STOCKHOLDERS EQUITY

9 Months Ended

Sep. 30, 2012

STOCKHOLDERS EQUITY

STOCKHOLDERS EQUITY

NOTE 7 - STOCKHOLDERS’ EQUITY

Preferred Stock

As of May 2008, all shares of Series A Preferred Stock of the Company were converted into shares of Common Stock. There are currently 5,000,000 shares of Preferred Stock authorized, with no shares of Series A Preferred Stock currently issued or outstanding.

Effective June 24, 2010, the Company filed a Certificate of Designations, Number, Voting Power, Preferences and Rights of Series B Convertible Redeemable Preferred Stock (the “Certificate”) with the Texas Secretary of State, designating 75,000 shares of Series B Preferred Stock, par value $10.00 per share (the “Series B Preferred Stock”). The Series B Preferred Stock ranks senior to shares of all other common and preferred stock with respect to dividends, distributions, and payments upon dissolution.  Each of the Series B Shares is convertible at the option of the holder into shares of Common Stock as provided in the Certificate.  There are currently no shares of Series B Preferred Stock issued or outstanding.

Common Stock

The Company is authorized to issue 100,000,000 shares of Common Stock, par value of $0.001 per share.  These shares have full voting rights.  As of September 30, 2012, there were 64,658,627 shares of Common Stock issued and 64,654,538 shares outstanding.   At December 31, 2011, there were 58,754,110 shares of Common Stock issued and 58,750,021 shares outstanding.  The Company holds 4,089 shares as treasury stock.

2011 Omnibus Long-Term Incentive Plan

On March 10, 2011, the Company adopted, subject to shareholder approval, the 2011 Omnibus Long-Term Incentive Plan (the “Plan”) to offer competitive long-term incentive compensation opportunities as well as to align the interests of the participants with those of the Company’s shareholders.  Under the Plan, stock options, stock appreciation rights, restricted shares, and performance shares were to be awarded at the discretion of the Compensation Committee to selected officers, employees, consultants and eligible directors of the Company.   In order for the Plan to become effective, shareholder approval had to be obtained on or before March 08, 2012.  Shareholder approval was not obtained and any awards made prior to the effective date have been terminated.

Warrants

A summary of the status of the warrants granted for the nine month period ended September 30, 2012 and for the year ended December 31, 2011 and changes during the periods then ended is presented below:

For the Year Ended December 31, 2011					For the Nine Months Ended September 30, 2012
	Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price
Outstanding at beginning of period		3,230,369	$	1.07	Outstanding at beginning of period		8,938,668	$	0.82
Granted		5,708,299		0.68	Granted		6,189,800		0.20
Exercised		-		-	Exercised		160,000		1.00
Forfeited		-		-	Forfeited		-		-
Expired		-		-	Expired		-		-
Outstanding at end of period		8,938,668	$	0.82	Outstanding at end of period		14,968,468	$	0.56

		As of September 30, 2012						As of September 30, 2012
		Warrants Outstanding						Warrants Exercisable
				Weighted-
				Average		Weighted-				Weighted-
Range of		Number		Remaining		Average		Number		Average
Exercise Prices		Outstanding		Contract Life		Exercise Price		Exercisable		Exercise Price
$	0.001		299,769		0.3	$	0.001		299,769	$	0.001
	0.15		5,389,800		4.9		0.15		5,389,800		0.15
	0.25		200,000		3.1		0.25		200,000		0.25
	0.40		1,299,999		2.5		0.40		1,299,999		0.40
	0.50		2,694,450		1.7		0.50		2,694,450		0.50
	0.60		975,000		4.2		0.60		975,000		0.60
	0.75		200,000		3.1		0.75		200,000		0.75
	1.00		2,909,450		1.6		1.00		2,909,450		1.00
	2.00		1,000,000		0.3		2.00		1,000,000		2.00
$	0.001- 2.00		14,968,468		3.0	$	0.56		14,968,468	$	0.56