Stockholders’ Equity

3 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Stockholders’ Equity

Note 9 – Stockholders’ Equity

Common Stock

The Company has 600,000,000 authorized shares of common stock, par value $0.001 per share. As of December 31, 2011, the Company had 327,079,104 shares issued and 307,739,481 shares outstanding. As of September 30, 2011, the Company had 299,331,673 shares of common stock issued and outstanding.

During the three months ended December 31, 2011, the Company issued 4,150,000 shares of common stock (valued at $239,500 based on closing market prices), for services. The Company also issued 3,757,808 shares of common stock for conversion of debt in the amount of $93,600 (including interest. The Company received $150,200 from the sale of common stock which was not issued prior to December 31, 2011.

Employee Stock Options and Warrants

A summary of the Company’s activity for employee stock options and warrants:

			Weighted				Average
			Average		Aggregate		Remaining
	Number		Exercise		Intrinsic		Contractual
	of Options		Price		Value		Life
Outstanding at October 1, 2011		38,866,316	$	0.12	$	—		3.01
Granted		1,850,000		0.11
Expired		—		—
Forfeited		—		—
Exercised		—		—
Outstanding at December 31, 2011		40,716,316	$	0.12	$	—		2.86
Exercisable at December 31, 2011		40,210,617	$	0.12	$	—		2.84

Outstanding and exercisable as of December 31, 2011:

			Weighted				Weighted
			Average				Average
			Remaining				Remaining
Exercise	Options		Contractual		Options		Contractual
Price	Outstanding		Life		Exercisable		Life
$0.06		7,415,000		3.68		7,351,219		3.68
$0.07		2,000,000		4.00		2,000,000		4.00
$0.09		2,000,000		4.00		2,000,000		4.00
$0.10		9,416,850		2.57		9,416,850		2.57
$0.12		8,450,940		2.28		8,450,940		2.28
$0.14		500,000		3.05		58,082		3.05
$0.15		8,000,000		3.05		8,000,000		3.05
$0.25		2,933,526		0.96		2,933,526		0.96
		40,716,316		2.86		40,210,617		2.84

During the three months ended December 31, 2011, the Company granted a total of 1,850,000 options and warrants to certain officers and employees. The options and warrants vested immediately upon grant and have a term of five years. The weighted average grant-date fair value of these options and warrants was $103,932.   The fair value of these options and warrants was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

• risk free rate of return of 0.87%-0.88%;
• volatility of 168% - 169%
• dividend yield of 0%; and
• expected term of 5 years.

Stock Warrants

A summary of the Company’s warrant activity with non-employees:

			Weighted
			Average		Aggregate
	Number		Exercise		Intrinsic
	of Warrants		Price		Value
Outstanding at October 1, 2011		94,266,670	$	0.15	$	75,000
Granted		1,251,666		0.17
Expired		—		—
Forfeited		—		—
Exercised		—		—
Outstanding as of December 31, 2011		95,518,336	$	0.15	$	—
Exercisable as of December 31, 2011		95,518,336	$	0.15	$	—

Warrants outstanding and exercisable as of December 31, 2011:

			Weighted
			Average
			Remaining	Weighted Average
Exercise	Warrants	Warrants	Contractual	Exercise Price
Price	Outstanding	Exercisable	Life	Outstanding	Exercisable
$                 0.06	7,500,000	7,500,000	4.38	$           0.06	$           0.06
$                 0.07	23,333,333	23,333,333	2.28	$           0.07	$           0.07
$                 0.10	4,026,578	4,026,578	3.18	$           0.10	$           0.10
$                 0.12	6,226,000	6,226,000	1.94	$           0.12	$           0.12
$                 0.14	5,000,000	5,000,000	3.81	$           0.14	$           0.14
$                 0.15	2,107,667	2,107,667	2.83	$           0.15	$           0.15
$                 0.17	25,909,992	25,909,992	4.03	$           0.17	$           0.17
$                 0.18	850,000	850,000	1.04	$           0.18	$           0.18
$                 0.25	15,269,312	15,269,312	1.23	$           0.25	$           0.25
$                 0.30	5,295,454	5,295,454	1.01	$           0.30	$           0.30
	95,518,336	95,518,336