Common Stock, Options and Warrants

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Note 10. Common Stock, Options and Warrants

The Company has authorized 150,000,000 shares of its common stock, $0.01 par value. In December 2009, the shareholders of the Company approved an increase in the number of authorized common stock from 75,000,000 to 150,000,000 shares. The increase took effect in January 2010.

Other than the issuances to certain Note investors of an aggregate of 1,732,015 shares of the Company’s common stock, as described in Note 7 above, 1,700,000 shares of the Company’s common stock issued related to a professional services agreement, as described in Note 11 below, and 450,000 shares of common stock, valued at $27,000, to certain executives of the Company, in the nine months ended September 30, 2012, no common stock, or options to purchase common stock, were issued or granted.

2007 Incentive and Non-Qualified Stock Option Plan. The fair value of options granted under the Company’s 2007 Incentive and Non-Qualified Stock Option Plan is recorded as compensation expense over the vesting period, or, for performance based awards, the expected service term. During the three and nine months ended September 30, 2012, the Company had no compensation expense related to employee stock options. For the three and nine months ended September 30, 2011, compensation expense for employee stock options was $7,950 and $23,042, respectively.