7. STOCKHOLDERS EQUITY

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

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 third quarter of 2013. In anticipation of the Series C Offering, the Company has received advance subscriptions in the amount of $569,000 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 June 30, 2013, there were 78,250,752 shares of Common Stock issued and 78,246,663 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.

In January of 2013, $5,760 was received and 240,000 shares of common stock were issued in an exercise of warrants.

On January 30, 2013, 74,993 shares of stock were issued according to the terms of the Forbearance Agreement related to the June 21, 2011 Note Payable (see Note 3 "Significant Transaction - Forbearance Agreement").

On February 4, 2013, 400,000 shares of common stock were issued in conversion of $9,688 of the May 30, 2012 Convertible Note and on February 19, 2013, 1,587,301 shares were issued in conversion of $50,000 of debentures. The Company issued an additional 500,000 shares of common stock to a consultant on February 21, 2013, according to the terms of the engagement agreement.

In February of 2013, 400,000 shares of common stock were issued in conversion of $12,880 of the May 30, 2012 Convertible Note. The Company also issued 500,000 shares of common stock to a consultant according to the terms of the engagement agreement.

On April 2, 2013, the Company issued 350,000 shares of common stock in conversion of $13,802 of principal and interest on the May 30, 2012 Convertible Note. On April 4, 2013, the Company issued a total of 800,000 shares of common stock to two consultants according to the terms of their engagement agreements.

On May 13, 2013, the Company issued 288,603 shares of common stock in conversion of $12,525 of principal and interest on the May 30, 2012 Convertible Note. On May 8, 2013, the Company issued 1,948,051 shares of common stock in conversion of $75,000 of principal of the 2012 Debentures and 500,000 shares of common stock to a consultant according to the terms of the engagement agreement.

On June 4, 2013, the Company issued 1,029,334 shares of common stock in the cashless exercise of 1,299,769 stock purchase warrants and 500,000 shares of common stock to a consultant according to the terms of the engagement agreement. On June 24, 2013, the Company also issued 350,000 shares of common stock in conversion of $15,027 of principal of unrelated party debt.

Warrants

A summary of the status of the warrants granted for the three month period ended June 30, 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 Six Months Ended June 30, 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		8,364,800		0.18	Granted		900,000		0.09
Exercised		160,000		0.10	Exercised		1,539,769		0.02
Forfeited		-		-	Forfeited		475,000		0.10
Expired		-		-	Expired		375,000		1.00
Outstanding at end of period		17,143,468	$	0.50	Outstanding at end of period		15,653,699	$	0.39

		As of June 30, 2013						As of June 30, 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
$	0.075		350,000		4.5		0.075		350,000		0.075
	0.09		1,125,000		4.9		0.09		750,000		0.09
	0.15		6,514,800		4.2		0.15		4,764,800		0.15
	0.25		120,000		2.3		0.25		120,000		0.25
	0.40		1,299,999		1.7		0.40		1,299,999		0.40
	0.50		2,614,450		0.9		0.50		2,614,450		0.50
	0.60		975,000		3.7		0.60		975,000		0.60
	0.75		120,000		2.3		0.75		120,000		0.75
	1.00		2,534,450		0.9		1.00		2,534,450		1.00
$	0.075 - 1.00		15,653,699		2.9	$	0.39		13,528,699	$	0.43