Securities Transactions

9 Months Ended

Jul. 31, 2012

Securities Financing Transactions [Abstract]

Securities Transactions

10. Securities Transactions

On November 30, 2011, at the annual meeting of stockholders, the stockholders of the Company approved a proposal to amend the Company’s Articles of Incorporation to increase the total number of authorized shares from 500,000,000 to 2,500,000,000.

Common Stock issued to Officers and Directors

During the nine months ended July 31, 2012, pursuant to his compensation arrangement, the Company issued 250,000 shares of common stock to its Chief Executive Officer, Michael W. Brennan, at prices ranging from $0.0035 to $0.0065 per share. The aggregate fair market value of the shares was determined to be $1,279.

During February 2012, the Company’s then Chief Executive, Michael Brennan, and the Company’s current Chief Financial Officer, Victor Hollander, each converted $100,000 in accrued fees for services rendered in exchange for the issuance of fifty (50) million shares of common stock. The shares were issued at a conversion price of $0.002 per share.

On February 2, 2012, the Company issued 3,571,429 shares of common stock Jeffrey Nunez, who was appointed Chairman of the Board and Chief Executive Officer of the Company on April 20, 2012. The shares were issued to Mr. Nunez in payment of $25,000 in accrued consulting fees at a conversion price was $0.007 per share. Mr. Nunez also received twenty million shares of common stock, valued at $78,300, on April 1, 2012 in connection with a consulting agreement entered into with the Company.

Pursuant to the above referenced consulting agreement with Jeffrey Nunez, the Company agreed to pay Mr. Nunez a five percent (5%) transaction fee on all proceeds received by the Company during the one year term of such agreement. The fee is payable in shares of the Company’s common stock which are to be valued as the average closing price of the common stock for the five (5) trading days prior to the transaction which triggers the fee. Between April 20 and July 31, 2012, the Company issued Mr. Nunez a total of 11,597,143 shares of common stock valued at $33,000 pursuant to the transaction fee arrangement.

Common Stock Issued in Private Placement Transactions

Between November 1, 2011 and July 31, 2012, Dutchess Opportunity Fund purchased 30,830,204 shares of common stock in three separate transactions at prices ranging from $0.003 to $0.0056 per share under the terms of the May 4, 2010 Securities Purchase Agreement. Net of $22,414 in fees and expenses, the Company received proceeds of $99,739 as of July 31, 2012. On May 31, 2012, the Company terminated the May 4, 2010 Investment Agreement it had entered into with Dutchess Opportunity Fund, II, LP and withdrew the Registration Statement on Form S-1 that it had filed in April 2012 to register one hundred forty (140) million shares of common stock it had intended to sell to Dutchess under that agreement.

During February and March 2012, a major stockholder purchased a total of 71,619,192 shares of common stock in private transactions at prices ranging from $0.0015 to $0.003 per share. The purchaser also received a three-year option to purchase forty (40) million shares of common stock at $0.002 per share if purchased within the first year; $0.005 per share if purchased during the second year; and $0.01 per share if purchased during the third year. The Company received a total of $151,661 in proceeds from the sale of shares of common stock.

On May 21, 2012, the Company entered into a Subscription Agreement with the above referenced stockholder to purchase a total of two hundred (200) million shares of the Company’s common stock at $0.001 per share, for a total of $200,000, over a six-month period. As additional consideration, the purchaser was granted a one-year option to purchase up to an additional 33,333,333 shares of common stock at $0.003 per share commencing on the date the final dollars are invested. As of July 31, 2012, the Company had received $100,000 of the total purchase commitment. See also Note 12 – “Subsequent Events.”

On May 8, 2012, Board member, Gregg J. Newhuis, entered into a Subscription Agreement to purchase a total of eight hundred (800) million shares of the Company’s common stock at $0.001 per share over a six-month period. The agreement also grants Mr. Newhuis a one-year option to purchase up to 166,666,667 additional shares of common stock at $0.003 per share during the one-year period commencing on the date the final dollars have been invested. As of July 31, 2012, the Company had received $500,000 of the total purchase commitment. See also Note 12 – “Subsequent Events.”

Common Stock Issued in Cancellation of Debt

Between November 10, 2011 and July 20, 2012, the Company issued 177,152,165 shares of common stock to Asher Enterprises, Inc. upon conversion of $272,500 in convertible notes, plus $7,600 in accrued interest thereon, at prices ranging from $0.0011 to $0.003 per share.

On February 1, 2012, the holder of a $50,000 convertible note converted the principal balance of such note into twenty five (25) million shares of common stock at $0.002 per share.

On February 2, 2012, the Company issued its legal counsel a total of 4,200,000 shares of common stock in payment for $12,500 in legal services rendered for $0.003 per share.

On April 30, 2012, the Company issued 23,517,500 shares of common stock to Gregg J. Newhuis, who was appointed to the Board of Directors on May 7, 2012. The shares were issued, at $0.002 per share, upon conversion of a $37,500 principal loan made to the Company in fiscal 2010, plus $9,535 in interest accrued on the loan.

On April 30, 2012, the Company issued 14,250,000 shares of common stock, at $0.004 per share, to a consultant in payment of $57,000 in services rendered. The shares were issued under the Company’s 2012 Employee Benefit Plan and were registered pursuant to an S-8 registration statement.

On April 30, 2012, the Company’s Chief Financial Officer, Victor Hollander, converted a total of $350,000 in principal notes, interest, fees and expenses into one hundred million shares of common stock at $0.0035 per share.

Effective on May 1, 2012, Mr. Anthony M. Frank, a major stockholder, converted a total of $189,000 in notes payable, together with $44,106 in interest accrued thereon, into 66,601,832 shares of common stock at $0.0035 per share.

On July 31, 2012, the Company issued 52,490,774 shares of common stock to an employee in lieu of accrued payroll and vacation totaling $183,718 at a conversion price of $0.0035 per share. Due to certain considerations, including but not limited to the fact that the shares issued to this employee are restricted under Rule 144 of the Securities and Exchange Commission rules and that there is a limited market for the sale of the Company’s common stock, the Company valued the shares issued at $27,558 and accrued the employer portion of payroll taxes due on that amount for $2,108 as of July 31, 2012.

Common Stock Issued for Loan

On February 1, 2012, the Company issued 600,000 shares of common stock at $0.005 per share as partial consideration for a $30,000 loan.