2007 LONG-TERM EQUITY INCENTIVE PLAN

3 Months Ended

Mar. 31, 2012

NOTE I - 2007 LONG-TERM EQUITY INCENTIVE PLAN

In June 2007 the Board of Directors of the Company adopted the 2007 Long-Term Equity Incentive Plan (the "Plan"). The Plan was ratified at the 2007 shareholder’s meeting (the "Effective Date"). The purpose of this Plan is to attract and retain directors, officers and other employees and non-employees of the Company and its Subsidiary and to provide to such persons incentives and rewards for performance. The Company may issue each of the following under the Plan: Incentive Options, Nonqualified Options, Stock Appreciation Rights, Restricted Stock Awards, Performance Stock Awards or any other award approved by the Board to employees, directors, officers and consultants.. No Award shall be granted pursuant to the Plan ten years after the Effective Date. Stock options to purchase shares of our common stock expire no later than ten years after the date of grant. The total number of shares available under the Plan is Fifteen Million (15,000,000). No Plan participant will be granted the right, in the aggregate, for more than Two Million (2,000,000) Common Shares during any calendar year.

We measure all stock-based compensation awards using a fair value method on the date of grant and recognize such expense in its consolidated financial statements over the requisite service period. We use the Black-Scholes option pricing model to calculate the fair value of warrants and stock option grants. The Black-Scholes option pricing model requires management to make assumptions regarding the option lives, expected volatility, and risk-free interest rates, all of which impact the fair value of the option and, ultimately, the expense that will be recognized over the life of the option.

During the three months ended March 31, 2012, the Company issued 500,000 shares of common stock pursuant to option exercises resulting in $50,000 to the Company

During the year ended December 31, 2011, the Company issued 800,000 shares of common stock pursuant to option exercises resulting in $80,000 to the Company, and canceled 825,000 options that expired due to termination of services by the related parties and their failure to exercise their respective options.

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

		Options Outstanding						Options Exercisable
		Number		Weighted		Weighted				Weighted
Range of		Outstanding		Average		Average				Average
Exercise		At March 31,		Contractural		Exercise		Number		Exercise
Prices		2012		Life (years)		Price		Outstanding		Price

$	0.40		1,000,000		5.50	$	0.40		1,000,000	$	0.40
	0.25		1,250,000		6.04		0.25		1,250,000		0.25
	0.10		1,387,500		5.50		0.10		1,387,500		0.10
	0.05		242,500		5.50		0.05		242,500		0.05

Total			3,880,000		5.66	$	0.22		3,880,000	$	0.22

A summary of the Company’s stock option activity for the three months ended March 31, 2012 and the years ended December 31, 2011 and related information follows:

	Number of Options			Weighted Average Exercise Price ($)		Options Exerciseable as of	Number of Options		Weighted Average Exercise Price ($)
Outstanding at December 31, 2010		5,505,000		$	0.18	December 31, 2010		5,505,000	$	0.18
Forfeitures		(825,000	)	$	0.06	December 31, 2011		3,880,000	$	0.22
Exercises		(800,000	)	$	0.10	March 31, 2012		3,880,000	$	0.22
Outstanding at December 31, 2011		3,880,000		$	0.22
Outstanding at March 31, 2012		3,880,000		$	0.22

Available for grant at March 31, 2012		2,138,001

During the year ended December 31, 2011 and 2010, the Company recognized no compensation expense related to stock options. From inception to date, the Company has recognized $178,844 of compensation expense related to stock options.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 10

-Section 50

-Paragraph 4

-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Statement of Position (SOP)

-Number 93-6

-Paragraph 53

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Staff Accounting Bulletin (SAB)

-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 123R

-Paragraph 64, 65, A240

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 40

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 505

-SubTopic 50

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 718

-SubTopic 10

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

+ Details

ITRACKR SYSTEMS INC 10-Q