Warrants and Options

3 Months Ended

Mar. 31, 2012

NOTE 5 – WARRANTS AND OPTIONS

Options Granted

On March 19, 2012, the Company granted an option to purchase 300,000 shares of common stock at $0.25 per share exercisable for three (3) years per an endorsement contract signed on March 19, 2012. The fair value of the stock options are $26,333 and the Company recorded consulting expense.

On March 31, 2012, the Company granted an option to purchase 30,000 shares of common stock at $0.50 per share exercisable for five (5) years to an employee per an employment agreement signed on March 1, 2012. The fair value of the stock options are $1,177 and the Company recorded compensation expense.

The following is a summary of the status of all of the Company’s stock options as of March 31, 2012 and changes during the three months ended on that date:

	Number of Stock Options	Weighted-Average Exercise Price
Outstanding at January 1, 2012	4,082,489	$ 0.83
Granted	370,000	$ 0.24
Exercised	(198,750)	$ 0.00
Cancelled	(319,444)	$ 1.00
Outstanding at March 31, 2012	3,934,295	$ 0.74
Options exercisable at March 31, 2012	3,261,379	$ 0.69

The following table summarizes information about stock options outstanding and exercisable at March 31, 2012:

STOCK OPTIONS OUTSTANDING AND EXERCISABLE
Exercise Price	Number of Options Outstanding	Weighted-Average Remaining Contractual Life in Years	Weighted- Average Exercise Price	Number of Options Exercisable	Intrinsic Value
$ 0.01	628,600	4.25	$ 0.01	628,600	$62,860
$ 0.25	300,000	2.96	$ 0.25	300,000	$0
$ 0.50	30,000	5.00	$ 0.50	30,000	$0
$ 1.00	2,975,695	1.51	$ 1.00	2,302,779	$0

As noted above, warrants were issued as part of Units sold to investors for cash. Thus, there is no compensation expense. The following is a summary of the status of all of the Company’s non-compensation warrants as of March 31, 2012 and the changes during the three months ended on that date:

	Number of Stock Warrants	Weighted-Average Exercise Price
Outstanding at January 1, 2012	3,048,000	$ 1.16
Granted	533,333	$ 0.50
Exercised	-	$ 0.00
Cancelled	-	$ 0.00
Outstanding at March 31, 2012	3,581,333	$ 1.06