NOTE 6 - COMMITMENTS AND CONTINGENCIES
On May 16, 2012, a complaint was filed against
the Company in Superior Court of California, County of Humboldt by Kenneth Stiver. The complaint alleges that the Company
has not paid Mr. Stiver for services rendered and is seeking a total sum of $86,000 plus reimbursement of expenses for $9,898.
The Company denies all allegations against it and is vigorously defending itself against this complaint, and accordingly no liability
has been recognized as of September 30, 2012.
On August 20, 2012, the Company filed a motion
to allow late filing of a malpractice claim against Heller Ehrman LLP, discovered after claims bar date, in the United States Bankruptcy
Court, Northern District of California, San Francisco Division. The first hearing was held on November 1, 2012 before the Honorable
Dennis Montali, United States Bankruptcy Judge at San Francisco, California.
We are not a party to any additional pending
legal proceedings, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business
or otherwise material to the financial condition of our business.