STOCKHOLDERS EQUITY

3 Months Ended

Mar. 31, 2013

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.

It is the Company’s intention to initiate an offering (the “Series C Offering”) of a new Series C Preferred Stock (“Series C Preferred”) during the second quarter of 2013, though the Series C Offering and the creation of the Series C Preferred have not yet been approved by the Board. In anticipation of the Series C Offering, the Company has received advance subscriptions in the amount of $500,000 from outside investors, which amounts are reflected as a Stock Subscription Payable under Current Liabilities on the Company’s balance sheet. If the Series C Offering is not consummated, the Company will be obligated to return the advanced funds.

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 March 31, 2013, there were 72,484,764 shares of Common Stock issued and 72,480,675 shares outstanding.   At December 31, 2012, there were 68,782,470 shares of Common Stock issued and 68,778,381 shares outstanding.  The Company holds 4,089 shares as treasury stock.

Warrants

A summary of the status of the warrants granted for the three month period ended March 31, 2013 and for the year ended December 31, 2012 and changes during the periods then ended is presented below:

For the Year Ended December 31, 2012					For the Three Months Ended March 31, 2013
	Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price
Outstanding at beginning of period		8,938,668	$	0.82	Outstanding at beginning of period		17,143,468	$	0.50
Granted		7,364,800		0.18	Granted		0		0
Exercised		160,000		0.10	Exercised		240,000		0.24
Forfeited		-		-	Forfeited		-		-
Expired		-		-	Expired		-		-
Outstanding at end of period		17,143,468	$	0.50	Outstanding at end of period		16,903,468	$	0.39

		As of March 31, 2013						As of March 31, 2013
		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		0.2		0.001		299,769		0.001
	0.02		1,000,000		0.2		0.02		1,000,000		0.02
	0.075		350,000		4.8		0.075		350,000		0.075
	0.09		600,000		4.8		0.09		225,000		0.09
	0.15		6,614,800		4.4		0.15		4,764,800		0.15
	0.25		120,000		2.6		0.25		120,000		0.25
	0.40		1,299,999		2.0		0.40		1,299,999		0.40
	0.50		2,614,450		1.2		0.50		2,614,450		0.50
	0.60		975,000		3.8		0.60		975,000		0.60
	0.75		120,000		2.6		0.75		120,000		0.75
	1.00		2,909,450		1.6		1.00		2,909,450		1.00
$	0.0075- 1.00		16,903,468		2.8	$	0.39		14,678,468	$	0.42