5. INCOME TAXES (Details Narrative)

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

8. STOCK BASED COMPENSATION

8. STOCK BASED COMPENSATION

During the periods ended June 30, 2013 and 2012 the Company issued stock in payment of services and debts as follows:

For the six month period ended June 30, 2013 the Board authorized the issuance of 2,833,333 shares of common stock in payment of services amounting to $86,500. In addition 1,500,000 shares were issued in payment of loans in the amount of $7,500. Although authorized prior to June 30, 2013, 1,833,333 of these shares were not issued until after June 30, 2013.

For the six month period ended June 30, 2012, 14,250,000 shares of common stock and 500,000 shares of preferred stock were issued in payment of services in the amount of $403,125. In addition, 3,000,000 shares of common stock were issued in payment of accounts payable amounting to $28,500 and 1,839,000 shares of common stock plus 1,000,000 shares of preferred stock were issued in payment of deferred compensation in the amount of $151,839. In addition 3,000,000 shares of common stock were issued in payment of loans in the amount of $15,000 and 1,000,000 shares of common stock were issued in payment of accrued interest in the amount of $75,000.

Independent contractors and consultants’ expense was based on the value of services rendered or the value of the common stock issued, if more reliably determined.

Stock Options and Warrants

On April 2, 2010, the Company adopted its 2010 Equity Incentive Plan, which authorized, among other forms of incentives, the issuance of stock options. Reserved for equity issuances under the 2010 Equity Incentive Plan are 50,000,000 shares of our common stock. No equity issuances have been made from the 2010 Equity Incentive Plan. Stock options, which may be tax qualified and non-qualified, are exercisable for a period of up to ten years at prices at or above market prices as established on the date of the grant.

Stock Options

Certain nonqualified stock options were issued during the six months ending June 30, 2013 to a member of the board of directors as compensation for services performed.

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining (in years) Contractual Life		Aggregate Intrinsic Value
Outstanding at January 1, 2013		—		—		—
Granted		15,000,000	$	0.03		4.66	$	—
Exercised		—		—		—
Forfeited		—		—		—
Outstanding at June 30, 2013		15,000,000	$	0.03		4.66	$	—
Exercisable at June 30, 2013		15,000,000	$	0.03		4.66	$	—

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. Significant assumptions used in this model include:

	Six Months Ended June 30,
	2013	2012
Annual Dividend	-	NA
Expected Life (in years)	5.00	NA
Risk Free Interest Rate	0.78%	NA
Expected Volatility	325.25%	NA

The 15,000,000 options granted for the three months ended June 30, 2013 had a weighted average grant date fair value of $0.03.