Item 2. Unregistered Sales of Equity Securities
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
We issued securities, which were not registered under the Securities Act of 1933, as amended, as follows:
During the quarter ended September 30, 2010, we issued 15,000,000 shares of restricted common stock to senior management, as a retention incentive, and 6,250,000 shares to certain consultants, as part of their compensation for services rendered. Additionally, a number of convertible note holders converted their convertible promissory notes into common shares, equaling a total of 174,825,962 shares of our common stock.
With respect to these transactions, we relied on Section 4(2) of the Securities Act of 1933, as amended. The investors are all accredited investors or certain persons outside the United States, and were given complete information concerning us and represented that the shares were being acquired for investment purposes. The issuance was made without general solicitation or advertising.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Special Meeting of Stockholders : We held our Special Meeting of Stockholders on August 10, 2010, for the purpose of (1) approving an amendment to our Articles of Incorporation to increase the number of authorized shares of common stock from 200,000,000 to 900,000,000, and (2) approving a reverse split in a ratio ranging from one-for-ten to one-for-twenty of all our issued and outstanding shares of our common stock. The following summarizes the voting results:
ITEM (1). Stockholders voted to approve an amendment to our Articles of Incorporation to increase the Company’s total authorized shares of common stock from 200,000,000 to 900,000,000. The vote was as follows:
Votes For
% of Total Shares Outstanding & Voted For
Votes Against
Votes Abstained
Broker Non-Votes
84,558,327
60.80
%
56,084
362,474
--
Effective August 10, 2010 we filed an amendment to our articles of incorporation increasing our total authorized shares of common stock to 900,000,000, par value $0.01.
ITEM (2). Stockholders voted to approve a reverse split in a ratio ranging from one-for-ten to one-for-twenty of all our issued and outstanding shares of our common stock. The vote was as follows:
Votes For
% of Total Shares Outstanding & Voted For
Votes Against
Votes Abstained
Broker Non-Votes
84,420,537
60.70
%
243,869
312,479
--
Although a stock split has been approved by the shareholders, it has not yet been made effective as of the date of the filing of this annual report. The Board of Directors reserves the right, notwithstanding stockholder approval, and without further action by the stockholders, to abandon or to delay a reverse stock split, if at any time prior to the filing of the amendment it determines, in its sole discretion, that the reverse stock split would not be in the best interests of our stockholders.