Note 8. Stock Options

The Company has an active stock option plan that provides shares available for option grants to employees, directors and others. A total of 120,000,000 shares of the Company’s common stock have been reserved for award under the stock option plan, of which 120,000,000 were available for future issuance as of December 31, 2011. Options granted under the Company’s option plan generally vest over five years or as otherwise determined by the Board of Directors, have exercise prices equal to the fair market value of the common stock on the date of grant, and expire no later than ten years after the date of grant.

During the years ended December 31, 2011 and 2010, the Company did not grant any stock option awards.

On August 27, 2010, Mr. Derek Cooper resigned from the positions of President, Chief Executive Officer, Chief Financial Officer and Director of the Company. At the time of his separation, certain of Mr. Cooper’s outstanding stock options were fully vested and exercisable. The unvested stock options were immediately cancelled and the stock compensation expense of $16,710 that the Company had recognized in relation to these unvested options was reversed to general and administrative expenses during the year ended December 31, 2010.

On August 26, 2010, Messrs. Jeet Sidhu and Christian Hudson resigned as members of the Board of Directors. At the time of their separation, certain of their outstanding stock options were fully vested and exercisable. The unvested stock options were immediately cancelled and the stock compensation expense of $33,419 that the Company had recognized in relation to these unvested options was reversed to general and administrative expenses during the year ended December 31, 2010.

Stock option activity during the years ended December 31, 2011 and 2010 is summarized as follows:

		Weighted	Remaining
		average	contractual	Aggregate
	Number of	exercise	term	intrinsic
	options	price	(years)	value

Outstanding at December 31, 2009	150,000	1.00
Forfeited	(150,000)	1.00
Outstanding at December 31, 2010	-			$ -
Granted	-
Outstanding at December 31, 2011	-			$ -
Available for grant at December 31, 2011	120,000,000

A summary of the Company’s unvested stock options and changes during the years ended December 31, 2010 is as follows:

				Weighted
	Number of			Average Grant
	options			Date Fair Value
Unvested, December 31, 2009		120,000			0.73
Forfeited		(120,000	)		0.73
Unvested December 31, 2011 and 2010		-

During the years ended December 31, 2011 and 2010, stock-based compensation expense (benefit) of $0 and ($36,138) was recognized as general and administrative expenses. As of December 31, 2011, the Company had no unrecognized compensation cost related to unvested stock options as there were no stock options outstanding.

The Company does not repurchase shares to fulfill the requirements of options that are exercised. Further, the Company issues new shares when options are exercised.