SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2011

10.	SUBSEQUENT EVENTS

The Company issued 1,011,030 shares of compensation shares to management employees in lieu of $137,500 cash compensation for services rendered during the third quarter of 2011 which had been recorded at a value of $2,022 in stock based compensation based upon individual tax elections made by each recipient. The shares were awarded on Restricted Stock Agreements which have a six month time lapse restriction and are subject to forfeiture upon voluntary termination of employment.

The Company’s independent directors annual compensation is $16,000 to be paid quarterly in restricted stock. The Company issued the directors 160,000 shares of restricted stock on October 1, 2011 for their third quarter 2011 compensation. The Company recorded $4,000 in stock based compensation for each of its five independent directors.

The Company issued 1,546,627 shares of restricted stock each to an investor in the Convertible Debenture Series 2010 who elected to convert his $100,000 debenture on October 10, 2011 at the weighted average price for the five-day trading period before the notice of conversion which was $.065. The investor received $1,859 to settle the accrued interest on his debenture.

Effective July 26, 2011, certain Company officers and directors granted consent to the Company to take shares of Common Stock that were reserved for issuance upon the exercise and/or conversion of options, warrants and convertible debentures (the “Securities”) and consider them as authorized but unissued shares of common stock to be used for other share issuances. Currently, there were 43,279,596 shares of Common Stock reserved for issuance pursuant to the Securities. This consent is effective until December 31, 2011, when the Company is required to reserve such Common Stock issuable upon exercise of the Securities. Prior to the consent, the number of shares of Common Stock issued and outstanding as well as reserved for issuance upon exercise or conversion of outstanding options, warrants and convertible debentures was close to 200 million, which is the number of shares of Common Stock authorized for issuance by the Company pursuant to the Articles of Incorporation. This action gave the Company flexibility until it could increase the authorized number of shares of Common Stock that may be issued. On October 28, 2011 upon approval of a majority of shareholders, the Company filed an Amended Certificate of Incorporation with the Oklahoma Secretary of State increasing its authorized capital to 500,000,000 common shares.

On July 17, 2011, the Company began offering its Convertible Debentures Series 2011 and Series B Warrants to purchase common stock to accredited investors. The offering modifies the earlier 2011 debenture by adding a ten cent ($0.10) conversion floor price. An additional $375,000 in debentures have been sold during the fourth quarter 2011.

The Company is currently in settlement and licensing discussions with several companies against whom we have brought suits alleging infringement of United States Patent #7,822,816. As of the date of filing, one settlement has been finalized with proceeds paid in October 2011.

The Company renewed its advancing term loan with a financial institution for $100,000 with interest only payable monthly at the greater of 5.75% or prime rate plus 1.0% (4.25% at September 30, 2011), until September 2012, and secured by substantially all assets of the company and the personal guarantees of one company director. In exchange for the guarantee, the director receives a $3,000 commitment fee and a five year warrant to purchase $100,000 of stock with a strike price of ten cents ($0.10) per share.

On October 31, 2011, the Company entered into an expanded business development agreement with a financial advisory firm for cash bonuses equaling $60,000 and a total of 1,050,000 five year cashless warrants to purchase restricted common stock at a strike price of $0.115.

On November 4, 2011, the Company appointed Randy Ritter as its Chief Operating Officer, a newly created position.