NOTE 13. STOCKHOLDERS EQUITY
equity section of the Company contains the following classes of capital stock as of August 31, 2012:
par value, 1,000,000,000 shares authorized 222,791,778 shares issued and outstanding as of August 31, 2012.
par value 5,000,000 shares authorized of 100,000 shares authorized is authorized as Series AA Preferred Stock , $001 par value
of which 5,000 shares are issued and outstanding as of February 29, 2012 and 4,400,000 is authorized as Series
B Preferred Stock of which 3, 201,397 shares are issued and outstanding as of August 31, 2012.
any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (collectively, a Liquidation),
before any distribution or payment shall be made to any of the holders of Common Stock or any other series of preferred stock,
the holders of Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are
capital, surplus or earnings, an amount equal to $0.10 per share of Series B Preferred Stock (the Liquidation Amount)
plus all declared and unpaid dividends thereon, for each share of Series B Preferred Stock held by them.
any Liquidation, the assets of the Company shall be insufficient to pay the Liquidation Amount, together with declared and unpaid
dividends thereon, in full to all holders of Series B Preferred Stock, then the entire net assets of the Company shall be distributed
among the holders of the Series B Preferred Stock, ratably in proportion to the full amounts to which they would otherwise be respectively
entitled and such distributions may be made in cash or in property taken at its fair value (as determined in good faith by the
Board), or both, at the election of the Board..
Non Voting Convertible Preferred Stock having a $1.00 par value:
200,000 shares authorized of which 75, 000
shares are issued and outstanding as of August 31, 2102.
Non Voting Convertible Preferred Stock shall
convert at the option of the holder into shares of the corporations common stock at a conversion price equal to seventy
percent (70%) of the lowest Closing Price for the five (5) trading days immediately preceding written receipt by the corporation
of the holders intent to convert.
CLOSING PRICE" shall mean the closing
bid price for the corporations common stock on the Principal Market on a Trading Day as reported by Bloomberg Finance L.P.
PRINCIPAL MARKET" shall mean the
principal trading exchange or market for the corporations common stock.
TRADING DAY shall mean a day
on which the Principal Market shall be open for business.