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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

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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.)

 

 

 

 

Large accelerated filer o	Accelerated filer  o
Non-accelerated filer  o  (Do not check if a smaller reporting company)	Smaller reporting companyo

 

 

 

 

		Page
PART I
ITEM 1. Financial Statements
Condensed consolidated balance sheets		1
Condensed consolidated statements of operations (unaudited)		2
Condensed consolidated statement of changes in stockholders’ deficiency (unaudited)		3
Condensed consolidated statements of cash flows (unaudited)		18
Notes to condensed consolidated financial statements (unaudited)		20
ITEM 2. Management’s Discussion and Analysis or Plan of Operations		35
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk		46
ITEM 4. Controls and Procedures		46
PART II
ITEM 1. Legal Proceedings		47
ITEM 1A. Risk Factors		48
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		49
ITEM 3. Defaults Upon Senior Securities		49
ITEM 4. Submission of Matters to a Vote of Security Holders		49
ITEM 5. Other Information		50
ITEM 6. Exhibits		50
SIGNATURES		51
EXHIBIT INDEX		52
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32

 

 

		September 30, 2008 (unaudited)				December 31, 2007
ASSETS
Current assets
Cash		$	78,125			$	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			34,844				20,552
Total current assets			143,225				99,848
Equipment, net			145,691				201,058
Other assets			11,250				4,500
Total assets		$	300,166			$	305,406
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities
Accounts payable-related parties		$	256,880			$	323,413
Accounts payable-Temple University			537,750				161,250
Accounts payable-other			589,171				555,736
Accrued expenses			184,618				172,719
Accrued salaries-officers and former officer			618,333				570,000
Accrued research and development fees			13,347				53,347
Accrued professional fees			340,978				274,499
Loan payable-related party			77,209				83,596
Loans and other payable due to Morale/Matthews			-				1,748,452
Convertible debentures, net-related parties			-				227,136
Convertible debentures, net-others			266,639				495,044
Total current liabilities			2,884,925				4,665,192
Commitments and contingencies
Stockholders’ deficiency
Common stock, $.001 par value: 200,000,000 shares authorized, 58,948,138 and 46,470,413 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively			58,948				46,471
Common stock to be issued			-				4,000
Additional paid-in capital			38,501,646				32,280,083
Deficit accumulated during the development stage			(41,145,353	)			(36,690,340	)
Total stockholders’ deficiency			(2,584,759	)			(4,359,786	)
Total liabilities and stockholders’ deficiency		$	300,166			$	305,406

 

 

		Three months ended September 30,								Nine months ended September 30,								For the Period From February 18, 1998 (Date of Inception) through
		2008				2007				2008				2007				September 30, 2008
Net sales		$	-			$	-			$	-			$	22,000			$	69,000
Cost of goods sold			-				-				-				5,360				24,120
Gross profit			-				-				-				16,640				44,880
Operating expenses			(1,148,887	)			(873,971	)			(2,428,889	)			(3,177,533	)			(29,288,210	)
Research and development expenses			(109,822	)			(98,427	)			(432,184	)			(539,610	)			(5,238,414	)
Non-cash patent settlement costs			-				-								-				(1,610,066	)
Loss before other income (expense)			(1,258,709	)			(972,398	)			(2,861,073	)			(3,700,503	)			(36,091,810	)
Other income (expense)
Other income			(30	)			2,271				533				2,448				4,042
Interest income			-				12				2				62				16,344
Interest expense			(220,400	)			(647,737	)			(1,636,862	)			(1,361,403	)			(6,129,242	)
Loss on sale of equipment			-				-				(9,683	)			-				(9,683	)
Settlement of litigation and debt			-				-				52,070				-				1,069,278
Loss before provision for income taxes			(1,479,139	)			(1,617,852	)			(4,455,013	)			(5,059,396	)			(41,141,071	)
Provision for income taxes			-				-				-				(800	)			(4,282	)
Net loss		$	(1,479,139	)		$	(1,617,852	)		$	(4,455,013	)		$	(5,060,196	)		$	(41,145,353	)
Net loss per share, basic and diluted		$	(0.03	)		$	(0.04	)		$	(0.10	)		$	(0.13	)
Weighted average shares outstanding,
basic and diluted			47,312,880				40,988,308				45,374,117				38,265,250