STOCK OPTIONS AND WARRANTS

3 Months Ended

Dec. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE F - STOCK OPTIONS AND WARRANTS

Warrants

The following table summarizes the changes in warrants outstanding and the related prices for the shares of Common Stock issued to non-employees of the Company.  These warrants were granted in lieu of cash compensation for services performed or financing expenses in connection with the sale of Common Stock.

				Warrants
				Outstanding		Weighted				Exercisable
				Remaining		Average		Weighted		Weighted
	Exercise	Number		Contractual		Exercise		Average		Average
	Prices	Outstanding		Life (Years)		Price		Exercisable		Exercise Price
$	0.03088		1,619,171		4.92	$	0.03088		1,619,171	$	0.03088
$	0.03283		355,421		4.89	$	0.03283		355,421	$	0.03283
$	0.04		3,000,000		2.66	$	0.04		3,000,000	$	0.04
$	0.04405		2,009,081		4.54	$	0.04405		2,009,081	$	0.04405
$	0.04750		5,052,652		5.54	$	0.04750		5,052,652	$	0.04750
$	0.05529		904,322		5.02	$	0.05529		904,322	$	0.05529
$	0.06		12,000,000		2.13	$	0.06		12,000,000	$	0.06
$	0.071		1,000,000		2.07	$	0.071		—	$	0.071
$	0.09		9,900,000		3.67	$	0.09		9,900,000	$	0.09
$	0.10		1,500,000		0.23	$	0.10		1,500,000	$	0.10
$	0.176		100,000		2.85	$	0.176		—	$	0.176
$	0.2232		67,204,300		3.17	$	0.2232		—	$	0.2232
$	0.50		3,200,000		0.47	$	0.50		3,200,000	$	0.50
			107,844,947		1.99	$	0.18		39,540,647	$	0.099

Transactions involving warrants are summarized as follows:

	Number of Shares			Weighted Average Price Per Share
Balance, September 30, 2011		58,205,280		$	0.140
Granted		1,075,000			0.071
Exercised		(5,039,633	)		(0.045	)
Cancelled or expired		(8,400,000	)		(0.161	)
Balance at September 30, 2012		45,840,647		$	0.0145
Granted		67,304,300			0.2231
Exercised		—
Cancelled or expired		(5,300,000	)		(0.50	)
Balance,  December 31, 2012		107,844,947		$	0.18

Transactions involving warrants are summarized as follows:

On November 7, 2012, 100,000 warrants were issued in connection with services. The warrants are exercisable on or after May 7, 2013 for three years at an exercise price of $0.179 per share. The fair value of the warrants of $13,238 was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 129.56% and risk free rate from 0.36% and were charged to current period operations.

On November 29, 2012, in connection with a securities purchase agreement as described in Note E above, the Company issued an aggregate of 67,204,300 warrants to purchase the Company’s common stock exercisable for one to five years after defined date or events, at an exercise price of $0.2232.

Employee Stock Options

On January 26, 2005, the Board of Directors, and on February 15, 2005, the holders of a majority of the outstanding shares of Common Stock approved the 2005 Incentive Stock Plan and authorized the issuance of 16,000,000 shares of Common Stock as stock awards and stock options thereunder. On May 16, 2007, at the annual meeting of stockholders, the holders of a majority of the outstanding shares of Common Stock approved an increase in the number of shares subject to the 2005 Incentive Stock Plan to 20,000,000 shares of Common Stock.  On June 17, 2008, the Board of Directors unanimously adopted an amendment to the 2005 Incentive Stock Plan that increased the total number of shares of Common Stock issuable pursuant to the 2005 Incentive Stock Plan from a total of 20,000,000 shares to a total of 100,000,000 shares, which was approved by our stockholders at the 2008 annual meeting of stockholders held on December 16, 2008.  On November 30, 2011, the Board of Directors unanimously adopted an amendment to the 2005 Incentive Stock Plan that increased the total number of shares of Common Stock issuable thereunder to 350,000,000 and the number of shares of Common Stock that can be covered by awards made to any participant in any calendar year to 50,000,000, which was approved by our stockholders at the 2012 annual meeting of stockholders held on January 27, 2012.

The 2005 Incentive Stock Plan is designed to retain directors, executives, and selected employees and consultants by rewarding them for making contributions to our success with an award of options to purchase shares of Common Stock.  As of December 31, 2012, a total of 10,175,000 shares have been issued and options to purchase 127,308,192 shares have been granted under the 2005 Incentive Stock Plan.

The following table summarizes the changes in options outstanding and the related prices for the shares of Common Stock issued to employees of the Company under the 2005 Incentive Stock Plan:

	Options Outstanding					Options Exercisable
	Exercise Prices	Number Outstanding		Weighted Average Remaining  Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.05		29,000,000		2.40	$	0.05		29,000,000	$	0.05
$	0.0585		50,000,000		5.54	$	0.0585		31,250,000	$	0.0585
$	0.06		30,100,000		2.51	$	0.06		22,500,000	$	0.06
$	0.065		634,825		3.93	$	0.065		634,825	$	0.065
$	0.068		5,724,000		3.92	$	0.068		5,724,000	$	0.068
$	0.07		2,850,000		2.42	$	0.07		1,562,500	$	0.07
$	0.09		1,500,000		3.67	$	0.09		1,500,000	$	0.09
$	0.11		5,400,000		0.46	$	0.11		5,400,000	$	0.11
$	0.1799		2,099,367		4.92	$	0.1766		—		0.1766
			127,308,192		3.71	$	0.06		97,571,325	$	0.06

 Transactions involving stock options issued to employees are summarized as follows:

	Number of Shares			Weighted Average Exercise Price Per Share
Outstanding at October 1, 2011		120,650,000		$	0.060
Granted		6,558,825			0.067
Exercised		(500,000	)		(0.08	)
Expired		(1,500,000	)		(0.08	)
Outstanding at September 30, 2012		125,208,825		$	0.060
Granted		2,099,367			0.1799
Exercised		—
Expired		—
Outstanding at December 31, 2012		127,308,192		$	0.060

Transactions involving stock options issued to employees are summarized as follows:

On November 30, 2012, the Company issued an aggregate of 2,099,367 options to non-employee board of director members (except Mr. Catenacci) under the 2005 Incentive Stock Plan. The options are exercisable at $0.1799 per share for five years, vesting one year from the date of issuance. The fair value of options was determined using the Black Scholes Option Pricing Model with the following assumptions: dividend yield $-0-, volatility of 146.33% and risk free rate of 0.82%.

The Company recorded $417,866 and $785,719 as stock compensation expense for the three month periods ended December 31, 2012  and 2011, respectively, for the vesting portion of all employee options outstanding.