2. SHARE BASED PAYMENT

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

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. Stock option compensation recognized for the nine months ended September 30, 2013 and 2012 in the accompanying condensed consolidated statements of operations amounted to $2,000 and $5,000, respectively.

A summary of stock option activity as of September 30, 2013, 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, 2012	385,000	$	0.23	5.66	$	-
Granted	-		-	-		-
Exercised	-		-	-		-
Forfeited	-		-	-		-
Outstanding at September 30, 2013 (unaudited)	385,000	$	0.23	4.92	$	-
Vested and expected to vest
at September 30, 2013 (unaudited)	385,000	$	0.23	4.92	$	-
Exercisable at September 30, 2013 (unaudited)	385,000	$	0.23	4.92	$	-

The Company had 575,613 warrants outstanding as of September 30, 2013 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.