NOTE 19 – STOCK PURCHASE WARRANTS AND OPTIONS

On August 15, 2012, the Company issued 1,250,000 warrants to a consulting company. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, and a risk free rate of 0.102% and a term of 5 years.

On May 11, 2012, warrants to purchase 275,000 shares of common stock at $0.10 per share were issued to an accredited investor in conjunction with a convertible note. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, and a risk free rate of 0.096% and a term of 5 years.

On August 2, 2012, the Company issued 250,000 options to its President and CFO. The options vest equally every six months over a three year period. The options were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, and a risk free rate of 0.61% and a term of 5 years.

On August 2, 2012, the Company issued 100,000 options to its new Chief Operating Officer. The options vest equally every six months over a three year period. The options were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, and a risk free rate of 0.61% and a term of 5 years.

In February 24, 2102 warrants to purchase 1,250,000 shares of common stock at $0.10 per share were issued to an accredited investor in conjunction with a convertible note. As consideration for this further investment, the 1,250,000 existing warrants with a strike price $.10 were cancelled and reissued with a strike price of $0.075 per share. The new and existing warrants were valued both valued at using the Black-Scholes model with a dividend rate of 0%, volatility of 462.61%, a risk free rate of 0.89% and a term of 5 years.

In July 15, 2011, warrants to purchase 1,250,000 shares of common stock at $0.10 per share were issued to an accredited investor in conjunction with a convertible note. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 347.62%, and a risk free rate of 1.45% and a term of 5 years.

In July 18, 2011, warrants to purchase 1,250,000 shares of common stock at $0.10 per share were issued to an accredited investor in conjunction with a convertible note. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 347.62%, and a risk free rate of 1.46% and a term of 5 years.

In July 14, 2011, warrants to purchase 250,000 shares of common stock at $0.10 per share were issued to an accredited investor in conjunction with a private offering. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 347.62%, and a risk free rate of 1.51% and a term of 5 years.

In May 16, 2011, warrants to purchase a total of 500,000 shares of common stock at $0.10 per share were issued to three accredited investors in conjunction with a private offering. The warrants were valued using the Black-Scholes model with a dividend rate of 0%, volatility of 347.62%, and a risk free rate of 1.83% and a term of 5 years.

In January 7, 2011, warrants to purchase 50,000 shares of common stock at $0.10 per share were issued to an accredited investor in conjunction with a private offering.

A summary of the Company’s warrant and option activity during the periods ended September 30, 2012 and December 31, 2011 is presented below:

Warrants

Options