STOCK OPTIONS AND WARRANTS

9 Months Ended

Jun. 30, 2012

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		5.42	$	0.03088		2,428,756	$	0.03088
$	0.03283		533,116		5.39	$	0.03283		533,116	$	0.03283
$	0.04		3,000,000		3.17	$	0.04		3,000,000	$	0.04
$	0.04405		3,007,946		5.04	$	0.04405		3,007,946	$	0.04405
$	0.04750		7,578,978		6.04	$	0.04750		7,578,978	$	0.04750
$	0.05529		1,356,484		5.53	$	0.05529		1,356,484	$	0.05529
$	0.06		12,000,000		2.63	$	0.06		12,000,000	$	0.06
$	0.07		75,000		2.33	$	0.07		75,000	$	0.07
$	0.071		1,000,000		2.57	$	0.071		—	$	0.071
$	0.09		9,900,000		4.18	$	0.09		9,900,000	$	0.09
$	0.10		1,500,000		0.74	$	0.10		1,500,000	$	0.10
$	0.50		9,700,000		0.54	$	0.50		9,700,000	$	0.50
			52,080,280						51,080,280

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		1,075,000			0.071
Exercised		—			—
Cancelled or expired		(7,200,000	)		(0.10	)
Balance,  June 30, 2012		52,080,280		$	0.14

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% and were charged to current period operations.

On January 25, 2012, warrants totaling 1,000,000 were issued in connection with services.  The warrants are exercisable for three years from the date of issuance at an exercise price of $0.071 per share and will vest in full on the first anniversary of the date of grant.  The fair value of the warrants  of $56,875 was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 147.53% and risk free rate from 0.81% and were charged to current period operations.

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.  On November 30, 2011, 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 thereunder 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 to 50,000,000, which was approved by our stockholders at the 2012 annual meeting of stockholders held on January 27, 2012.

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 June 30, 2012, a total of 9,675,000 shares have been issued and options to purchase 127,208,825 shares have been granted under the 2005 Incentive Stock Plan.

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		2.91	$	0.05		29,000,000	$	0.05
$	0.0585		50,000,000		6.04	$	0.0585		12,500,000	$	0.0585
$	0.06		30,100,000		3.00	$	0.06		15,000,000	$	0.06
$	0.065		634,825		4.44	$	0.065		634,825	$	0.065
$	0.068		5,724,000		4.42	$	0.068		5,724,000	$	0.068
$	0.07		2,850,000		3.04	$	0.07		1,125,000	$	0.07
$	0.08		2,000,000		3.52	$	0.08		500,000	$	0.08
$	0.09		1,500,000		4.18	$	0.09		1,500,000	$	0.09
$	0.11		5,400,000		0.96	$	0.11		5,400,000	$	0.11
			127,208,825			$	0.06		71,383,825	$	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		6,558,825		0.067
Exercised		—
Canceled or expired		—
Outstanding at June 30, 2012		127,208,825	$	0.06

The Company recorded $389,533 and $1,564,311 as stock compensation expense for the three and nine  month periods ended June 30, 2012, respectively, and $154,499 and $459,968 for the three and nine month periods ended June 30, 2011, respectively, for the vesting portion of all employee options outstanding.