þ
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
|
52-2088326
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Page
|
|||||||
PART I
|
3
|
||||||
ITEM 1. Financial
Statements
|
3
|
||||||
Condensed consolidated balance
sheets
|
3-4
|
||||||
Condensed consolidated statements of
operations (unaudited)
|
5
|
||||||
Condensed consolidated statement of changes in stockholders’ deficiency
(unaudited)
|
6-32
|
||||||
Condensed consolidated statements of cash flows
(unaudited)
|
33-34
|
||||||
Notes to condensed consolidated financial statements
(unaudited)
|
35
|
||||||
ITEM 2. Management’s Discussion and Analysis or
Plan of Operations
|
52
|
||||||
ITEM 3. Controls and
Procedures
|
62
|
||||||
|
|||||||
PART II
|
64
|
||||||
ITEM 1. Legal Proceedings
|
64
|
||||||
ITEM 2. Unregistered Sales of Equity Securities
and Use of Proceeds
|
64
|
||||||
ITEM 3. Defaults Upon Senior
Securities
|
66
|
||||||
ITEM 4. Submission of Matters to a Vote of
Security Holders
|
66
|
||||||
ITEM 5. Other Information
|
66
|
||||||
ITEM 6. Exhibits
|
66
|
||||||
SIGNATURES
|
67
|
||||||
EXHIBIT INDEX
|
68
|
||||||
EXHIBIT
31.1
|
|||||||
EXHIBIT
31.2
|
|||||||
EXHIBIT
32
|
March
31, 2008
|
December
31,
|
|||||||
(unaudited)
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 143,127 | $ | 47,660 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $1,380 and $0,
respectively
|
- | 1,380 | ||||||
Inventory
|
30,256 | 30,256 | ||||||
Other
current assets
|
22,700 | 20,552 | ||||||
Total
current assets
|
196,083 | 99,848 | ||||||
Equipment,
net
|
163,599 | 201,058 | ||||||
Other
assets
|
4,500 | 4,500 | ||||||
Total
assets
|
$ | 364,182 | $ | 305,406 | ||||
March
31, 2008
|
December
31,
|
|||||||
(unaudited)
|
2007
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable-related parties
|
$
|
344,587
|
$
|
323,413
|
||||
Accounts
payable-other
|
929,632
|
716,986
|
||||||
Accrued
expenses
|
685,748
|
742,719
|
||||||
Accrued
research and development fees
|
38,347
|
53,347
|
||||||
Accrued
professional fees
|
270,113
|
747,261
|
||||||
Loan
payable-related party
|
84,817
|
83,596
|
||||||
Loan
payable-other
|
—
|
20,334
|
||||||
Convertible
debentures, net-related parties
|
315,419
|
227,136
|
||||||
Convertible
debentures, net-others
|
414,483
|
1,078,408
|
||||||
Convertible
debentures, net-other-default
|
—
|
671,992
|
||||||
Total
current liabilities
|
3,083,146
|
4,665,192
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders’
deficiency
|
||||||||
Common
stock, $.001 par value: 200,000,000 shares authorized, 54,751,117 and
46,470,413
shares issued and outstanding at March 31, 2008 and December 31,
2007,
respectively
|
54,752
|
46,471
|
||||||
Common
stock to be issued
|
459,105
|
4,000
|
||||||
Additional
paid-in capital
|
35,741,366
|
32,280,083
|
||||||
Deficit
accumulated during the development stage
|
(38,974,187
|
)
|
(36,690,340
|
)
|
||||
Total
stockholders’ deficiency
|
(2,718,964
|
)
|
(4,359,786
|
)
|
||||
Total
liabilities and stockholders’ deficiency
|
$
|
364,182
|
$
|
305,406
|
||||
Cumulative
|
||||||||||||
March
31,
|
March
31,
|
since
|
||||||||||
2008
|
2007
|
inception
|
||||||||||
Net
sales
|
$
|
—
|
$
|
22,000
|
$
|
69,000
|
||||||
Cost
of goods sold
|
—
|
5,360
|
24,120
|
|||||||||
Gross
profit
|
—
|
—
|
44,880
|
|||||||||
Operating
expenses
|
760,142
|
1,279,775
|
27,619,463
|
|||||||||
Research
and development expenses
|
259,670
|
340,452
|
5,065,9000
|
|||||||||
Non-cash
patent settlement cost
|
—
|
—
|
1,610,066
|
|||||||||
Loss
before other income(expense)
|
(1,019,812
|
)
|
(1,603,587
|
)
|
(34,250,549
|
)
|
||||||
Other
income(expense)
|
||||||||||||
Other
income
|
200
|
87
|
3,709
|
|||||||||
Interest
income
|
354
|
17
|
16,696
|
|||||||||
Interest
expense
|
(1,254,906
|
)
|
(309,878
|
)
|
(5,747,286
|
)
|
||||||
Loss
on sale of equipment
|
(9,683
|
)
|
—
|
(9,683
|
)
|
|||||||
Settlement
of litigation and debt
|
—
|
—
|
1,017,208
|
|||||||||
Loss
before provision for income taxes
|
(2,283,847
|
)
|
(1,913,361
|
)
|
(38,969,905
|
)
|
||||||
Provision
for income taxes
|
—
|
800
|
4,282
|
|||||||||
Net
loss
|
$
|
(2,283,847
|
)
|
$
|
(1,914,161
|
)
|
$
|
(38,974,187
|
)
|
|||
Net
loss per common share, basic and diluted
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
||||||
Weighted
average common shares outstanding, basic and diluted
|
49,551,981
|
39,012,446
|
||||||||||
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Balance, February 18,
1998 (date of inception)
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||||||||||
Issuance
of common stock on April 18, 1998
|
.0015 —
.01
|
10,030,000
|
10,030
|
—
|
14,270
|
—
|
—
|
24,300
|
||||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(21,307
|
)
|
(21,307
|
)
|
|||||||||||||||||||||||
Balance,
December 31, 1998
|
10,030,000
|
$
|
10,030
|
$
|
—
|
14,270
|
$
|
—
|
$
|
(21,307
|
)
|
$
|
2,993
|
|||||||||||||||||||
Issuance
of common stock on May 18, 1999
|
1.00 —
6.40
|
198,003
|
198
|
—
|
516,738
|
—
|
—
|
516,936
|
||||||||||||||||||||||||
Issuance
of common stock for ZEFS on September 14, 1999
|
.001
|
5,000,000
|
5,000
|
—
|
—
|
—
|
—
|
5,000
|
||||||||||||||||||||||||
Stock
issued for professional services on May 18, 1999
|
0.88
|
69,122
|
69
|
—
|
49,444
|
—
|
—
|
49,513
|
||||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(1,075,264
|
)
|
(1,075,264
|
)
|
|||||||||||||||||||||||
Balance,
December 31, 1999
|
15,297,125
|
$
|
15,297
|
$
|
—
|
$
|
580,452
|
$
|
—
|
$
|
(1,096,571
|
)
|
$
|
(500,822
|
)
|
|||||||||||||||||
Stock
issued for employee compensation on February 8, 2000
|
1.03
|
20,000
|
20
|
—
|
20,580
|
—
|
—
|
20,600
|
||||||||||||||||||||||||
Stock
issued for consulting services on February 8, 2000
|
1.03
|
100,000
|
100
|
—
|
102,900
|
—
|
—
|
103,000
|
||||||||||||||||||||||||
Stock
issued for professional services on April 18, 2000
|
3.38
|
27,000
|
27
|
—
|
91,233
|
—
|
—
|
91,260
|
||||||||||||||||||||||||
Stock
issued for directors fees on April 18, 2000
|
3.38
|
50,000
|
50
|
—
|
168,950
|
—
|
—
|
169,000
|
||||||||||||||||||||||||
Stock
issued for professional services on May 19, 2000
|
4.06
|
5,000
|
5
|
—
|
20,295
|
—
|
—
|
20,300
|
||||||||||||||||||||||||
Stock
issued for directors fees on June 20, 2000
|
4.44
|
6,000
|
6
|
—
|
26,634
|
—
|
—
|
26,640
|
||||||||||||||||||||||||
Stock
issued for professional services on June 20, 2000
|
4.44
|
1,633
|
2
|
—
|
7,249
|
—
|
—
|
7,251
|
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for professional services on June 26, 2000
|
5.31
|
1,257
|
1
|
—
|
6,674
|
—
|
—
|
6,675
|
||||||||||||||||||||||||
Stock
issued for employee compensation on June 26, 2000
|
5.31
|
22,000
|
22
|
—
|
116,798
|
—
|
—
|
116,820
|
||||||||||||||||||||||||
Stock
issued for consulting services on June 26, 2000
|
5.31
|
9,833
|
10
|
—
|
52,203
|
—
|
—
|
52,213
|
||||||||||||||||||||||||
Stock
issued for promotional services on July 28, 2000
|
4.88
|
9,675
|
9
|
—
|
47,205
|
—
|
—
|
47,214
|
||||||||||||||||||||||||
Stock
issued for consulting services on July 28, 2000
|
4.88
|
9,833
|
10
|
—
|
47,975
|
—
|
—
|
47,985
|
||||||||||||||||||||||||
Stock
issued for consulting services on August 4, 2000
|
2.13
|
35,033
|
35
|
—
|
74,585
|
—
|
—
|
74,620
|
||||||||||||||||||||||||
Stock
issued for promotional services on August 16, 2000
|
2.25
|
25,000
|
25
|
—
|
56,225
|
—
|
—
|
56,250
|
||||||||||||||||||||||||
Stock
issued for consulting services on September 5, 2000
|
2.25
|
12,833
|
13
|
—
|
28,861
|
—
|
—
|
28,874
|
Stock
issued for consulting services on September 10, 2000
|
1.50
|
9,833
|
10
|
—
|
14,740
|
—
|
—
|
14,750
|
||||||||||||||||||||||||
Stock
issued for consulting services on November 2, 2000
|
0.88
|
9,833
|
10
|
—
|
8,643
|
—
|
—
|
8,653
|
||||||||||||||||||||||||
Stock
issued for consulting services on November 4, 2000
|
0.88
|
9,833
|
10
|
—
|
8,643
|
—
|
—
|
8,653
|
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for consulting services on December 20, 2000
|
0.50
|
19,082
|
19
|
—
|
9,522
|
—
|
—
|
9,541
|
||||||||||||||||||||||||
Stock
issued for filing services on December 20, 2000
|
0.50
|
5,172
|
5
|
—
|
2,581
|
—
|
—
|
2,586
|
||||||||||||||||||||||||
Stock
issued for professional services on December 26, 2000
|
0.38
|
12,960
|
13
|
—
|
4,912
|
—
|
—
|
4,925
|
||||||||||||||||||||||||
Other
stock issuance on August 24, 2000
|
2.13
|
2,000
|
2
|
—
|
4,258
|
—
|
—
|
4,260
|
||||||||||||||||||||||||
Common
shares cancelled
|
(55,000
|
)
|
(55
|
)
|
—
|
(64,245
|
)
|
—
|
—
|
(64,300
|
)
|
|||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(1,270,762
|
)
|
(1,270,762
|
)
|
|||||||||||||||||||||||
Balance,
December 31, 2000
|
15,645,935
|
$
|
15,646
|
$
|
—
|
$
|
1,437,873
|
$
|
—
|
$
|
(2,367,333
|
)
|
$
|
(913,814
|
)
|
|||||||||||||||||
Stock
issued for consulting services on January 8, 2001
|
0.31
|
9,833
|
10
|
—
|
3,038
|
—
|
—
|
3,048
|
Stock
issued for consulting services on February 1, 2001
|
0.33
|
9,833
|
10
|
—
|
3,235
|
—
|
—
|
3,245
|
||||||||||||||||||||||||
Stock
issued for consulting services on March 1, 2001
|
0.28
|
9,833
|
10
|
—
|
2,743
|
—
|
—
|
2,753
|
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional Paid-in
|
Deferred
|
During
the Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for legal services on March 13, 2001
|
0.32
|
150,000
|
150
|
—
|
47,850
|
—
|
—
|
48,000
|
||||||||||||||||||||||||
Stock
issued for consulting services on April 3, 2001
|
0.25
|
9,833
|
10
|
—
|
2,448
|
—
|
—
|
2,458
|
||||||||||||||||||||||||
Stock
issued for legal services on April 4, 2001
|
0.25
|
30,918
|
31
|
—
|
7,699
|
—
|
—
|
7,730
|
||||||||||||||||||||||||
Stock
issued for professional services on April 4, 2001
|
0.25
|
7,040
|
7
|
—
|
1,753
|
—
|
—
|
1,760
|
||||||||||||||||||||||||
Stock
issued for consulting services on April 5, 2001
|
0.25
|
132,600
|
132
|
—
|
33,018
|
—
|
—
|
33,150
|
||||||||||||||||||||||||
Stock
issued for filing fees on April 30, 2001
|
1.65
|
1,233
|
1
|
—
|
2,033
|
—
|
—
|
2,034
|
||||||||||||||||||||||||
Stock
issued for filing fees on September 19, 2001
|
0.85
|
2,678
|
2
|
—
|
2,274
|
—
|
—
|
2,276
|
||||||||||||||||||||||||
Stock
issued for professional services on September 28,
2001
|
0.62
|
150,000
|
150
|
—
|
92,850
|
—
|
—
|
93,000
|
||||||||||||||||||||||||
Stock
issued for directors services on October 5, 2001
|
0.60
|
100,000
|
100
|
—
|
59,900
|
—
|
—
|
60,000
|
||||||||||||||||||||||||
Stock
issued for legal services on October 17, 2001
|
0.60
|
11,111
|
11
|
—
|
6,655
|
—
|
—
|
6,666
|
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for consulting services on October 18, 2001
|
0.95
|
400,000
|
400
|
—
|
379,600
|
—
|
—
|
380,000
|
||||||||||||||||||||||||
Stock
issued for consulting services on October 19, 2001
|
1.25
|
150,000
|
150
|
—
|
187,350
|
—
|
—
|
187,500
|
||||||||||||||||||||||||
Stock
issued for exhibit fees on October 22, 2001
|
1.35
|
5,000
|
6
|
—
|
6,745
|
—
|
—
|
6,751
|
||||||||||||||||||||||||
Stock
issued for directors
|
0.95
|
1,000,000
|
1,000
|
—
|
949,000
|
—
|
—
|
950,000
|
||||||||||||||||||||||||
Stock
issued for consulting services on November 7, 2001
|
0.85
|
20,000
|
20
|
—
|
16,980
|
—
|
—
|
17,000
|
Stock
issued for consulting services on November 20, 2001
|
0.98
|
43,000
|
43
|
—
|
42,097
|
—
|
—
|
42,140
|
||||||||||||||||||||||||
Stock
issued for consulting services on November 27, 2001
|
0.98
|
10,000
|
10
|
—
|
9,790
|
—
|
—
|
9,800
|
||||||||||||||||||||||||
Stock
issued for consulting services on November 28, 2001
|
0.98
|
187,000
|
187
|
—
|
183,073
|
—
|
—
|
183,260
|
||||||||||||||||||||||||
Intrinsic
value of options issued to employees
|
—
|
—
|
—
|
2,600,000
|
(2,600,000
|
)
|
—
|
—
|
||||||||||||||||||||||||
Fair
value of options issued to non-employees for services
|
—
|
—
|
—
|
142,318
|
—
|
—
|
142,318
|
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Amortization
of deferred compensation
|
—
|
—
|
—
|
—
|
191,667
|
—
|
191,667
|
|||||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(2,735,013
|
)
|
(2,735,013
|
)
|
|||||||||||||||||||||||
Balance,
December 31, 2001
|
18,085,847
|
$
|
18,086
|
$
|
—
|
$
|
6,220,322
|
$
|
(2,408,333
|
)
|
$
|
(5,102,346
|
)
|
$
|
(1,272,271
|
)
|
||||||||||||||||
Stock
issued for directors services on December 10, 2002
|
0.40
|
2,150,000
|
2,150
|
—
|
857,850
|
—
|
—
|
860,000
|
||||||||||||||||||||||||
Common
stock paid for, but not issued (2,305,000 shares)
|
0.15-0.25
|
—
|
—
|
389,875
|
—
|
—
|
—
|
389,875
|
||||||||||||||||||||||||
Fair
value of options issued to non-employees for services
|
—
|
—
|
—
|
54,909
|
(54,909
|
)
|
—
|
—
|
||||||||||||||||||||||||
Amortization
of deferred compensation
|
—
|
—
|
—
|
—
|
891,182
|
—
|
891,182
|
|||||||||||||||||||||||||
Net
loss for the year ended December 31, 2002
|
—
|
—
|
—
|
—
|
—
|
(2,749,199
|
)
|
(2,749,199
|
)
|
|||||||||||||||||||||||
Balance,
December 31, 2002
|
20,235,847
|
$
|
20,236
|
$
|
389,875
|
$
|
7,133,081
|
$
|
(1,572,060
|
)
|
$
|
(7,851,545
|
)
|
$
|
(1,880,413
|
)
|
||||||||||||||||
Common
stock issued, previously paid for
|
0.15
|
1,425,000
|
1,425
|
(213,750
|
)
|
212,325
|
—
|
—
|
—
|
|||||||||||||||||||||||
Common
stock issued, previously paid for
|
0.25
|
880,000
|
880
|
(220,000
|
)
|
219,120
|
—
|
—
|
—
|
|||||||||||||||||||||||
Stock
issued for cash on March 20, 2003
|
0.25
|
670,000
|
670
|
—
|
166,830
|
—
|
—
|
167,500
|
||||||||||||||||||||||||
Stock
issued for cash on April 4, 2003
|
0.25
|
900,000
|
900
|
—
|
224,062
|
—
|
—
|
224,962
|
||||||||||||||||||||||||
Stock
issued for cash on April 8, 2003
|
0.25
|
100,000
|
100
|
—
|
24,900
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued for cash on May 8, 2003
|
0.25
|
1,150,000
|
1,150
|
—
|
286,330
|
—
|
—
|
287,480
|
||||||||||||||||||||||||
Stock
issued for cash on June 16, 2003
|
0.25
|
475,000
|
475
|
—
|
118,275
|
—
|
—
|
118,750
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
Stock
issued for cash on June 16, 2003
|
0.25
|
475,000
|
475
|
—
|
118,275
|
—
|
—
|
118,750
|
||||||||||||||||||||||||
Stock
issued for legal services on June 27, 2003
|
0.55
|
83,414
|
83
|
—
|
45,794
|
—
|
—
|
45,877
|
||||||||||||||||||||||||
Debt
converted to stock on June 27, 2003
|
0.25
|
2,000,000
|
2,000
|
—
|
498,000
|
—
|
—
|
500,000
|
||||||||||||||||||||||||
Stock
and warrants issued for cash on July 11, 2003
|
0.25
|
519,000
|
519
|
—
|
129,231
|
—
|
—
|
129,750
|
||||||||||||||||||||||||
Stock
and warrants issued for cash on September 29, 2003
|
0.25
|
1,775,000
|
1,775
|
—
|
441,976
|
—
|
—
|
443,751
|
||||||||||||||||||||||||
Stock
and warrants issued for cash on October 21, 2003
|
0.25
|
1,845,000
|
1,845
|
—
|
459,405
|
—
|
—
|
461,250
|
||||||||||||||||||||||||
Stock
and warrants issued for cash on October 28, 2003
|
0.25
|
1,570,000
|
1,570
|
—
|
390,930
|
—
|
—
|
392,500
|
||||||||||||||||||||||||
Stock
and warrants issued for cash on November 19, 2003
|
0.25
|
500,000
|
500
|
—
|
124,500
|
—
|
—
|
125,000
|
Finders’
fees related to stock issuances
|
—
|
—
|
43,875
|
(312,582
|
)
|
—
|
—
|
(268,707
|
)
|
|||||||||||||||||||||||
Common
stock paid for, but not issued (25,000 shares)
|
0.25
|
—
|
—
|
6,250
|
—
|
—
|
—
|
6,250
|
||||||||||||||||||||||||
Amortization
of deferred comp
|
—
|
—
|
—
|
—
|
863,727
|
—
|
863,727
|
|||||||||||||||||||||||||
Net
loss for year ended December 31, 2003
|
—
|
—
|
—
|
—
|
—
|
(2,476,063
|
)
|
(2,476,063
|
)
|
|||||||||||||||||||||||
Balance,
December 31, 2003
|
34,128,261
|
$
|
34,128
|
$
|
6,250
|
$
|
10,162,177
|
$
|
(708,333
|
)
|
$
|
(10,327,608
|
)
|
$
|
(833,386
|
)
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued, previously paid for
|
0.25
|
25,000
|
25
|
(6,250
|
)
|
6,225
|
—
|
—
|
—
|
|||||||||||||||||||||||
Stock
issued for director services on March 31, 2004
|
1.50
|
50,000
|
50
|
—
|
74,950
|
—
|
—
|
75,000
|
||||||||||||||||||||||||
Stock
issued for finders fees on March 31, 2004
|
0.15
|
82,500
|
82
|
—
|
12,293
|
—
|
—
|
12,375
|
||||||||||||||||||||||||
Stock
issued for finders fees on March 31, 2004
|
0.25
|
406,060
|
407
|
—
|
101,199
|
—
|
—
|
101,606
|
||||||||||||||||||||||||
Stock
issued for services on April 2, 2004
|
1.53
|
65,000
|
65
|
—
|
99,385
|
—
|
—
|
99,450
|
||||||||||||||||||||||||
Debt
converted to stock on April 2, 2004
|
1.53
|
60,000
|
60
|
—
|
91,740
|
—
|
—
|
91,800
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on May 21, 2004
|
0.20
|
950,000
|
950
|
—
|
189,050
|
—
|
—
|
190,000
|
||||||||||||||||||||||||
Stock
issued for directors services on June 8, 2004
|
1.70
|
600,000
|
600
|
—
|
1,019,400
|
—
|
—
|
1,020,000
|
||||||||||||||||||||||||
Stock
issued for cash on August 25, 2004
|
1.00
|
550,000
|
550
|
—
|
549,450
|
—
|
—
|
550,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of options on August 30, 2004
|
0.40
|
4,000
|
4
|
—
|
1,596
|
—
|
—
|
1,600
|
||||||||||||||||||||||||
Stock
issued for cash on September 8, 2004
|
1.00
|
25,000
|
25
|
—
|
24,975
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued for consulting services on September 15, 2004
|
1.31
|
50,000
|
49
|
—
|
65,451
|
—
|
—
|
65,500
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for patent settlement on September 22, 2004
|
1.24
|
20,000
|
20
|
—
|
24,780
|
—
|
—
|
24,800
|
||||||||||||||||||||||||
Stock
issued for research and development on October 6,
2004
|
1.40
|
65,000
|
65
|
—
|
90,935
|
—
|
—
|
91,000
|
||||||||||||||||||||||||
Stock
issued for cash on October 6, 2004
|
1.00
|
25,000
|
25
|
—
|
24,975
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued for cash on October 15, 2004
|
1.00
|
150,000
|
150
|
—
|
149,850
|
—
|
—
|
150,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of stock options on October 21,
2004
|
0.40
|
6,500
|
6
|
—
|
2,594
|
—
|
—
|
2,600
|
||||||||||||||||||||||||
Stock
issued for cash on November 3, 2004
|
1.00
|
25,000
|
25
|
—
|
24,975
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued for cash on November 18, 2004
|
1.00
|
172,500
|
173
|
—
|
172,327
|
—
|
—
|
172,500
|
||||||||||||||||||||||||
Stock
issued for cash on December 9, 2004
|
1.00
|
75,000
|
75
|
—
|
74,925
|
—
|
—
|
75,000
|
||||||||||||||||||||||||
Stock
issued for cash on December 23, 2004
|
1.00
|
250,000
|
250
|
—
|
249,750
|
—
|
—
|
250,000
|
Finders
fees related to stock issuances
|
—
|
—
|
—
|
—
|
(88,384
|
)
|
—
|
—
|
(88,384
|
)
|
||||||||||||||||||||||
Common
stock paid for, but not issued (119,000 shares)
|
—
|
—
|
—
|
119,000
|
—
|
—
|
—
|
119,000
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Intrinsic
value of options issued to employees
|
—
|
—
|
—
|
—
|
248,891
|
(248,891
|
)
|
—
|
—
|
Fair
value of options issued to non-employees for services
|
—
|
—
|
—
|
—
|
55,381
|
(55,381
|
) |
—
|
—
|
|||||||||||||||||||||||
Fair
value of warrants issued for settlement costs
|
—
|
—
|
—
|
1,585,266
|
—
|
—
|
1,585,266
|
|||||||||||||||||||||||||
Fair
value of warrants issued to non-employees for services
|
—
|
—
|
|
—
|
—
|
28,872
|
—
|
—
|
28,872
|
|||||||||||||||||||||||
Amortization
of deferred compensation
|
—
|
—
|
—
|
—
|
—
|
936,537
|
—
|
936,537
|
||||||||||||||||||||||||
Net
loss for year ended December 31, 2004
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,803,280
|
)
|
(6,803,280
|
)
|
||||||||||||||||||||||
Balance,
December 31, 2004
|
37,784,821
|
$
|
37,784
|
$
|
119,000
|
$
|
15,043,028
|
$
|
(76,068
|
)
|
$
|
(17,130,888
|
)
|
$
|
(2,007,144
|
)
|
||||||||||||||||
Common
stock issued, previously paid for
|
1.00
|
69,000
|
69
|
(69,000
|
)
|
68,931
|
—
|
—
|
—
|
|||||||||||||||||||||||
Stock
issued upon exercise of warrants, previously paid for
|
1.00
|
50,000
|
50
|
(50,000
|
)
|
49,950
|
—
|
—
|
—
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for cash on January 20, 2005
|
1.00
|
25,000
|
25
|
—
|
24,975
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on January 31, 2005
|
0.40
|
500
|
1
|
—
|
199
|
—
|
—
|
200
|
Stock
issued for cash on February 17, 2005
|
1.00
|
325,000
|
325
|
—
|
324,675
|
—
|
—
|
325,000
|
||||||||||||||||||||||||
Stock
issued for cash on March 31, 2005
|
1.00
|
215,000
|
215
|
—
|
214,785
|
—
|
—
|
215,000
|
||||||||||||||||||||||||
Stock
issued for cash on May 17, 2005
|
1.00
|
5,000
|
5
|
—
|
4,995
|
—
|
—
|
5,000
|
||||||||||||||||||||||||
Stock
issued for cash on June 7, 2005
|
1.00
|
300,000
|
300
|
—
|
299,700
|
—
|
—
|
300,000
|
||||||||||||||||||||||||
Stock
issued for cash on August 5, 2005
|
1.00
|
480,500
|
480
|
—
|
480,020
|
—
|
—
|
480,500
|
||||||||||||||||||||||||
Stock
issued for cash on August 9, 2005
|
1.00
|
100,000
|
100
|
—
|
99,900
|
—
|
—
|
100,000
|
||||||||||||||||||||||||
Stock
issued for cash on October 27, 2005
|
1.00
|
80,000
|
80
|
—
|
79,920
|
—
|
—
|
80,000
|
||||||||||||||||||||||||
Common
stock cancelled on December 7, 2005
|
Various
|
(8,047,403
|
)
|
(8,047
|
)
|
—
|
8,047
|
—
|
—
|
—
|
||||||||||||||||||||||
Stock
to be issued for settlement of payables on December 21,
2005
|
—
|
—
|
—
|
57,092
|
—
|
—
|
—
|
—
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
to be issued for settlement of payables on December 31,
2005
|
—
|
—
|
—
|
555,429
|
—
|
—
|
—
|
555,429
|
||||||||||||||||||||||||
Finders
fees related to stock issuances
|
—
|
—
|
—
|
—
|
(109,840
|
)
|
—
|
—
|
(109,840
|
)
|
||||||||||||||||||||||
Intrinsic
value of options issued to employees
|
—
|
—
|
—
|
—
|
243,750
|
(243,750
|
)
|
—
|
—
|
|||||||||||||||||||||||
Fair
value of options issued for settlement costs
|
—
|
—
|
—
|
—
|
31,500
|
—
|
—
|
31,500
|
||||||||||||||||||||||||
Fair
value of warrants issued for settlement costs
|
—
|
—
|
—
|
—
|
4,957
|
—
|
—
|
4,957
|
||||||||||||||||||||||||
Fair
value of warrants issued to non-employees for services
|
—
|
—
|
—
|
—
|
13,505
|
—
|
—
|
13,505
|
||||||||||||||||||||||||
Amortization
of deferred compensation
|
—
|
—
|
—
|
—
|
—
|
177,631
|
—
|
177,631
|
||||||||||||||||||||||||
Warrants
issued with convertible notes
|
—
|
—
|
—
|
—
|
696,413
|
—
|
—
|
696,413
|
||||||||||||||||||||||||
Intrinsic
value of beneficial conversion associated with convertible
notes
|
—
|
—
|
—
|
—
|
756,768
|
—
|
—
|
756,768
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for cash on April 24, 2006
|
1.56
|
473,000
|
473
|
—
|
737,408
|
—
|
—
|
737,881
|
Stock
issued upon exercise of warrants on April 26, 2006
|
0.50
|
125,000
|
125
|
—
|
62,375
|
—
|
—
|
62,500
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on April 26, 2006
|
1.50
|
100,000
|
100
|
—
|
149,900
|
—
|
—
|
150,000
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on April 26, 2006
|
0.70
|
35,714
|
36
|
—
|
24,964
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on May 6, 2006
|
0.50
|
200,000
|
200
|
—
|
99,800
|
—
|
—
|
100,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on May 15, 2006
|
1.50
|
25,000
|
25
|
—
|
37,475
|
—
|
—
|
37,500
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on May 15, 2006
|
0.50
|
50,000
|
50
|
—
|
24,950
|
—
|
—
|
25,000
|
||||||||||||||||||||||||
Stock
issued for cash on June 7, 2006
|
1.89
|
873,018
|
872
|
—
|
1,649,136
|
—
|
—
|
1,650,008
|
Common
stock issued for convertible debt on June 7, 2006
|
0.70
|
1,535,716
|
1,536
|
—
|
1,073,464
|
—
|
—
|
1,075,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on June 8, 2006
|
0.50
|
900,000
|
900
|
—
|
449,100
|
—
|
—
|
450,000
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued upon exercise of warrants on June 9, 2006
|
0.50
|
9,000
|
9
|
—
|
4,491
|
—
|
—
|
4,500
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on June 23, 2006
|
0.50
|
150,000
|
150
|
—
|
74,850
|
—
|
—
|
75,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on June 23, 2006
|
1.50
|
15,000
|
15
|
—
|
22,485
|
—
|
—
|
22,500
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on June 30, 2006
|
0.70
|
219,104
|
219
|
—
|
153,155
|
—
|
—
|
153,374
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on July 11, 2006
|
0.70
|
14,603
|
15
|
—
|
10,207
|
—
|
—
|
10,222
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on August 7, 2006
|
0.70
|
1,540,160
|
1,540
|
—
|
1,076,572
|
—
|
—
|
1,078,112
|
Common
stock issued upon exercise of warrants on August 7, 2006
|
1.50
|
175,000
|
175
|
—
|
262,325
|
—
|
—
|
262,500
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued upon exercise of warrants on August 21, 2006
|
1.50
|
50,000
|
50
|
—
|
74,950
|
—
|
—
|
75,000
|
||||||||||||||||||||||||
Common
stock issued for cash on August 22, 2006
|
1.00
|
14,519
|
15
|
—
|
14,504
|
—
|
—
|
14,519
|
||||||||||||||||||||||||
Common
stock issued upon exercise of warrants on August 23, 2006
|
1.00
|
3,683
|
4
|
—
|
3679
|
—
|
—
|
3,683
|
||||||||||||||||||||||||
Common
stock issued upon exercise of warrants on August 28, 2006
|
1.50
|
5,000
|
5
|
—
|
7,495
|
—
|
—
|
7,500
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on September 13, 2006
|
0.70
|
4,286
|
4
|
—
|
2,996
|
—
|
—
|
3,000
|
||||||||||||||||||||||||
Common
stock issued upon exercise of warrants on September 13,
2006
|
0.50
|
150,000
|
150
|
—
|
74,850
|
—
|
—
|
75,000
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued for convertible debt on October 16, 2006
|
0.70
|
66,654
|
67
|
—
|
46,591
|
—
|
—
|
46,658
|
||||||||||||||||||||||||
Common
stock issued upon exercise of warrants on November 3, 2006
|
0.50
|
210,000
|
210
|
—
|
104,790
|
—
|
—
|
105,000
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on November 7,
2006
|
1.22
|
94,4700
|
94
|
—
|
115,368
|
—
|
—
|
115,462
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on November 14,
2006
|
1.14
|
7,300
|
7
|
—
|
8,349
|
—
|
—
|
8,356
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on November 27,
2006
|
0.83
|
27,500
|
28
|
—
|
22,913
|
—
|
—
|
22,941
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on November 28,
2006
|
0.82
|
36,500
|
36
|
—
|
30,059
|
—
|
—
|
30,095
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on December 6,
2006
|
0.78
|
73,863
|
74
|
—
|
57,244
|
—
|
—
|
57,318
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on December 26,
2006
|
0.55
|
18,800
|
19
|
—
|
10,377
|
—
|
—
|
10,396
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on December 31,
2006
|
0.59
|
229,050
|
229
|
—
|
135,300
|
—
|
—
|
135,529
|
||||||||||||||||||||||||
Common
stock paid for, but not issued
|
—
|
—
|
—
|
60,000
|
—
|
—
|
—
|
60,000
|
||||||||||||||||||||||||
Fair
value of options issued to employees and officers
|
—
|
—
|
—
|
—
|
2,253,263
|
—
|
—
|
2,253,263
|
Fair
value of warrants issued for services
|
—
|
—
|
—
|
—
|
401,130
|
—
|
—
|
401,130
|
||||||||||||||||||||||||
Write
off of deferred compensation
|
—
|
—
|
—
|
—
|
(142,187
|
)
|
142,187
|
—
|
—
|
Warrants
issued for consulting
|
—
|
—
|
—
|
—
|
62,497
|
—
|
—
|
62,497
|
||||||||||||||||||||||||
Warrants
issued with convertible notes
|
—
|
—
|
—
|
—
|
408,596
|
—
|
—
|
408,596
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Intrinsic
value of beneficial conversion associated with convertible
notes
|
—
|
—
|
—
|
—
|
851,100
|
—
|
—
|
851,100
|
||||||||||||||||||||||||
Finders
fees related to stock issuances
|
—
|
—
|
—
|
—
|
(284,579
|
)
|
—
|
—
|
(284,579
|
)
|
||||||||||||||||||||||
Fees
paid on equity line of credit
|
—
|
—
|
—
|
—
|
(30,402
|
)
|
—
|
—
|
(30,402
|
)
|
||||||||||||||||||||||
Net
loss for year ended December 31, 2006
|
—
|
—
|
—
|
—
|
—
|
—
|
(10,181,523
|
)
|
(10,181,523
|
)
|
||||||||||||||||||||||
Balance,
December 31, 2006
|
40,081,757
|
$
|
40,082
|
$
|
60,000
|
$
|
29,430,821
|
$
|
—
|
$
|
(30,427,597
|
)
|
$
|
(896,694
|
)
|
|||||||||||||||||
Common
stock issued for put on equity line of credit on January 11,
2007
|
0.63
|
63,000
|
63
|
—
|
39,659
|
—
|
—
|
39,722
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on January 22,
2007
|
0.73
|
58,150
|
58
|
—
|
42,246
|
—
|
—
|
42,304
|
Common
stock issued for put on equity line of credit on February 9,
2007
|
0.73
|
35,800
|
36
|
—
|
26,009
|
—
|
—
|
26,045
|
Deficit Accumulated |
|||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
|||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on February 16,
2007
|
0.70
|
162,000
|
162
|
—
|
112,979
|
—
|
—
|
113,141
|
|||||||||||||||||||||||
Common
stock issued for put on equity line of credit on February 26,
2007
|
0.66
|
71,000
|
71
|
—
|
46,761
|
—
|
—
|
46,832
|
|||||||||||||||||||||||
Common
stock issued for put on equity line of credit on March 5,
2007
|
0.66
|
42,600
|
43
|
—
|
28,056
|
—
|
—
|
28,099
|
|||||||||||||||||||||||
Common
stock issued for put on equity line of credit on March 12,
2007
|
0.67
|
92,900
|
93
|
—
|
62,085
|
—
|
—
|
62,178
|
|||||||||||||||||||||||
Common
stock issued for put on equity line of credit on March 19,
2007
|
0.64
|
47,500
|
48
|
—
|
30,362
|
—
|
—
|
30,410
|
|||||||||||||||||||||||
Common
stock issued for put on equity line of credit on March 26,
2007
|
0.63
|
7,500
|
7
|
—
|
4,722
|
—
|
—
|
4,729
|
|||||||||||||||||||||||
Common
stock issued for put on equity line of credit on March 31,
2007
|
0.61
|
25,500
|
25
|
—
|
15,558
|
—
|
—
|
15,583
|
Fees
paid on equity line of credit
|
—
|
—
|
—
|
—
|
(32,723
|
)
|
—
|
—
|
(32,723
|
)
|
|||||||||||||||||||||
Warrants
issued with convertible notes
|
—
|
—
|
—
|
—
|
291,936
|
—
|
—
|
291,936
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on April 9,
2007
|
0.63
|
56,300
|
56
|
—
|
35,441
|
—
|
—
|
35,497
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on April 17,
2007
|
0.56
|
73,835
|
74
|
—
|
41,466
|
—
|
—
|
41,540
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on April 24,
2007
|
0.56
|
122,857
|
123
|
—
|
68,996
|
—
|
—
|
69,119
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on May 1,
2007
|
0.55
|
226,081
|
226
|
—
|
124,774
|
—
|
—
|
125,000
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on May 8,
2007
|
0.66
|
29,400
|
29
|
—
|
19,363
|
—
|
—
|
19,392
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on May 15,
2007
|
0.43
|
403,502
|
404
|
—
|
171,811
|
—
|
—
|
172,215
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on May 22,
2007
|
0.39
|
119,800
|
120
|
—
|
46,362
|
—
|
—
|
46,482
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on May 30,
2007
|
0.33
|
80,996
|
81
|
—
|
26,631
|
—
|
—
|
26,712
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on June 6,
2007
|
0.32
|
54,700
|
55
|
—
|
17,454
|
—
|
—
|
17,509
|
Common
stock issued for put on equity line of credit on June 15,
2007
|
0.27
|
94,500
|
95
|
—
|
25,571
|
—
|
—
|
25,666
|
||||||||||||||||||||||||
Common
stock issued for put on equity line of credit on June 21,
2007
|
0.31
|
12,500
|
12
|
—
|
3,868
|
—
|
—
|
3,880
|
||||||||||||||||||||||||
Fees
paid on equity line of credit
|
—
|
—
|
—
|
—
|
(46,641
|
)
|
—
|
—
|
(46,641
|
)
|
Deficit
Accumulated
|
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Warrants
issued with convertible notes
|
—
|
—
|
—
|
—
|
260,718
|
—
|
—
|
260,718
|
||||||||||||||||||||||||
Fair
value of options issued to an officer
|
—
|
—
|
—
|
—
|
8,898
|
—
|
—
|
8,898
|
||||||||||||||||||||||||
Common
stock issued, previously paid for
|
—
|
2,597,524
|
2,597
|
(60,000
|
)
|
57,403
|
—
|
—
|
—
|
|||||||||||||||||||||||
Fair
value of options issued to officers
|
—
|
—
|
—
|
—
|
20,574
|
—
|
—
|
20,574
|
||||||||||||||||||||||||
Warrants
issued with convertible notes
|
—
|
—
|
—
|
—
|
267,930
|
—
|
—
|
267,930
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on October 5, 2007
|
0.53
|
51,887
|
52
|
—
|
27,448
|
—
|
—
|
27,500
|
Common
stock issued for convertible debt on November 12, 2007
|
0.37
|
255,081
|
255
|
—
|
94,125
|
—
|
—
|
94,380
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued for convertible debt on November 12, 2007
|
0.53
|
51,887
|
52
|
—
|
27,448
|
—
|
—
|
27,500
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on November 14, 2007
|
0.34
|
80,882
|
81
|
—
|
27,419
|
—
|
—
|
27,500
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on November 14, 2007
|
0.37
|
95,227
|
95
|
—
|
35,105
|
—
|
—
|
35,200
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on November 15, 2007
|
0.37
|
163,514
|
164
|
—
|
60,336
|
—
|
—
|
60,500
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on November 16, 2007
|
0.37
|
71,351
|
71
|
—
|
26,329
|
—
|
—
|
26,400
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on November 16, 2007
|
0.34
|
80,882
|
81
|
—
|
27,419
|
—
|
—
|
27,500
|
||||||||||||||||||||||||
Warrants
issued with convertible notes
|
—
|
—
|
—
|
—
|
158,652
|
—
|
—
|
158,652
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock to be issued for consulting services
|
—
|
—
|
—
|
4,000
|
—
|
—
|
—
|
4,000
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on December 28, 2007
|
0.17
|
1,060,000
|
1,060
|
—
|
198,940
|
—
|
—
|
200,000
|
||||||||||||||||||||||||
Fair
value of options issued to an officer
|
—
|
—
|
—
|
—
|
21,818
|
—
|
—
|
21,818
|
||||||||||||||||||||||||
Net
loss for year ended December 31, 2007
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,262,743
|
)
|
(6,262,743
|
)
|
||||||||||||||||||||||
Balance,
December 31, 2007
|
46,470,413
|
$
|
46,471
|
$
|
4,000
|
$
|
32,280,083
|
$
|
—
|
$
|
(36,690,340
|
)
|
$
|
(4,359,786
|
)
|
Fair
value of warrants issued with convertible notes
|
—
|
—
|
—
|
—
|
116,913
|
—
|
—
|
116,913
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on January 31, 2008
|
0.37
|
118,918
|
119
|
—
|
43,881
|
—
|
—
|
44,000
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on January 31, 2008
|
0.39
|
279,232
|
279
|
—
|
108,621
|
—
|
—
|
108,900
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on March 10, 2008
|
0.39
|
442,820
|
443
|
—
|
172,257
|
—
|
—
|
172,700
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued for convertible debt on March 10, 2008
|
0.38
|
5,450,848
|
5,451
|
—
|
2,039,243
|
—
|
—
|
2,044,694
|
Common
stock issued on March 10, 2008 for settlement of loan on January 31,
2008
|
0.37
|
80,000
|
80
|
—
|
29,603
|
—
|
—
|
29,683
|
||||||||||||||||||||||||
Common
stock issued on March 10, 2008 for settlement of payable on January 31,
2008
|
0.38
|
1,891,048
|
1,891
|
—
|
707,443
|
—
|
—
|
709,334
|
||||||||||||||||||||||||
Common
stock issued on March 10, 2008 for settlement of consulting services on
December 13, 2007
|
0.40
|
10,000
|
10
|
(4,000
|
)
|
3,990
|
—
|
—
|
—
|
|||||||||||||||||||||||
Common
stock issued on March 10, 2008 for settlement of payable on February 1,
2008
|
0.37
|
7,838
|
8
|
—
|
2,892
|
—
|
—
|
2,900
|
||||||||||||||||||||||||
Common
stock to be issued for settlement of payable
|
—
|
—
|
—
|
25,375
|
—
|
—
|
—
|
25,375
|
||||||||||||||||||||||||
Common
stock to be issued upon exercise of warrants on March 18,
2008
|
—
|
—
|
—
|
3,000
|
—
|
—
|
—
|
3,000
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock to be issued upon exercise of warrants on March 19,
2008
|
—
|
—
|
—
|
50,000
|
—
|
—
|
—
|
50,000
|
||||||||||||||||||||||||
Common
stock to be issued upon exercise of warrants on March 20,
2008
|
—
|
—
|
—
|
50,000
|
—
|
—
|
—
|
50,000
|
||||||||||||||||||||||||
Common
stock to be issued upon exercise of warrants on March 21,
2008
|
—
|
—
|
—
|
50,000
|
—
|
—
|
—
|
50,000
|
||||||||||||||||||||||||
Common
stock to be issued upon exercise of warrants on March 26,
2008
|
—
|
—
|
—
|
15,130
|
—
|
—
|
—
|
15,130
|
||||||||||||||||||||||||
Common
stock to be issued upon exercise of warrants on March 27,
2008
|
—
|
—
|
—
|
2,700
|
—
|
—
|
—
|
2,700
|
Common
stock to be issued for notes converted on March 10, 2008
|
—
|
—
|
—
|
11,000
|
—
|
—
|
—
|
11,000
|
||||||||||||||||||||||||
Common
stock to be issued for notes converted on March 17, 2008
|
—
|
—
|
—
|
82,500
|
—
|
—
|
—
|
82,500
|
Deficit Accumulated |
||||||||||||||||||||||||||||||||
Price
per
|
Common
Stock
|
Common
Stock
|
Additional
Paid-in
|
Deferred
|
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
to
be Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock to be issued for notes converted on March 20, 2008
|
—
|
—
|
—
|
158,400
|
—
|
—
|
—
|
158,400
|
||||||||||||||||||||||||
Common
stock to be issued for notes converted on March 21, 2008
|
—
|
—
|
—
|
11,000
|
—
|
—
|
—
|
11,000
|
||||||||||||||||||||||||
Fair
value of options issued to an officer
|
—
|
—
|
—
|
—
|
21,818
|
—
|
—
|
21,818
|
||||||||||||||||||||||||
Fair
value of warrants issued with convertible notes
|
—
|
—
|
—
|
—
|
96,883
|
—
|
—
|
96,883
|
||||||||||||||||||||||||
Intrinsic
value of beneficial conversion associated with convertible
notes
|
—
|
—
|
—
|
—
|
117,739
|
—
|
—
|
117,739
|
||||||||||||||||||||||||
Net
loss for the three months ended March 31, 2008
2008
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,283,847
|
)
|
(2,283,847
|
)
|
||||||||||||||||||||||
Balance,
March 31, 2008
|
54,751,117
|
$
|
54,752
|
$
|
459,105
|
$
|
35,741,366
|
$
|
—
|
$
|
(38,974,187
|
)
|
$
|
(2,718,964
|
)
|
Cumulative
|
||||||||||||
March
31,
|
March
31,
|
since
|
||||||||||
2008
|
2007
|
inception
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
loss
|
$
|
(2,283,847
|
)
|
$
|
(1,914,161
|
)
|
$
|
(38,974,187
|
)
|
|||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Write
off of intangible assets
|
—
|
—
|
505,000
|
|||||||||
Settlement
of litigation and debt
|
—
|
—
|
(1,017,208
|
)
|
||||||||
Stock
based compensation expense
|
21,818
|
16,302
|
2,943,890
|
|||||||||
Issuance
of common stock for services
|
501,037
|
—
|
5,173,139
|
|||||||||
Legal
and interest expense converted into common stock
|
928,237
|
—
|
928,237
|
|||||||||
Issuance
of common stock for payment of loan
|
20,000
|
—
|
20,000
|
|||||||||
Issuance
of options for legal settlement
|
—
|
—
|
31,500
|
|||||||||
Issuance
of warrants for legal settlement
|
—
|
—
|
4,957
|
|||||||||
Issuance
of warrants for financing fees
|
—
|
47,104
|
82,444
|
|||||||||
Patent
acquisition cost
|
—
|
—
|
1,610,066
|
|||||||||
Amortization
of issuance costs and original issue debt
|
471,643
|
217,695
|
4,844,544
|
|||||||||
Amortization
of deferred compensation
|
—
|
—
|
3,060,744
|
|||||||||
Loss
on sale of equipment
|
9,683
|
—
|
9,683
|
|||||||||
Depreciation
|
10,299
|
53,832
|
365,898
|
|||||||||
Bad
debt
|
1,380
|
—
|
1,380
|
|||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
—
|
—
|
(1,380
|
)
|
||||||||
Inventory
|
—
|
(4,409)
|
(30,256
|
)
|
||||||||
Prepaid
expenses and other
|
(2,148
|
)
|
(12,911)
|
(22,700
|
)
|
|||||||
Other
assets
|
—
|
—
|
(4,500
|
)
|
||||||||
Accounts
payable and accrued expenses
|
(315,299
|
)
|
276,023
|
3,108,476
|
||||||||
Net
cash used in operating activities
|
(637,197
|
)
|
(1,320,525
|
)
|
(17,360,273
|
)
|
||||||
Cash
flows from investing activities
|
||||||||||||
Purchase
of property and equipment
|
—
|
(38,937
|
)
|
(553,107
|
)
|
|||||||
Proceeds
from sale of equipment
|
17,477
|
—
|
17,477
|
|||||||||
Net
cash used in investing activities
|
17,477
|
(38,937
|
)
|
(535,630
|
)
|
|||||||
Cash
flows from financing activities
|
||||||||||||
Net
proceeds under equity line of credit
|
—
|
376,320
|
1,262,386
|
|||||||||
Increase
(decrease) in payables to related parties and shareholder
|
(19,113
|
)
|
—
|
596,267
|
||||||||
Increase
in convertible notes
|
89,470
|
—
|
163,962
|
|||||||||
Advances
from founding executive officer
|
—
|
—
|
517,208
|
|||||||||
Net
proceeds from issuance of convertible notes and warrants
|
474,000
|
850,000
|
5,299,678
|
|||||||||
Repayment
of convertible notes
|
(18,750)
|
(226,250
|
)
|
|||||||||
Net
proceeds from issuance of common stock and common stock
issuable
|
170,830
|
—
|
10,425,779
|
|||||||||
Net
cash provided by financing activities
|
715,187
|
1,207,570
|
18,039,030
|
|||||||||
Net
increase (decrease) in cash
|
95,467
|
(151,892)
|
143,127
|
|||||||||
Cash, beginning of
period
|
47,660
|
244,228
|
—
|
|||||||||
Cash, end of
period
|
$
|
143,127
|
$
|
92,336
|
$
|
143,127
|
|
|
|
||||||||||
March
31, 2008 |
March
31, 2007 |
Cumulative since |
||||||||||
Supplemental
disclosures of cash flow information
|
||||||||||||
Cash
paid during the period for
|
||||||||||||
Interest
|
$ | 499 | $ | 3,079 | $ | 135,543 | ||||||
Income
taxes
|
$ | — | $ | 800 | $ | 4,282 |
Non-cash
investing and financing activities
|
Acquisition
of intangible asset through advance from related party and issuance of
common stock
|
$ | — | $ | — | $ | 505,000 | ||||||
Deferred
compensation for stock options issued for services
|
— | — | 3,202,931 | |||||||||
Purchase
of property and equipment financed by advance from related
party
|
— | — | 3,550 | |||||||||
Conversion
of related party debt to equity
|
--- | — | 515,000 | |||||||||
Issuance
of common stock in settlement of payable
|
--- | — | 113,981 | |||||||||
Cancellation
of stock
|
— | — | 8,047 | |||||||||
Conversion
of accounts payable and accrued expenses to common stock
issued
|
— | — | 612,521 | |||||||||
Conversion
of related party debt to convertible debentures
|
— | — | 45,000 | |||||||||
Conversion
of convertible debentures to common stock
|
1,951,212 | — | 4,924,626 | |||||||||
Write
off of deferred compensation
|
— | — | 142,187 | |||||||||
Non-cash
equity-warrant valuation and intrinsic value of beneficial conversion
associated with convertible notes
|
331,535 | 566,248 | 4,297,960 |
•
|
Persuasive
evidence of an arrangement exists;
|
|
•
|
Delivery
has Delivery has occurred or services rendered;
|
|
•
|
The
seller’s price to the buyer is fixed or determinable;
and
|
|
•
|
Collectability
is reasonably assured.
|
(i)
|
|
(ii)
|
|
●
|
Promptly,
but no later than November 30, 2007 (instead of on or before July 2,
2007), the Company shall file the Registration Statement with the SEC to
register the Conversion Shares and the Warrant Shares.
|
●
|
Effective
August 1, 2007, the interest rate on the PIPE Notes shall be increased
from 10% per annum to 18% per annum until such time as the Registration
Statement is declared effective by the SEC.
|
●
|
The
price at which the PIPE Notes may be converted into Conversion Shares (the
"Conversion Price") shall be reduced from $0.70 to $0.45 per
share.
|
●
|
Each
Investor shall receive, for no additional consideration, additional
warrants ("Additional Warrants") in an amount equal to an additional 50%
of the PIPE Warrants originally issued pursuant to the terms of the 2007
PIPE Offering. These Additional Warrants total 428,575 and shall have the
same registration rights as are described in the Private Placement
Memorandum dated January 12, 2007 (the "Offering Memorandum") used in
connection with the 2007 PIPE Offering applicable to the PIPE Warrants;
shall be exercisable immediately upon issuance; shall remain exercisable
for a period of five years from the date of the Modification Agreement, on
a cash basis only, at an initial exercise price of $0.45 per share; and
shall, in all other respects, have the same terms and conditions, and be
in the same form, as the PIPE Warrants.
|
●
|
If
the Company does not file the Registration Statement with the SEC by
November 30, 2007, each Investor shall receive, for no additional
consideration, warrants ("Delay Warrants") in an amount equal to an
additional 50% of the PIPE Warrants originally issued pursuant to the
terms of the Offering Memorandum. The Delay Warrants shall have the same
registration rights as are described in the Offering Memorandum applicable
to the PIPE Warrants; shall be exercisable immediately upon issuance;
shall remain exercisable for a period of five years from the date of this
Agreement, on a cash basis only, at an initial exercise price of $0.45 per
share; and shall, in all other respects, have the same terms and
conditions, and be in the same form, as the PIPE
Warrants.
|
●
|
The
Investors have agreed to forgive all accrued interest on their PIPE Notes,
from the date of issuance thereof through December 14,
2007.
|
●
|
On
December 14, 2007, the Company agreed to pay all Investors 50% of the
principal amount of their original PIPE Notes which equals a total cash
repayment of $200,000. Additionally, in repayment of the other
50% of the principal amount of the original PIPE Notes, the Company, on
December 14, 2007, agreed to issue to Investors a total of 1,060,000
shares of the Company’s common stock (the “Conversion
Shares”).
|
● |
Concurrently
with the cash payment and the issuance of the Conversion Shares as noted
in paragraph 2 above, the Investors agreed to deliver to the Company the
original of the PIPE Notes, which will be marked and deemed cancelled and
of no further force or
effect.
|
●
|
In
further consideration of the above terms and conditions, the Investors
have agreed that the Company shall not be required to, and shall not, file
a Registration Statement with the Securities and Exchange Commission or
any state securities agency to register or qualify the PIPE Notes, the
Conversion Shares, the PIPE Warrants, or any shares issuable pursuant to
the PIPE Warrants (the Warrant Shares”). The Conversion Shares
and Warrant Shares when issued will be deemed restricted securities and
bear appropriate legends.
|
●
|
The
terms and conditions of the PIPE Warrants, to the extent not expressly
amended in the Second Modification Agreement, shall remain in full force
and effect in furtherance of the terms and conditions set forth in the
Modification Agreement.
|
Weighted
Avg.
|
Weighted
Avg.
|
|||||||
Options
|
Exercise
Price
|
|||||||
Options,
January 1, 2004
|
13,250,000
|
0.11
|
||||||
Options
granted
|
1,172,652
|
1.03
|
||||||
Options
exercised
|
—
|
—
|
||||||
Options
cancelled
|
—
|
—
|
||||||
Options,
December 31, 2004
|
14,422,652
|
0.18
|
||||||
Options
granted
|
2,085,909
|
0.92
|
||||||
Options
exercised
|
—
|
—
|
||||||
Options
cancelled
|
(10,000,000
|
)
|
0.10
|
|||||
Options,
December 31, 2005
|
6,508,561
|
0.53
|
||||||
Options
granted
|
1,313,605
|
1.21
|
||||||
Options
exercised
|
(2,860,000
|
)
|
0.10
|
|||||
Options
forfeited
|
(962,607
|
)
|
0.84
|
|||||
Options
cancelled
|
—
|
—
|
||||||
Options,
December 31, 2006
|
3,999,559
|
0.99
|
||||||
Options
granted
|
238,679
|
0.55
|
||||||
Options
exercised
|
—
|
—
|
||||||
Options
forfeited
|
(49,793)
|
1.96
|
||||||
Options
cancelled
|
—
|
—
|
||||||
Options,
December 31, 2007
|
4,188,445
|
$
|
0.95
|
|||||
Options
granted (unaudited)
|
—
|
—
|
||||||
Options
exercised (unaudited)
|
—
|
—
|
||||||
Options
forfeited (unaudited)
|
(1,673,049
|
)
|
1.01
|
|||||
Options
cancelled (unaudited)
|
—
|
—
|
||||||
Options,
March 31, 2008 (unaudited)
|
2,515,396
|
$
|
0.92
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
||||||||||
As
of March 31, 2008:
|
||||||||||||
Outstanding
|
2,515,396
|
$
|
0.92
|
7.10
|
||||||||
Expected
to
Vest
|
2,515,396
|
$
|
0.92
|
7.10
|
||||||||
Exercisable
|
2,326,717
|
$
|
0.96
|
6.88
|
Expected
life
(years)
5.5
|
Risk
free interest
rate
4.42%
|
Volatility 124.57%
|
Expected
dividend
yield
0.0%
|
Warrants
|
Weighted
Avg.
Exercise
Price
|
|||||||
Warrants
outstanding, January 1,
2004
|
14,252,414
|
0.48
|
||||||
Warrants
granted
|
2,372,500
|
1.27
|
||||||
Warrants
exercised
|
(960,500
|
)
|
0.20
|
|||||
Warrants
cancelled
|
—
|
—
|
||||||
Warrants
outstanding, December 31,
2004
|
15,664,414
|
0.62
|
||||||
Warrants
granted
|
5,198,574
|
1.16
|
||||||
Warrants
exercised
|
(50,500
|
)
|
0.99
|
|||||
Warrants
cancelled
|
(20,000
|
)
|
1.50
|
|||||
Warrants
outstanding, December 31,
2005
|
20,792,488
|
0.75
|
||||||
Warrants
granted
|
3,624,894
|
1.28
|
||||||
Warrants
exercised
|
(2,328,452
|
)
|
0.68
|
|||||
Warrants
cancelled
|
(1,191,619
|
)
|
1.46
|
|||||
Warrants
outstanding, December 31,
2006
|
20,897,311
|
$
|
0.81
|
|||||
Warrants
granted
|
3,602,701
|
0.64
|
||||||
Warrants
exercised
|
—
|
—
|
||||||
Warrants
cancelled
|
(6,580,984
|
)
|
1.06
|
|||||
Warrants
outstanding, December 31,
2007
|
17,919,028
|
$
|
0.67
|
|||||
Warrants
granted
|
949,975
|
0.48
|
||||||
Warrants
exercised
|
(341,660
|
)
|
0.50
|
|||||
Warrants
cancelled
|
(2,919,319
|
)
|
0.71
|
|||||
Warrants
outstanding, March 31,
2008
|
15,608,024
|
$
|
0.65
|
Year
|
||||
2008
|
$
|
121,000
|
||
2009
|
$
|
0
|
||
Total
|
$
|
121,000
|
2008
|
$
|
64,080
|
||
2009
|
43,840
|
|||
Total
|
$
|
107,920
|
|
b.
|
The
above payments shall be payable to SCOTTICH GLEN GOLF COMPANY, INC. dba
KZG and wired transferred to the
latter.
|
|
c.
|
In
the event any payment listed above is not paid when due, then the total
sum of $75,000 shall immediately be due and owing, less any payments
actually made pursuant to the Agreement and SGGC shall be entitled to file
the Stipulated Judgment
|
|
d.
|
The
Settlement and Mutual Release Agreement also provides for mutual general
releases.
|
•
|
revenues
and profits;
|
|
•
|
customers;
|
|
•
|
research
and development expenses and efforts;
|
|
•
|
scientific
and other third-party test results;
|
|
•
|
sales
and marketing expenses and efforts;
|
|
•
|
liquidity
and sufficiency of existing cash;
|
|
•
|
technology
and products;
|
|
•
|
the
outcome of pending or threatened litigation; and
|
|
•
|
the
effect of recent accounting pronouncements on our financial condition and
results of operations
|
(i)
|
|
(ii)
|
|
●
|
Promptly,
but no later than November 30, 2007 (instead of on or before July 2,
2007), the Company shall file the Registration Statement with the SEC to
register the Conversion Shares and the Warrant
Shares.
|
●
|
Effective
August 1, 2007, the interest rate on the PIPE Notes shall be increased
from 10% per annum to 18% per annum until such time as the Registration
Statement is declared effective by the
SEC.
|
●
|
The
price at which the PIPE Notes may be converted into Conversion Shares (the
"Conversion Price") shall be reduced from $0.70 to $0.45 per
share.
|
●
|
Each
Investor shall receive, for no additional consideration, additional
warrants ("Additional Warrants") in an amount equal to an additional 50%
of the PIPE Warrants originally issued pursuant to the terms of the 2007
PIPE Offering. These Additional Warrants total 428,575 and shall have the
same registration rights as are described in the Private Placement
Memorandum dated January 12, 2007 (the "Offering Memorandum") used in
connection with the 2007 PIPE Offering applicable to the PIPE Warrants;
shall be exercisable immediately upon issuance; shall remain exercisable
for a period of five years from the date of the Modification Agreement, on
a cash basis only, at an initial exercise price of $0.45 per share; and
shall, in all other respects, have the same terms and conditions, and be
in the same form, as the PIPE Warrants.
|
●
|
If
the Company does not file the Registration Statement with the SEC by
November 30, 2007, each Investor shall receive, for no additional
consideration, warrants ("Delay Warrants") in an amount equal to an
additional 50% of the PIPE Warrants originally issued pursuant to the
terms of the Offering Memorandum. The Delay Warrants shall have the same
registration rights as are described in the Offering Memorandum applicable
to the PIPE Warrants; shall be exercisable immediately upon issuance;
shall remain exercisable for a period of five years from the date of this
Agreement, on a cash basis only, at an initial exercise price of $0.45 per
share; and shall, in all other respects, have the same terms and
conditions, and be in the same form, as the PIPE
Warrants.
|
● |
The
Investors have agreed to forgive all accrued interest on their PIPE Notes,
from the date of issuance thereof through December 14,
2007.
|
● |
On
December 14, 2007, the Company agreed to pay all Investors 50% of the
principal amount of their original PIPE Notes which equals a total cash
repayment of $200,000. Additionally, in repayment of the other
50% of the principal amount of the original PIPE Notes, the Company, on
December 14, 2007, agreed to issue to Investors a total of 1,060,000
shares of the Company’s common stock (the “Conversion
Shares”).
|
● |
Concurrently
with the cash payment and the issuance of the Conversion Shares as noted
in paragraph 2 above, the Investors agreed to deliver to the Company the
original of the PIPE Notes, which will be marked and deemed cancelled and
of no further force or effect.
|
● |
In
further consideration of the above terms and conditions, the Investors
have agreed that the Company shall not be required to, and shall not, file
a Registration Statement with the Securities and Exchange Commission or
any state securities agency to register or qualify the PIPE Notes, the
Conversion Shares, the PIPE Warrants, or any shares issuable pursuant to
the PIPE Warrants (the Warrant Shares”). The Conversion Shares
and Warrant Shares when issued will be deemed restricted securities and
bear appropriate legends.
|
● |
The
terms and conditions of the PIPE Warrants, to the extent not expressly
amended in the Second Modification Agreement, shall remain in full force
and effect in furtherance of the terms and conditions set forth in the
Modification Agreement.
|
Year
ending December 31,
|
Operating
Leases(1)
|
Guaranteed
Payments
|
||||||
2008
|
$
|
64,080
|
$
|
231,933
|
(2)
|
|||
2009
|
$
|
43,840
|
$
|
200,000
|
(3)
|
|||
2010
|
$
|
0
|
$
|
125,000
|
(4)
|
|||
$
|
107,920
|
$
|
556,933
|
•
|
Persuasive
evidence of an arrangement exists;
|
|
•
|
Delivery
has occurred or services rendered;
|
|
•
|
The
seller’s price to the buyer is fixed or determinable;
and
|
|
•
|
Collectability
is reasonably assured.
|
|
b.
|
The
above payments shall be payable to SCOTTICH GLEN GOLF COMPANY, INC. dba
KZG and wired transferred to the
latter.
|
|
c.
|
In
the event any payment listed above is not paid when due, then the total
sum of $75,000 shall immediately be due and owing, less any payments
actually made pursuant to the Agreement and SGGC shall be entitled to file
the Stipulated Judgment
|
|
d.
|
The
Settlement and Mutual Release Agreement also provides for mutual general
releases.
|
Exhibit
No.
|
Description
|
|||
31.1
|
Certification
of Chief Executive Officer of Quarterly Report Pursuant to Rule
13(a)-15(e) or Rule 15(d)-15(e)
|
|||
31.2
|
Certification
of Chief Financial Officer of Quarterly Report Pursuant to 18 U.S.C.
Section 1350
|
|||
32
|
Certification
of Chief Executive Officer and Chief Financial Officer of Quarterly Report
pursuant to Rule 13(a)-15(e) or
Rule 15(d)-15(e)
|
SAVE THE WORLD AIR, INC. | |||
Date:
May 13, 2008
|
By:
|
/s/ EUGENE E. EICHLER | |
Eugene
E. Eichler
|
|||
Interim
Chief Financial Officer
|
|||
Exhibit
No.
|
Description
|
|||||
31.1
|
Certification
of Chief Executive Officer of Quarterly Report Pursuant to Rule
13(a)-15(e) or Rule 15(d)-15(e)
|
|||||
31.2
|
Certification
of Chief Financial Officer of Quarterly Report Pursuant to 18 U.S.C.
Section 1350
|
|||||
32
|
Certification
of Chief Executive Officer and Chief Financial Officer of Quarterly Report
pursuant to Rule 13(a)-15(e) or
Rule 15(d)-15(e)
|
|||||
†
|
Management
contract or compensatory plan or
arrangement.
|