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STOCK OPTIONS AND WARRANTS
 3 Months Ended
Dec. 31, 2011
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
STOCK OPTIONS AND WARRANTS
NOTE G - STOCK OPTIONS AND WARRANTS
 
Warrants
 
The following table summarizes the changes in warrants outstanding and the related prices for the shares of Common Stock issued to non-employees of the Company. These warrants were granted in lieu of cash compensation for services performed or financing expenses in connection with the sale of Common Stock.
 
Warrants
Outstanding
Weighted
Exercisable
Remaining
Average
Weighted
Weighted
Exercise
Number
Contractual
Exercise
Average
Average
Prices
Outstanding
Life (Years)
Price
Exercisable
Exercise Price
$
0.03088
2,428,756
5.92
$
0.03088
2,428,756
$
0.03088
$
0.03283
533,116
5.89
$
0.03283
533,116
$
0.03283
$
0.04
3,000,000
3.67
$
0.04
3,000,000
$
0.04
$
0.04405
3,007,946
5.54
$
0.04405
3,007,946
$
0.04405
$
0.04750
7,578,978
6.54
$
0.04750
7,578,978
$
0.04750
$
0.05529
1,356,484
6.02
$
0.05529
1,356,484
$
0.05529
$
0.06
12,000,000
3.13
$
0.06
7,000,000
$
0.06
$
0.07
275,000
0.21
$
0.07
275,000
$
0.07
$
0.09
9,900,000
4.67
$
0.09
9,900,000
$
0.09
$
0.10
1,500,000
1.24
$
0.10
1,500,000
$
0.10
$
0.50
10,700,000
0.99
$
0.50
10,700,000
$
0.50
52,280,280
47,280,280
 
Transactions involving warrants are summarized as follows:
 
Number of
Shares
Weighted Average
Price Per Share
Balance, September 30, 2010
69,207,946
$
0.237
Granted
11,897,334
0.044
Exercised
—
Cancelled or expired
(22,900,000
)
(0.384
)
Balance at September 30, 2011
58,205,280
$
0.140
Granted
75,000
0.07
Exercised
—
—
Cancelled or expired
(6,000,000
)
(0.04
)
Balance, December 31, 2011
52,280,280
$
0.15
 
Transactions involving warrants are summarized as follows:
 
On October 31, 2011, warrants totaling 75,000 were issued in connection with services. The warrants are exercisable for three years from the date of issuance at an exercise price of $0.07 per share with vesting immediately. The fair value of the warrants of $1,363 was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 157.69% and risk free rate from 0.41%.
 
Employee Stock Options
 
On January 26, 2005, the Board of Directors, and on February 15, 2005, the holders of a majority of the outstanding shares of Common Stock approved the 2005 Incentive Stock Plan and authorized the issuance of 16,000,000 shares of Common Stock as stock awards and stock options thereunder. On May 16, 2007, at the annual meeting of stockholders, the holders of a majority of the outstanding shares of Common Stock approved an increase in the number of shares subject to the 2005 Incentive Stock Plan to 20,000,000 shares of Common Stock. On June 17, 2008, the Board of Directors unanimously adopted an amendment to the 2005 Incentive Stock Plan that increased the total number of shares of Common Stock issuable pursuant to the 2005 Incentive Stock Plan from a total of 20,000,000 shares to a total of 100,000,000 shares, which was approved by our stockholders at the 2008 annual meeting of stockholders held on December 16, 2008.
 
The 2005 Incentive Stock Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to our success with an award of options to purchase shares of Common Stock. As of December 31, 2011, a total of 9,675,000 shares have been issued and options to purchase 127,008,825 shares have been granted under the 2005 Incentive Stock Plan. The exercisability of options to purchase 40,000,000 shares of Common Stock is conditioned upon stockholder approval at the 2012 annual stockholders meeting of an amendment to the Company’s 2005 Incentive Stock Plan increasing the aggregate limits on the shares of Common Stock issuable under the Plan from 100,000,000 to 350,000,000 and the number of shares of Common Stock that can be covered by awards made to any participant in any calendar year from 25,000,000 to 50,000,000 shares, and if the amendment is not so approved, this option shall expire.
 
The following table summarizes the changes in options outstanding and the related prices for the shares of Common Stock issued to employees of the Company under the 2005 Incentive Stock Plan:
 
Options Outstanding
Options Exercisable
Exercise
Prices
Number
Outstanding
Weighted Average
Remaining Contractual
Life (Years)
Weighted Average
Exercise Price
Number
Exercisable
Weighted Average Exercise Price
$
0.05
29,000,000
1.46
$
0.05
29,000,000
$
0.05
$
0.0585
50,000,000
6.54
$
0.0585
12,500,000
$
0.0585
$
0.06
30,000,000
3.50
$
0.06
15,000,000
$
0.06
$
0.065
634,825
4.93
$
0.065
634,825
$
0.065
$
0.068
5,724,000
4.92
$
0.068
5,724,000
$
0.068
$
0.07
2,750,000
2.53
$
0.07
875,000
$
0.07
$
0.08
2,000,000
4.01
$
-
-
$
-
$
0.09
1,500,000
4.67
$
0.09
1,500,000
$
0.09
$
0.11
5,400,000
1.46
$
0.11
5,400,000
$
0.11
127,008,825
$
0.06
70,633,825
$
0.06
 
Transactions involving stock options issued to employees are summarized as follows:
 
Number of
Shares
Weighted Average
Exercise Price Per Share
Outstanding at October 1, 2010
66,900,000
$
0.06
Granted
53,750,000
0.06
Exercised
-
Cancelled or expired
-
Outstanding at September 30, 2011
120,650,000
$
0.06
Granted
6,358,825
0.067
Exercised
-
Canceled or expired
-
Outstanding at December 31, 2011
127,008,825
$
0.06
 
 
Transactions involving stock options issued to employees are summarized as follows:
 
During the three months ended December 31, 2011, the Company granted an aggregate of 6,358,825 options to purchase Common Stock at an exercise prices from $0.065 to $0.068 per share for five years to directors, vesting immediately. The fair value of options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 156.29% to 156.65% and risk free rate from 0.94% to 96%.
 
The Company recorded $785,719 and $148,538 as stock compensation expense for the three month periods ended December 31, 2011 and 2010, respectively, for the vesting portion of all employee options outstanding.