Stock Options and Warrants

6 Months Ended

Jun. 30, 2013

Notes

Stock Options and Warrants

NOTE 6: STOCK OPTIONS AND WARRANTS

A summary of the status of the Company's outstanding stock options and warrants (all of which were exercisable) as of June 30, 2013 and December 31, 2012 and changes during the periods then ended, is presented below:

	Warrants		2013 Weighted Average Exercise Price	Warrants		2012 Weighted Average Exercise Price
Outstanding, beginning balance	60,000	$	.30	60,000	$	.30
.Granted	0		0	0		0
Expired/Cancelled	0		0	0		0
Exercised	0		0	0		0
Outstanding ending balance	60,000	$	.30	60,000	$	.30
Exercisable	60,000	$	.30	60,000	$	.30

NOTE 7:  CAPITAL STOCK

Common stock

The authorized capital stock of the Company consists of 50,000,000 shares of common stock, par value $0.01 per share, of which 2,332,105 were outstanding at June 30, 2013.

On January 1 and April 1, 2013 the Company awarded 10,000 shares of common stock to each Director and the Chairman in accordance with a Board Resolution. The shares were valued at the market price at the date of issuance of $0.10 and $0.20, respectively, per share resulting in compensation expense of $4,000, of which $1,000 was recognized in the quarter ended June 30, 2013. As of the date of this report, the shares have not been issued, and the Company recognized additional stock compensation payable of $2,000 for the quarter.

On March 12, and April 22, 2013 the company sold 250,000 shares of its common stock for $50,000 or $0.20per share to two investors.

Preferred stock

The Series 1 Class A 8% Cumulative Convertible Preferred Stock has a par value of $0.01 per share. As of June 30, 2013 there were 50,400 shares outstanding.  Holders of preferred shares are entitled to cumulative dividends of 8% per annum on the stated value of the stock, designated at $7 per share.  Dividends are payable semi-annually on September 15 and March 15. No dividends have been paid since March 15, 1993, resulting in dividends in arrears at June 30, 2013 of approximately $564,480 or $11.20 per share. Dividends are not payable on any other class of stock ranking junior to the preferred stock until the full cumulative dividend requirements of the preferred stock have been satisfied. The preferred stock carries a liquidation preference equal to its stated value plus any unpaid dividends. Holders of the preferred stock are entitled to one-tenth of a vote for each share of preferred stock held.  The Company may, at its option, redeem at any time all shares of the preferred stock or some of them upon notice to each preferred stockholder at a per share price equal to the stated value ($7.00) plus all accrued and unpaid dividends thereon (whether or not declared) to the date fixed for redemption, subject to certain other provisions and requirements. Preferred Shares may be converted into Common Shares on a one share of Preferred Stock for two shares of Common Stock basis. .