NOTE 7 - STOCK OPTIONS

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

NOTE 7 - STOCK OPTIONS

NOTE 7 – STOCK OPTIONS

During 2010 the Company issued stock options to various parties.  The stock options allow the parties to purchase shares of the Company’s common stock at various prices per share per each individual option agreement.  The options allow the various parties to purchase one share of its stock for each option.  The options expire at various times through October 28, 2013 per each individual option agreement. The Company did not grant any registration rights with respect to any shares of common stock issuable upon exercise of the options. There were no forfeited options during 2010. During the year ended December 31, 2010, the Company recorded an expense of $42,543, equal to the estimated fair value of the options at the date of grants.  The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 5.0% risk-free interest, 0% dividend yield, 60% volatility, and expected lives ranging from one to three years.

During 2010 we also issued 500,000 stock options exercisable at $0.05 per share to one person, who is not an officer or a director. No stock options have been issued in the six months ended June 30, 2011.

During the three months ended June 30, 2011, 928,529 stock options were exercised and 920,160 warrants were exercised. There are no outstanding warrants as of June 30, 2011.

Stock Options

Stock options outstanding and exercisable on June 30, 2011 are as follows:

Exercise Price per Share	Shares Under Option		Remaining Life in Years
Outstanding
$0.35		212,500		2.50
$0.30		60,000		1.25
$0.20		300,000		1.50
$0.20		300,000		2.50
$0.11		15,000		3.80
$0.11		15,000		1.24
$0.11		300,000		1.79
$0.05		15,450,000		1.20
$0.05		100,000		2.35
Exercisable
$0.35		212,500		2.50
$0.30		60,000		1.25
$0.20		300,000		1.50
$0.20		300,000		2.50
$0.11		15,000		3.80
$0.11		15,000		1.24
$0.11		300,000		1.79
$0.05		15,450,000		1.20
$0.05		100,000		2.35