Stock Warrants and Options

9 Months Ended

Sep. 30, 2012

Notes

Stock Warrants and Options

NOTE 4 -       STOCK WARRANTS AND OPTIONS

The Company had no outstanding stock warrants during the nine months ended September 30, 2012, and the year ended December 31, 2011.  During 2011 the Company granted 3,000,000 options to purchase the Company’s common stock for an exercise price of $0.20 per share for a period of 60 months beginning in February 2011 and 59,283 options to purchase the Company’s common stock for an exercise price of $0.10 per share for a period of 35 months beginning in February 2011.  The options were granted as part of an employment agreement with Frank Marra entered into during the quarter.  The Company valued the options using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%; expected volatility of 176.85%; risk-free interest rate of 2.39%; and expected life of 5 years.  The value of the options was $984,975 and was expensed.  A summary of the status of the Company’s outstanding stock options as of September 30, 2012 and December 31, 2011 and changes during the periods then ended is presented below:

	September 30, 2012 Shares		September 30, 2012 Weighted Average Exercise Price	December 31, 2011 Shares		December 31, 2011 Weighted Average Exercise Price
Outstanding, beginning balance	3,760,716	$	.18	701,433	$	.10
Granted	0		0	3,059,283		.20
Expired/Cancelled	0		0	0		0
Exercised	0		0	0		0
Outstanding ending balance	3,760,716	$	.18	3,760,716	$	.18
Exercisable	3,760,716	$	.18	3,760,716	$	.18

		Outstanding			Exercisable
Range of Exercise Prices			Number outstanding at September 30, 2012	Weighted Average Remaining Contractual Life	Number Exercisable at September 30, 2012
$	.10-.20		3,760,716	2.94	3,760,716
			3,760,716		3,760,716