NOTE 6 - STOCK OPTION

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

NOTE 6 - STOCK OPTION

NOTE 6 – STOCK OPTIONS

During the year ended December 31, 2012, the Company issued 8,000,000 stock options to directors and officers of the Company. 7,500,000 stock options were issued as part of the employment agreement with it’s President and CEO, Thom Kidrin. The stock option allows Thom Kidrin to purchase 7,500,000 shares of the Company’s common stock at $0.076 per share per each individual option. The option allows. The options expire on March 31, 2014. The Company issued 300,000 stock options to Chris Ryan, the Company’s CFO. The stock option allows Chris Ryan to purchase 300,000 shares of the Company’s common stock at $0.0115 per share per each individual option. The options expire on September 30, 2017. The Company issued 100,000 shares to each of the Company’s directors, Bernard Stolar and Robert Fireman. The stock options allow each director to purchase 100,000 shares of the Company’s common stock at $0.0115 per share per each individual option. The options expire on September 30, 2017. The Company did not grant any registration rights with respect to any shares of common stock issuable upon exercise of the options.

During the period ended December 31, 2012, the Company recorded an expense of $705,918, 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 1.6% risk-free interest, 0% dividend yield, 279% volatility, and expected life of 1.5 years for Mr Kidrin’s options and 4.5 years for the remaining options.

No stock options were issued in the year ended December 31, 2011.

During the year ended December 31, 2011, 1,160,804 warrants were exercised and 928,529 stock options were exercised for cash proceeds of $118,446 and $58,000, respectively.

Stock Warrants and Options

Stock warrants/options outstanding and exercisable on December 31, 2012 are as follows:

Exercise Price per Share	Shares Under Option/warrant		Remaining Life in Years
Outstanding
$0.35		212,500		1.00
$0.20		300,000		1.00
$0.15		1,537,500		2.00
$0.115		500,000		4.83
$0.11		150,000		2.30
$0.11		300,000		.30
$0.076		7,500,000		1.25
$0.05		600,000		.85
Exercisable
$0.35		212,500		1.00
$0.20		300,000		1.00
$0.15		1,537,500		2.00
$0.11		150,000		2.30
$0.11		300,000		.30
$0.076		7,500,000		1.25
$0.05		600,000		.85