STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2012

The following table summarizes all stock optionand warrant activity for the six months ended June 30, 2012:

	Shares			Weighted Average Exercise Price Per Share
Outstanding, December 31, 2011		19,648,462		$	0.34
Granted		4,544,000			0.40
Exercised		-			-
Forfeited		(6,553,846	)		0.33
Expired		-			-

Outstanding, June 30, 2012		17,638,616		$	0.36

Exercisable at June 30, 2012		17,638,616		$	0.36

The following table discloses information regarding outstanding and exercisable options and warrants at June 30, 2012:

		Outstanding						Exercisable
Range of Exercise Prices		Number of Option Shares		Weighted- Average Exercise Price		Remaining Weighted- Average Contractual Term (Years)		Number of OptionShares		Weighted-average Exercise Price
$	0.20 – $0.25		2,000,000	$	0.20		4.4		2,000,000	$	0.20
$	0.26 – $0.30		1,000,000		0.28		4.5		1,000,000		0.28
$	0.31 – $0.35		2,024,616		0.33		4.5		2,024,616		0.33
$	0.36 – $0.40		11,614,000		0.38		4.2		11,614,000		0.38
$	0.41– $0.50		1,000,000		0.50		4.8		1,000,000		0.50
			17,638,616	$	0.36		4.3		17,638,616	$	0.36

In determining the compensation cost of the stock options granted, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used in these calculations are summarized as follows:

	Year Ended December 31, 2011
Expected term of options granted	5 years
Expected volatility range		211 – 229	%
Range of risk-free interest rates		0.81 – 1.80	%
Expected dividend yield		0	%

Stock-based compensation expense associated with stock options issued during the six months ended June 30, 2012, and 2011 was $893,928 and $-0-, respectively.