 900,000 shares of common stock.

March 2, 2012, the Company accepted $380,000 in private placement funds from accredited investors in exchange for units consisting of seven hundred sixty thousand (760,000) shares of the Company’s common stock, plus three hundred eighty thousand (380,000) warrants with an exercise price of $1.00.  The Company believes the sale is exempt from registration, pursuant to Section 4(2) of the Securities Act of 1933 (as amended), as a private transaction not involving a public offering.

In January 2011, the Company entered into a contract with Cameron Associates, Inc. for investor relation consulting services.  The Company paid Cameron Associates a one-time payment of 150,000 shares of the Company’s common stock.

In April 2011, the Company entered into an agreement with ProActive Capital Resources Group for consulting services with a one-time payment of 75,000 shares of the Company’s common stock.

In July 2011, the Company paid outstanding invoices using common stock to the Company’s legal counsel, Randal Edwards.  The total amount paid was $13,500 at a price of $0.50 for a total of 27,000 shares of the Company’s common stock.  However, we valued this transaction for the financial statements using the closing trade price on that day of $5.40 for total expense of $145,800.

During the month of July 2011, 375,000 shares of the Company’s common stock were returned to treasury, due to a consulting agreement which was not consummated.

In August 2011 the Company entered into two 90 day convertible Notes Payable for $280,500 each, from Bristol Investment Funds and St. George Investments.  These notes also include 280,500 warrants each for a total of 561,000 warrants at an exercise price of $1.00 per share. Using the Lattice model, we valued these warrants based on the closing price of the market at $3.00 for additional interest expense of $1,122,000, which equates to an effective interest rate of 3,310%.  During December 2011, these warrants were exercised using the cashless exercise provision within the agreement and a total of 2,945,250 shares of common stock were issued.   

During the month of October 2011 the Company entered into two twelve month convertible Notes Payable for $605,000 each, for a total funding of $1,210,000, with an initial issue discount of 10% and total proceeds of $1,100,000.  These notes may be converted at a fixed price of $1.50 per share of the Company’s common stock.  However, if the Company obtained other financing at a lower price, then the shares issued would be adjusted to reflect the price difference.  These notes also include 950,000 warrants each for a total of 1,900,000 warrants at an exercise price of $1.00 per share and have a cashless exercise provision.  In case of default the Note may be converted into common stock at $1.50 per share or 80% of the current market bid price, whichever is lower.