STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 7 – STOCK OPTIONS AND WARRANTS

During 1999, the Board of Directors (“Board”) of the Company adopted, with the approval of the stockholders, a Stock Option Plan. In 2000, the Board superseded that plan and created a new Stock Option Plan, pursuant to which it is authorized to grant options to purchase up to 1.5 million shares of common stock. On December 17, 2003, the Board, with approval of the stockholders, superseded this plan and created the 2003 Stock Option Plan (the “Plan”). Under the Plan the Company is authorized to grant options to purchase up to 18,000,000 shares of common stock to the Company’s employees, officers, directors, consultants, and other agents and advisors. The Plan is intended to permit stock options granted to employees under the Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”). As of June 30, 2012, there were 3,100,000 options that had been issued and exercised, 13,625,996 options that had been issued and were unexercised, and 1,274,004 options that were available to be issued under the Plan.

The Plan is administered by a committee of the Board of Directors (“Stock Option Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of $100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise.

The Company issued non-statutory stock options pursuant to contractual agreements to non-employees. Options granted under the agreements are expensed when the related service or product is provided.

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2011:

					Weighted Average
	Option/Warrant		Exercise		Exercise
	Shares		Price		Price
Outstanding, December 31, 2011		15,385,996		$.00125 to $.20	$	0.01
Granted		—		—		—
Exercised		—		—		—
Expired		—		—		—
Outstanding, June 30, 2012		15,385,996		$.00125 to $.20	$	0.01
Exercisable, June 30, 2012		15,385,996		$.00125 to $.20	$	0.01
Weighted Average Remaining Life,
Exercisable, June 30, 2012 (years)		5.9

A summary of incentive stock option transactions for employees since December 31, 2011 is as follows:

					Weighted Average
	Option		Exercise		Exercise
	Shares		Price		Price
Outstanding, December 31, 2011		6,390,000	$	0.00125	$	0.00125
Granted		—		—		—
Exercised		—		—		—
Expired/Returned		—		—		—
Outstanding, June 30, 2012		6,390,000	$	0.00125	$	0.00125
Exercisable, June 30, 2012		6,390,000	$	0.00125	$	0.00125
Weighted Average Remaining Life,
Exercisable, June 30, 2012 (years)		8.8