During the quarter ended June 30, 2011, and thereafter, the Company was unable to receive from Magic Bright their financial records and support for the transactions as a result of the failure to make the first required note payment. The parties mutually agreed that due to the failure of the Company to be properly funded and make the required note payments as stipulated in the purchase agreement, that effective April 1, 2011, the agreement would be terminated.

As a result of this termination, the Company returned the stock of Magic Bright to the original shareholders, and Magic Bright shareholders forgave the remaining $700,000 owed by the Company as consideration for the acquisition and returned to the Company, the 1,000,000 shares of convertible preferred stock that were issued in the agreement. The Company agreed that the initial $300,000 paid by the Company as cash consideration for the acquisition would be retained by the sellers and agreed to let the Magic Bright shareholders keep the 184,000 shares of common stock issued to them on March 31, 2011. (See Notes 12 and 14)

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The Company was established with two classes of stock, common stock – 250,000,000 shares authorized at a par value of $0.001; and preferred stock – 25,000,000 shares authorized at a par value of $0.001. On June 28, 2010, the Company approved the increase in the authorized common shares from 75,000,000 to 250,000,000.

Common stock, $0.001 par value, 250,000,000 shares authorized,
69,843,313 and 63,516,758 shares issued and outstanding	69,843	63,517
(4,790,081 shares are held in reserve but are in issued and outstanding)