NOTE 2 - SHARE BASED PAYMENT

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

NOTE 2 — SHARE BASED PAYMENT

NOTE 2 — SHARE BASED PAYMENT

On August 29, 2008, the Company issued options to certain employees and Board members to purchase membership units in the Company. The options give the grantees the right to purchase up to 2,398,400 shares of the Company's common stock at an exercise price of $0.23 per share. The options vest 20% each year over a five-year period and expire after ten years. The weighted average grant date fair value of options granted was $0.13 per option. Stock option compensation recognized for the three months ended September 30, 2012 and 2011 in the accompanying condensed consolidated statements of operations amounted to $1,000 and $9,000, respectively. Stock option compensation recognized for the nine months ended September 30, 2012 and 2011 in the accompanying condensed consolidated statements of operations amounted to $5,000 and $31,000, respectively.

As a result of the sale of substantially all of the Company's assets in the second quarter of 2011, other than the CEO, the Company no longer has any employees. As a result, the only options expected to vest are those held by the Company's Board of Directors and CEO. As a result, the estimated forfeiture rate has been adjusted to 75.6%.

A summary of stock option activity as of September 30, 2012, and changes during the period then ended is presented below.

				Weighted-
			Weighted-	Average
			Average	Remaining		Aggregate
			Exercise	Contractual		Intrinsic
	Options		Price	Life (Years)		Value
Outstanding at December 31, 2011	385,000	$	0.23	6.67	$	-
Granted	-		-	-		-
Exercised	-		-	-		-
Forfeited	-		-	-		-
Outstanding at September 30, 2012 (unaudited)	385,000	$	0.23	5.92	$	-
Vested and expected to vest
at September 30, 2012 (unaudited)	385,000	$	0.23	5.92	$	-
Exercisable at September 30, 2012 (unaudited)	308,000	$	0.23	5.92	$	-

The Company had 575,613 warrants outstanding as of September 30, 2012 which entitle the holders to immediately purchase one share of the Company's common stock at an exercise price of $0.44 per share. The warrants expire on November 13, 2014.