NOTE 6 COMMON STOCK WARRANTS AND OPTIONS

6 Months Ended

Jun. 30, 2011

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

NOTE 6  COMMON STOCK WARRANTS AND OPTIONS

Warrants

All outstanding warrants were either exercised or expired unexercised prior to December 31, 2009, thus there are no warrants outstanding as of June 30, 2011 or December 31, 2010.  

Options

In March 2011, the Company granted options for the purchase of 150,000 shares of common stock to an individual for accounting related services to be performed through December 30, 2011, which do not vest until such date.  The options have an exercise price of $0.14 per share, and are exercisable for up to five years.  The grant date fair value of these options was $20,042, in connection with which the Company recognized $6,311 and $7,351 of expense during the three and six months ended June 30, 2011, respectively.  The remaining $12,691 will be recognized between July 1, and December 30, 2011.

In March 2011, the Company granted options for the purchase of 100,000 shares of common stock to an individual for web and press support services to be performed through December 30, 2011, which do not vest until such date. The options have an exercise price of $0.14 per share, and are exercisable for up to five years.  The grant date fair value of these options was $13,361, in connection with which the Company recognized $4,207 and $4,901 of expense during the three and six months ended June 30, 2011, respectively.  The remaining $8,460 will be recognized between July 1, and December 30, 2011.

On March 29, 2010, the Company granted options for the purchase of 250,000 shares of common stock to an individual for research and development consulting services to be performed for the period of April 1, 2010 through September 30, 2010.  The options have an exercise price of $0.19 per share, and are exercisable for up to five years.  The grant date fair value of these options was $46,094, in connection with which the Company recognized $23,047 of expense during the six months ended June 30, 2010.  The remaining $23,047 was recognized during the three months ended September 30, 2010.

For the six months ended June 30, 2011, the Company estimated the fair value of the stock options at the date of the grant, based on the following weighted average assumptions:

Risk-free interest rate		2.43	%
Expected life	5 years
Expected volatility		176.45	%
Dividend yield		0.00	%

A summary of the status of the Company’s outstanding options as of June 30, 2011 and changes during the six months then ended is presented below:

	Shares		Weighted Average Exercise Price
Outstanding, beginning of period		7,750,000	$	0.17
Granted		250,000	$	0.14
Expired/Canceled		-		n/a
Exercised		-		n/a
Outstanding, end of period		8,000,000	$	0.17
Exercisable		3,000,000	$	0.16

The Company estimates the fair value of each stock award by using the Black-Scholes option pricing model, which model requires the use of exercise behavior data and the use of a number of assumptions including volatility of the Company’s stock price, the weighted average risk-free interest rate, and the weighted average expected life of the options. Because the Company does not pay dividends, the dividend rate variable in the Black-Scholes model is zero.  Under the provisions of this accounting standard, additional expense of $12,252 and $23,047 was recorded for the six months ended June 30, 2011 and 2010, respectively, using the Black-Scholes option pricing model.