EQUITY

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

NOTE 10 - EQUITY

Common and Preferred Stock

The Company is authorized to issue 150,000,000 shares of common stock, $0.01 par value, of which 77,753,482 common shares were issued and outstanding as of March 31, 2013. The Company is authorized to issue 10,000,000 shares of Series A Convertible Preferred Stock, $0.01 par value, none of which were issued and outstanding as of March 31, 2013. The Company is authorized to issue 1,000 shares of its 10% Cumulative Perpetual Series B Preferred Stock, $0.01 par value, of which 103.3 were issued and outstanding as of March 31, 2013. The Company recorded an accumulated dividend of $801,815 as of March 31, 2013, which was recorded against the par value of the 10% Cumulative Perpetual Series B Preferred Stock and Additional Paid in Capital. The outstanding 10% Cumulative Perpetual Series B Preferred Stock has a liquidation preference of $10,000 per share. The Company is authorized to issue 500 shares of its Series C Convertible Preferred Stock, par value $0.01, of which 125 shares were issued and outstanding as of March 31, 2013. The Company recorded an accumulated dividend of $63,763 as of March 31, 2013, which was recorded against the par value of the Series C Convertible Preferred Stock and Additional Paid in Capital. The Series C Convertible Preferred Stock is convertible at $0.25 per share and has a liquidation preference of $10,000 per share.

Options

As of March 31, 2012, 1,800,000 options to purchase common stock of the Company were issued and outstanding, 600,000 of which had an exercise price equal to $0.10 per share, and 1,200,000 of which had an exercise price equal to $0.09 per share.

Warrants

The Company values all warrants using the Black-Scholes option-pricing model.  Critical assumptions for the Black-Scholes option-pricing model include the market value of the stock price at the time of issuance, the risk-free interest rate corresponding to the term of the warrant, the volatility of the Company’s stock price, dividend yield on the common stock, as well as the exercise price and term of the warrant.  The Black Scholes option-pricing model was the best determinable value of the warrants that the Company “knew up front” when issuing the warrants in accordance with Topic 505. Other than as expressly noted below, the warrants are not subject to any form of vesting schedule and, therefore, are exercisable by the holders anytime at their discretion during the life of the warrant.  No discounts were applied to the valuation determined by the Black-Scholes option-pricing model; provided, however, that in determining volatility the Company utilized the lesser of the 90-day volatility as reported by Bloomberg or other such nationally recognized provider of financial markets data and 40.0%.  

As of March 31, 2013, 5,993,917 warrants to purchase common stock of the Company were issued and outstanding, additional information about which is included in the following table:

Issued		Exercise Price		Issuance Date	Expiration Date			Vesting
	175,864	$	0.770	12/31/09	12/31/14			No
	100,000	$	0.700	12/31/09	12/31/14			No
	375,000	$	0.500	08/20/09	08/20/14			No
	500,000	$	0.375	12/31/08	12/31/13			No
	142,593	$	0.360	05/14/10	05/14/15			Yes
	175,000	$	0.350	08/20/09	08/20/14			No
	100,000	$	0.350	12/31/09	12/31/14			No
	2,500,000	$	0.300	11/15/10	11/15/15			No
	20,833	$	0.300	04/01/09	04/01/14			Yes
	206,400	$	0.200	06/29/10	06/29/15			No
	212,400	$	0.200	07/21/10	07/21/15			No
	90,000	$	0.200	09/03/10	09/03/15			No
	1,395,827	$	0.150	12/31/08	12/31/13			Yes
	5,993,917
		Expected Dividend Yield				0.0	%
		Volatility				40.0	%
		Weighted average risk free interest rate				0.2	%
		Weighted average expected life (in years)				1.8

Private Placements, Other Issuances and Cancellations

The Company periodically issues shares of its common stock, as well as options and warrants to purchase shares of common stock to investors in connection with private placement transactions, and to advisors, consultants and employees for the fair value of services rendered. Absent an arm’s length transaction with an independent third-party, the value of any such issued shares is based on the trading value of the stock at the date on which such transactions or agreements are consummated. The Company expenses the fair value of all such issuances in the period incurred. During the quarter ended March 31, 2013 the Company issued 3,000,000 shares of common stock for services and recorded an expense of $330,000 for the fair value of services rendered. In addition to the above, during the quarter ended March 31, 2013 the Company issued 600,000 common stock purchase options to employees and directors for services and recorded an expense of $19,670 for the fair value of services rendered.