STOCK OPTIONS AND WARRANTS

3 Months Ended

Mar. 31, 2012

Equity

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 10 - STOCK OPTIONS AND WARRANTS

Stock Option Plans - As of March 31, 2012, options to purchase a total of 42,400,000 shares of common stock had been issued from the 2006 Stock Option Plan, out of which a maximum of 50,000,000 can be issued.  As of March 31, 2012, options and share purchase rights to acquire a total of 56,600,000 shares of common stock had been issued from the 2008 Stock Option Plan, also, out of which a maximum of 60,000,000 can be issued.  The Company’s Board of Directors administers the plans and has discretion in determining the employees, directors, independent contractors, and advisors who receive awards, the type of awards (stock, incentive stock options, nonqualified stock options, or share purchase rights) granted, and the term, vesting, and exercise prices.

During the three months ended March 31, 2012 the Company issued 20,000,000 shares of common stock for the exercise of stock options valued at $18,000, recorded as a reduction to accounts payable due. The fair market value and the intrinsic value of the options aggregated $18,000, using the following assumptions: 1-month term, estimated volatility of 167.01% and a discount rate of 0.07%.

Options and Assumptions

Employee Options - During the three months ended March 31, 2012 and 2011, the Company did not grant options to purchase shares of common stock to employees.

During the three months ended March 31, 2012, the Company accrued for 20,400,000 employee options relating to the employment contract of the Company president, directors, and officers.  The fair market value of the options accrued aggregated $19,897, using the following assumptions: 2.5-year term, estimated volatility of 200.04% and a discount rate of 0.34%.

A summary of the stock option activity under the Plans as of March 31, 2012, and changes during the three months then ended is presented below:

	Shares			Weighted- Average  Exercise Price		Weighted- Average  Remaining Contractual Life		Aggregate  Intrinsic Value
Outstanding at December 31, 2011		37,800,000		$	0.0130		0.51	$	-
Granted		20,000,000		$	0.0001
Exercised		(20,000,000	)	$	0.0001
Expired		(15,600,000	)	$	0.0133
Outstanding at March 31, 2012		22,200,000		$	0.0130		0.59	$	-
Exercisable at March 31, 2012		22,200,000		$	0.0130		0.59	$	-

As of March 31, 2012 and December 31, 2011, the company had a total of 104,000,000 and 83,600,000 options not issued but accrued.

Warrants - On January, 24, 2011, as part of the Forbearance Agreement, a warrant to purchase 25,000,000 shares of common stock was issued to YA Global. The warrant had an exercise price of $0.02 per share and vested immediately.

The Corporation currently has an insufficient number of authorized shares to enable warrant holders to fully exercise their warrants, assuming all warrants holders desired to do so. Accordingly, the warrants are subject to derivative accounting treatment, and are included in the derivative liability related to the convertible debentures (see Note 8).