Nevada
|
52-2088326
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
Page
|
||||
PART
I
|
||||
Item 1
|
Business
|
1
|
||
Item 1A | Risk Factors |
18
|
||
Item 1B | Unresolved Staff Comments |
26
|
||
Item 2
|
Properties
|
26
|
||
Item 3
|
Legal
Proceedings
|
26
|
||
Item 4
|
Submission
of Matters to a Vote of Security Holders
|
27
|
||
PART
II
|
||||
Item 5
|
Market
for Common Equity and Related Stockholder Matters
|
28
|
||
Item 6 | Selected Financial Data | |||
Item 7
|
Management’s
Discussion and Analysis or Plan of Operation
|
29
|
||
Item 7A | Quantitative and Qualitative Disclosures About Market Risk | |||
Item 8
|
Financial
Statements
|
37
|
||
Item 9
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
37
|
||
Item 9A(T)
|
Controls
and Procedures
|
37
|
||
Item 9B
|
Other
Information
|
38
|
||
PART
III
|
||||
Item 10
|
Directors
and Executive Officers of Registrant
|
39
|
||
Item 11
|
Executive
Compensation
|
39
|
||
Item 12
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
39
|
||
Item 13
|
Certain
Relationships and Related Transactions
|
39
|
||
Item
14
|
Principal
Accountant Fees and Services
|
39
|
||
PART
IV
|
||||
Item 15
|
Exhibits
|
40
|
||
SIGNATURES
|
44
|
●
|
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.
|
THC
(g/km)
|
CO
(g/km)
|
NOx
(g/km)
|
CO2
(g/km)
|
|
Without
ECO ChargR (ZEFS)
|
0.536
|
0.162
|
9.67
|
52.851
|
With
ECO ChargR (ZEFS)
|
0.52
|
0.104
|
1.42
|
48.553
|
%
Change
|
-3.00%
|
-35.80%
|
-85.32%
|
-8.13%
|
THC
(g/km)
|
CO
(g/km)
|
NOx
(g/km)
|
CO2
(g/km)
|
|
Without
ECO ChargR (ZEFS)
|
0.36
|
0.087
|
2.59
|
44.53
|
With
ECO ChargR (ZEFS)
|
0.33
|
0.108
|
1.86
|
43.6
|
%
Change
|
-8.3%
|
24.1%
|
-28.2%
|
-2.1%
|
|
Run
1
|
Run
2
|
Run
3
|
|||||||||||||
(l/km)
|
(l/km)
|
(l/km)
|
Average
|
|||||||||||||
Baseline
FC Test Runs without MK IV Device
|
0.0196
|
0.0195
|
0.0193
|
0.0195
|
||||||||||||
FC
Test Runs with MK IV Device
|
0.0186
|
0.0184
|
0.0185
|
0.0185
|
||||||||||||
Difference
|
0.0010
|
0.0011
|
0.0008
|
0.0010
|
||||||||||||
Improvement
|
5.10
|
%
|
5.64
|
%
|
4.15
|
%
|
5.13
|
%
|
Total
Hydrocarbon (THC) Emissions (gms/km)
|
||||||||||||
Suzuki
110cc
|
RevTech
100cc
|
Merch
125cc
|
||||||||||
AVERAGE
BASELINE
|
0.124
|
1.821
|
1.372
|
|||||||||
AVERAGE
ECO ChargR
|
0.098
|
1.685
|
1.302
|
|||||||||
%
Improvement
|
21.0
|
%
|
7.5
|
%
|
5.1
|
%
|
Carbon
Monoxide (CO) Emissions (gms/km)
|
||||||||||||
Suzuki
110cc
|
RevTech
100cc
|
Merch
125cc
|
||||||||||
AVERAGE
BASELINE
|
1.729
|
29.086
|
21.201
|
|||||||||
AVERAGE
ECO ChargR
|
1.231
|
18.160
|
15.805
|
|||||||||
%
Improvement
|
28.8
|
%
|
37.6
|
%
|
25.5
|
%
|
Oxides
of Nitrogen (NOx) Emissions (gms/km)
|
||||||||||||
Suzuki
110cc
|
RevTech
100cc
|
Merch
125cc
|
||||||||||
AVERAGE
BASELINE
|
0.066
|
0.136
|
0.287
|
|||||||||
AVERAGE
ECO ChargR
|
0.063
|
0.196
|
0.268
|
|||||||||
%
Improvement
|
4.5
|
%
|
-44.0
|
%
|
6.4
|
%
|
||||||
Fuel
Economy (miles per gallon)
|
||||||||||||
Suzuki
110cc
|
RevTech
100cc
|
Merch
125cc
|
||||||||||
AVERAGE
BASELINE
|
241.97
|
39.68
|
34.83
|
|||||||||
AVERAGE
ECO ChargR
|
253.16
|
41.08
|
34.82
|
|||||||||
%
Improvement
|
4.6
|
%
|
3.5
|
%
|
0.0
|
%
|
●
|
Size
of the installed base of cars applicable to an individual MAG ChargR
model
|
●
|
Probability
that the owner of such an automobile would purchase and aftermarket
performance enhancement
product
|
●
|
Level
of improvement that MAG ChargR delivers for a specific make, model, year
and displacement
|
●
|
Existing
proven, large-scale manufacturing and distribution for transportation
OEMs
|
●
|
Existing
relationships with fleet managers of large diesel truck
operators
|
●
|
Forward-looking
proactive corporate vision looking to bold expand their market
share
|
Make
|
Model
|
Year
|
Engine
|
Chrysler
|
SRT8
|
2006
|
6.1L
Hemi
|
Dodge
|
Challenger
|
2008
|
6.1L
Hemi
|
Chevrolet
|
Suburban
|
2005
|
4.6L
Big
Block
|
Make
|
Model
|
Year
|
Engine
|
HP
Increase @ 4680 RPM
|
Torque
Increase @ 4680 RPM
|
Chrysler
|
SRT8
|
2006
|
6.1L
Hemi
|
3.4%
|
5.4%
|
Chevrolet
|
Suburban
|
2005
|
Big
Block
|
11.5%
|
8.9%
|
Country
|
Number
|
Filing
date
|
Status
|
|||
GCC
*
|
GCC/P/2005/5066
|
22
August 2005
|
Application
filed – awaiting examination.
|
|||
Brazil
|
0510871-3
|
13
May 2005
|
Examination
to be requested by May 2008
|
|||
Canada
|
2566739
|
13
May 2005
|
Examination
to be requested by May 2010
|
|||
China
|
200580023369.3
|
13
May 2005
|
Examination
requested April 2007
|
|||
Algeria
|
060593
|
13
May 2005
|
Application
filed – awaiting examination
|
|||
Eurasia
**
|
200602114
|
13
May 2005
|
Under
examination – response filed.
|
|||
Egypt
|
PCT
1087/2006
|
13
May 2005
|
Application
filed – awaiting examination
|
|||
United
Kingdom
|
0624025.3
|
13
May 2005
|
Under
examination – response filed
|
|||
Indonesia
|
WO0200603429
|
13
May 2005
|
Application
filed – examination to be requested by 13 May 2008
|
|||
Libya
|
To
be advised
|
Application
sent to agent
|
||||
Mexico
|
PA/a/2006/013206
|
13
May 2005
|
Application
filed – awaiting examination
|
|||
Norway
|
20065632
|
13
May 2005
|
Application
filed – awaiting examination
|
|||
United
States
|
11/519168
|
13
May 2005
|
Application
filed – awaiting
examination
|
Country
|
Number
|
Filing
date
|
Status
|
|||
Australia
|
2001258057
|
21
May 2001
|
GRANTED
|
|||
Canada
(small
entity
status)
|
2409195
|
21
May 2001
|
Examination
requested April 2006
|
|||
China
|
01809802.9
|
21
May 2001
|
Under
examination – response filed
|
|||
Columbia
|
02115018
|
21
May 2001
|
Examination
requested 23 July 2004.
|
|||
Czech
Republic
|
PV
2002-4092
|
21
May 2001
|
Accepted -
awaiting Deed of Letters Patent
|
|||
Eurasian
+++
|
200201237
|
21
May 2001
|
GRANTED.
Renewed in Russia only.
|
|||
Europe ++
|
019331222.2
|
21
May 2001
|
Awaiting
examination
|
|||
Hong
Kong
|
04100327.0
|
21
May 2001
|
Automatic
grant upon grant of the Chinese application
|
|||
India*
|
IN/PCT/2002/01523
|
21
May 2001
|
Under
Examination – response filed
|
|||
Indonesia
|
WO0200202844
|
21
May 2001
|
Accepted
– awaiting Deed of Letters
Patent
|
Korea
[South]
|
2002-7015531
|
21
May 2001
|
Under
examination – response filed.
|
|||
Japan
|
586731/2001
|
21
May 2001
|
Examination
to be requested by 21 May 2008
|
|||
Mexico
|
PA/A/2002/011365
|
21
May 2001
|
GRANTED
|
|||
New
Zealand
|
523113
|
21
May 2001
|
GRANTED
|
|||
Norway
|
20025531
|
21
May 2001
|
Awaiting
examination
|
|||
Poland
|
P358837
|
21
May 2001
|
Awaiting
examination
|
|||
Singapore
|
93310
[WO
01/90562]
|
21
May 2001
|
GRANTED
|
|||
Sri
Lanka
|
12918
|
21
May 2001
|
GRANTED
|
|||
United
States
|
6901917
|
21
May 2001
|
GRANTED
|
|||
Vietnam
|
1-2002-01168
|
21
May 2001
|
GRANTED
|
Country
|
Number
|
Filing
date
|
Status
|
|||
China
|
NA
|
20
June 2006
|
Application
sent to Agent
|
|||
Japan
|
NA
|
20
June 2006
|
Application
sent to Agent
|
|||
Korea
[South]
|
NA
|
20
June 2006
|
Application
sent to Agent
|
|||
Malaysia
|
PI
20062013
|
2
May 2006
|
Examination
due by 2 May 2008
|
|||
PCT
|
PCT/AU2006/000861
|
20
June 2006
|
Demand
for IPE filed – IPRP favorable.
|
|||
Taiwan
|
95115220
|
28
April 2006
|
Examination
due by 29 April 2009
|
|||
Thailand
|
0601001997
|
2
May 2006
|
Application
filed - awaiting examination
|
|||
United
States
|
NA
|
20
June 2006
|
Application
sent to Agent
|
Country
|
Number
|
Filing
Date
|
Status
|
|||
Australia
|
1121860
|
4
July 2006
|
GRANTED
|
|||
Madrid
*
|
1121860
|
4
January 2007
|
GRANTED
|
|||
Canada
|
1330199
|
4
January 2007
|
Accepted
– awaiting Registration Certificate
|
|||
Indonesia
|
D00
2007 000330
|
4
January 2007
|
Application
filed – awaiting examination
|
|||
Malaysia
|
2007/00156
|
4
January 2007
|
Application
filed – awaiting examination
|
|||
Thailand
|
649741
|
4
January 2007
|
Application
filed – awaiting examination
|
|||
Taiwan
|
96000462
|
4
January 2007
|
Under
examination – response filed.
|
●
|
China
|
|
|
●
|
European
Community
|
|
●
|
United
States
|
|
●
|
Japan
|
|
●
|
Korea
|
|
●
|
Singapore
|
|
●
|
Vietnam
|
Country
|
Number
|
Filing
Date
|
Status
|
|||
Australia
|
1121864
|
4
July 2006
|
Registered
Co-Existence Agreement with Mag Instruments
|
|||
Madrid
|
1121864
|
4
January 2007
|
GRANTED
|
|||
Canada
|
1330200
|
4
January 2007
|
Under
examination – response filed
|
|||
Indonesia
|
D00
2007 000331
|
4
January 2007
|
Application
filed – awaiting examination
|
|||
Malaysia
|
2007/00157
|
4
January 2007
|
Application
filed – awaiting examination
|
|||
Thailand
|
649742
|
4
January 2007
|
Application
filed – awaiting examination
|
|||
Taiwan
|
96000465
|
4
January 2007
|
Allowed/Accepted.
|
Country
|
Number
|
Filing
Date
|
Status
|
|||
Australia
|
1140033
|
11
July 2006
|
GRANTED
|
Madrid
|
1140033
|
10
July 2007
|
GRANTED
|
●
|
raise
additional needed capital for research and development;
|
|
●
|
complete
development of our products in development; and
|
|
●
|
successfully
introduce and commercialize our new
products.
|
●
|
the
willingness and ability of consumers and industry partners to adopt new
technologies;
|
|
●
|
the
willingness and ability of consumers and industry partners to adopt new
technologies;
|
|
●
|
the
willingness of governments to mandate reduction of motor vehicle
emissions;
|
|
●
|
our
ability to convince potential industry partners and consumers that our
technology is an attractive alternative to other technologies for
reduction of motor vehicle emissions;
|
|
●
|
our
ability to manufacture products and provide services in sufficient
quantities with acceptable quality and at an acceptable cost;
and
|
|
●
|
our
ability to place and service sufficient quantities of our
products.
|
·
|
delays
in product development;
|
|
·
|
market
acceptance of our new products;
|
|
·
|
changes
in the demand for, and pricing, of our products;
|
|
·
|
competition
and pricing pressure from competitive products;
|
|
·
|
manufacturing
delays; and
|
|
·
|
expenses
related to, and the results of, proceedings relating to our intellectual
property.
|
·
|
incur
substantial monetary damages;
|
|
·
|
encounter
significant delays in marketing our current and proposed product
candidates;
|
|
·
|
be
unable to conduct or participate in the manufacture, use or sale of
product
|
·
|
candidates or methods of
treatment requiring licenses;
|
|
·
|
lose
patent protection for our inventions and products; or
|
|
·
|
find
our patents are unenforceable, invalid, or have a reduced scope of
protection.
|
·
|
developments
with respect to patents or proprietary rights;
|
|
·
|
announcements
of technological innovations by us or our
competitors;
|
·
|
announcements
of new products or new contracts by us or our
competitors;
|
|
·
|
actual
or anticipated variations in our operating results due to the level of
development expenses and other factors;
|
|
·
|
changes
in financial estimates by securities analysts and whether any future
earnings of ours meet or exceed such
estimates;
|
·
|
conditions
and trends in our industry;
|
|
·
|
new accounting
standards;
|
|
·
|
general economic, political and
market conditions and other factors; and
|
|
·
|
the
occurrence of any of the risks described in this Memorandum.
|
2008
|
2007
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First
First Quarter
|
$
|
0.86
|
$
|
0.30
|
$
|
1.17
|
$
|
0.60
|
||||||||
Snd
Second Quarter
|
$
|
0.79
|
$
|
0.37
|
$
|
0.80
|
$
|
0.25
|
||||||||
Th Third
Quarter
|
$
|
0.45
|
$
|
0.27
|
$
|
0.60
|
$
|
0.17
|
||||||||
Fou Fourth
Quarter
|
$
|
0.40
|
$
|
0.12
|
$
|
0.48
|
$
|
0.15
|
●
|
Gross
and net proceeds of $474,000 from the issuance of convertible notes and
warrants in a Spring 2008 offering. The face amount of the
notes is $521,400.
|
|
●
|
Gross
and net proceeds of $60,000 from the issuance of convertible notes and
warrants in a Spring 2008 offering. The face amount of the
notes is $66,000.
|
●
|
Gross
and proceeds of $440,000 from the issuance of convertible notes and
warrants in a Summer 2008 offering. The face amount of the
notes is $484,000.
|
|
●
|
Gross
and net proceeds of $180,200 from the issuance of convertible notes and
warrants in a Fall 2008 offering. The face amount of the notes
is $198,220.
|
|
●
|
Gross
and net proceeds of $477,000 from the issuance of convertible notes and
warrants in a Winter 2008 (2nd) offering. The face amount of
the notes is $524,700.
|
|
●
|
Gross
and net proceeds of $532,325 from the issuance of stock upon exercise
warrants.
|
Year ending December 31,
|
Operating
Leases (1)
|
Guaranteed
Payments
|
||||||
2009
|
$
|
43,840
|
$
|
466,200
|
(2)
|
|||
2010
|
0
|
142,567
|
(3)
|
|||||
Total
|
$
|
43,840
|
$
|
608,767
|
(1)
|
Consists
of rent for our Morgan Hill Facility expiring on August 31, 2009. (For
description of this property, see Part 1, Item 2, and
“Property”.
|
(2)
|
Consists
of an aggregate of $72,967 in total compensation, including base salary
and certain contractually-provided benefits, to one
executive officer, pursuant to an employment agreement that expires on
July 25, 2009; $193,233 in total compensation, including base salary and
certain contractually-provided benefits, to an executive officer, pursuant
to an employment agreement that expires on January 30, 2010 and $200,000
in licensing and maintenance fees to Temple
University.
|
(3)
|
Consists
of an aggregate of $17,567 in total compensation, including
base salary and certain contractually-provided benefits to an executive
officer, pursuant to an employment agreement that expires on January 30,
2010 and $125,000 in licensing and maintenance fees due to Temple
University.
|
|
●
|
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.
|
Amount
|
||||||||
Type of
Fee
|
Fiscal
Year 2008
|
Fiscal
Year 2007
|
||||||
Audit(1)
|
$
|
103,850
|
$
|
193,186
|
||||
Audit
Related(2)
|
0
|
0
|
||||||
Taxes
(3)
|
0
|
0
|
||||||
All
Other (4)
|
0
|
0
|
||||||
Total
|
$
|
103,850
|
$
|
193,186
|
(1)
|
This
category consists of fees for the audit of our annual financial statements
included in the Company’s annual report on Form 10-K and review of
the financial statements included in the Company’s quarterly reports on
Form 10-Q. This category also includes advice on audit and accounting
matters that arose during, or as a result of, the audit or the review of
interim financial statements, statutory audits required by
non-U.S. jurisdictions and the preparation of an annual “management
letter” on internal control matters.
|
(2)
|
Represents
services that are normally provided by the independent auditors in
connection with statutory and regulatory filings or engagements for those
fiscal years, aggregate fees charged for assurance and related services
that are reasonably related to the performance of the audit and are not
reported as audit fees. These services include consultations regarding
Sarbanes-Oxley Act requirements, various SEC filings and the
implementation of new accounting requirements.
|
(3)
|
Represents
aggregate fees charged for professional services for tax compliance and
preparation, tax consulting and advice, and tax
planning.
|
(4)
|
Represents
aggregate fees charged for products and services other than those services
previously reported.
|
(a)
|
The
following documents are filed as part of this Form
10-K.
|
(b)
|
Exhibits:
|
Exhibit
No.
|
Description
|
||
3.1(1)
|
Articles
of Incorporation, as amended, of the Registrant.
|
||
3.2(1)
|
Bylaws
of the Registrant.
|
||
10.1(2)
|
Commercial
Sublease dated October 16, 2003 between the Registrant and KZ Golf,
Inc.
|
||
10.2(9)
|
Amendment
dated June 15, 2004 to Exhibit 10.1
|
||
10.3
(10)
|
Amendment
dated August 14, 2005 to Exhibit 10.1
|
||
10.4(10)
|
General
Tenancy Agreement dated March 14, 2006 between the Registrant and Autumlee
Pty Ltd.
|
||
10.5(3)
|
Agreement
dated December 13, 2002 between the Registrant and
RAND.
|
||
10.6(2)**
|
Agreement
dated May 7, 2003 between the Registrant and RAND.
|
||
10.7(5)
|
Modification
No. 1 dated as of August 21, 2003 to
Exhibit 10.5
|
||
10.8(5)
|
Modification
No. 2 dated as of October 17, 2003 to
Exhibit 10.5
|
||
10.9(5)
|
Modification
No. 3 dated as of January 20, 2004 to
Exhibit 10.5
|
||
10.10(4)
|
Deed
and Document Conveyance between the Trustee of the Property of Jeffrey Ann
Muller and Lynette Anne Muller (Bankrupts).
|
||
10.11(4)
|
Assignment
and Bill of Sale dated May 28, 2002 between the Registrant and Kevin
Charles Hart.
|
||
10.12(11)†
|
Amended
and Restated Employment Agreement dated October 5, 2005 between the
Registrant and Eugene E. Eichler.
|
||
10.13(15)†
|
Severance
Agreement dated November 8, 2006 between the Registrant and Eugene E.
Eichler
|
||
10.14(11)†
|
Amended
and Restated Employment Agreement dated October 5, 2005 between the
Registrant and Bruce H. McKinnon.
|
||
10.15(6)
|
Save
the World Air, Inc. 2004 Stock Option Plan
|
||
10.16(8)
|
Form
of Incentive Stock Option Agreement under 2004 Stock Option
Plan
|
||
10.17(8)
|
Form
of Non-Qualified Stock Option Agreement under 2004 Stock Option
Plan
|
||
10.18(8)
|
Consulting
Agreement dated as of October 1, 2004 between the Registrant and John
Fawcett
|
||
10.19(7)
|
License
Agreement dated as of July 1, 2004 between the Registrant and Temple
University – The Commonwealth System of Higher Education
|
||
10.20(8)
|
Consulting
Agreement dated as of November 19, 2004 between the Registrant and London
Aussie Marketing, Ltd.
|
||
10.21(13)
|
Amendment
dated September 14, 2006 to Exhibit 10.20
|
||
10.22(8)†
|
Employment
Agreement dated September 1, 2004 with Erin Brockovich
|
||
10.23(15)†
|
Amendment
dated as of July 31, 2006 to Exhibit 10.22
|
||
10.24(8)
|
Assignment
of Patent Rights dated as of September 1, 2003 between the Registrant
and Adrian Menzell
|
||
10.25(8)
|
Global
Deed of Assignment dated June 26, 2004 between the Registrant and
Adrian Menzell
|
||
10.26(11)†
|
Amended
and Restated Employment Agreement dated as of March 1, 2006 between the
Registrant and John Richard Bautista III
|
||
10.27(9)
|
Lease
dated August 15, 2005 between the Registrant and Thomas L.
Jackson
|
||
10.28(10)
|
Amendment
dated February 1, 2006 to Exhibit 10.27
|
||
10.29(10)
|
Form
of 9% Convertible Note issued in the 2005 Interim
Financing
|
||
10.30(10)
|
Form
of Stock Purchase Warrant issued in the 2005 Interim
Financing
|
||
10.31(10)
|
Form
of Stock Purchase Warrant issued in the 2005 Bridge
Financing
|
||
10.32(11)
|
Form
of Stock Purchase Warrant issued in 2006 Regulation S
financing
|
||
10.33(11)
|
Form
of Stock Purchase Warrant issued in 2006 PIPE financing
|
||
10.34(12)
|
Commercial
Sublease between the Registrant and KZG Golf dated January 1,
2006
|
||
10.35(12)
|
Investment
Agreement dated September 15, 2006 between the Registrant and Dutchess
Private Equities Fund
|
||
10.36(12)
|
Registration
Rights Agreement dated September 15, 2006 between the registrant and
Dutchess Private Equities Fund, LLP
|
||
10.37(17)
|
License
Agreement between the Registrant and Temple University dated February 2,
2007
|
10.38(17)
|
License
Agreement between the Registrant and Temple University dated February 2,
2007
|
||
10.39(17)
|
R&D
Agreement between the Registrant and Temple University dated February 2,
2007
|
||
10.40(14)
|
Note
Purchase Agreement dated December 5, 2006 between the registrant and
Morale Orchards LLC
|
||
10.41(14)
|
Form
of Stock Purchase Warrant issued to Morale Orchards LLC
|
||
10.42(14)
|
Form
of Convertible Note issued to Morale Orchards LLC
|
||
10.43(16)
|
Consulting
Agreement dated January 4, 2007 between the Registrant and Spencer Clarke
LLC
|
||
10.44(15)
|
Agreement
dated as of July 15, 2006 between the Company and SS Sales and Marketing
Group
|
||
10.45(15)
|
Engagement
Agreement between the Registrant and Charles K. Dargan II
|
||
10.46(15)
|
Form
of 10% Convertible Note issued in 2007 PIPE Offering
|
||
10.47(15)
|
Form
of Stock Purchase Warrant issued in 2007 PIPE Offering
|
||
10.48(18)
|
Appointment
of New Directors, Nathan Shelton, Steven Bolio and Dennis
Kenneally
|
||
10.49(19)
|
Issuance
of RAND Final Report
|
||
10.50(20)
|
Delisting
from OTCBB to OTC Pink Sheets
|
||
10.51(21)
|
Resignation
of Director, Dennis Kenneally
|
||
10.52(22)
|
Resignation
of Officer, Bruce H. McKinnon
|
||
10.53(23)
|
Form
of 10% Convertible Note issued in 2007 Spring Offering
|
||
10.54(23)
|
Form
of Stock Purchase Warrant issued in 2007 Spring Offering
|
||
10.55(24)
|
Termination
of North Hollywood Lease
|
||
10.56(25)
|
Modification
Agreement of 10% 2007 PIPE Convertible Notes
|
||
10.57(26)
|
Form
of 10% Convertible Note issued in 2007 Summer Offering
|
||
10.58(26)
|
Form
of Stock Purchase Warrant issued in 2007 Summer Offering
|
||
10.59(27)
|
Resignation
of Director, J. Joseph Brown
|
||
10.60(28)
|
Resignation
of Chief Financial Officer and Appointment of Interim Chief Financial
Officer
|
||
10.61(29)
|
Severance
Agreement dated June 15, 2007 between Registrant and Bruce H.
McKinnon
|
||
10.62(30)
|
Resignation
of Director, Bruce H. McKinnon
|
||
10.63(31)
|
Second
Modification Agreement of 10% 2007 PIPE Convertible Notes
|
||
10.64(32)
|
Form
of 10% Convertible Note issued in 2007 Fall Offering
|
||
10.65(32)
|
Form
of Stock Purchase Warrant issued in 2007 Fall Offering
|
||
10.66(33)
|
Resignation
of Director, Joseph Helleis
|
||
10.67(34)
|
Form
of 10% Convertible Note issued in 2007/8 Winter Offering
|
||
10.68(34)
|
Form
of Stock Purchase Warrant issued in 2007/8 Winter Offering
|
||
10.69(34)
|
Modification
and Satisfaction Agreement of Convertible Notes with Morale Orchards, LLP
and Matthews & Partners
|
||
10.70(35)
|
Termination
of employment relationship with John Bautista
|
||
10.71(36)
|
Form
of 10% Convertible Note issued in 2008 Summer Offering
|
||
Form
of Stock Purchase Warrant issued in 2008 Summer Offering
|
|||
10.72(37)
|
Form
of 10% Convertible Note issued in 2008 Fall Offering
|
||
Form
of Stock Purchase Warrant issued in 2008 Fall Offering
|
|||
10.73(38)
|
Form
of 10% Convertible Note issued in 2008 Winter Offering
|
||
Form
of Stock Purchase Warrant issued in 2008 Winter Offering
|
|||
10.74(39)
|
Letter
Agreement with Temple University extending default date
|
||
10.75(40)
|
Notice
of first payment to Temple University under Letter
Agreement
|
||
Announcement
of date of 2009 Annual Shareholder Meeting
|
|||
Appointment
of Cecil Bond Kyte as new Chief Executive Officer
|
|||
10.76(41)
|
Form
of 10% Convertible Note issued in 2009 Winter Offering
|
||
Form
of Stock Purchase Warrant issued in 2009 Winter Offering
|
|||
10.77(42)*
|
Employment
Agreement with Cecil Bond Kyte, January 30, 2009
|
||
10.78(43)
|
Form
of 10% Convertible Note issued in 2009 Winter #2 Offering
|
||
Form
of Stock Purchase Warrant issued in 2009 Winter #2
Offering
|
|||
21
|
List
of Subsidiaries
|
||
24*
|
Power
of Attorney (included on Signature Page)
|
||
31.1*
|
Certification
of Chief Executive Officer of Annual Report Pursuant to
Rule 13(a)—15(e) or Rule 15(d)—15(e).
|
||
31.2*
|
Certification
of Chief Financial Officer of Annual Report Pursuant to 18 U.S.C.
Section 1350.
|
||
32.1*
|
Certification
of Chief Executive Officer and Chief Financial Officer of Annual Report
pursuant to Rule 13(a)—15(e) or
Rule 15(d)—15(e).
|
*
|
Filed
herewith.
|
||
**
|
Confidential
treatment previously requested.
|
||
†
|
Management
contract or compensatory plan or arrangement.
|
||
(1)
|
|
Incorporated
by reference from Registrant’s Registration Statement on Form 10-SB
(Registration Number 000-29185), as amended, filed on March 2,
2000.
|
|
(2)
|
Incorporated by reference from
Registrant’s Form 10-KSB for the fiscal year ended December 31,
2002.
|
||
(3)
|
Incorporated by reference from
Registrant’s Form 8-K filed on December 30,
2002.
|
||
(4)
|
Incorporated by reference from
Registrant’s Form 8-K filed on November 12,
2002.
|
||
(5)
|
Incorporated by reference from
Registrant’s Form 10-QSB for the quarter ended March 31,
2004.
|
||
(6)
|
Incorporated by reference from
Appendix C of Registrant’s Schedule 14A filed on April 30,
2004, in connection with its Annual Meeting of Stockholders held on
May 24, 2004.
|
||
(7)
|
Incorporated by reference from
Registrant Form 8-K filed on July 12,
2004.
|
||
(8)
|
Incorporated by reference from
registrant’s Form 10-KSB for the fiscal year ended December 31,
2004.
|
||
(9)
|
Incorporated by reference from
Registrant’s Form 10-QSB for the quarter ended September 30,
2005
|
||
(10)
|
Incorporated by reference from
Registrant’s Form 10-KSB for the fiscal year ended December 31,
2005
|
||
(11)
|
Incorporated by reference from
Registrant’s Form SB-2 filed on June 28, 2006 (SEC File No. 333-
333-135415)
|
||
(12)
|
Incorporated by reference from
Registrant’s Form 8-K filed on September 21,
2006
|
||
(13)
|
Incorporated by reference from
Registrant’s Form SB-2 filed on October 6, 2006 (SEC File No.
333-137855)
|
||
(14)
|
Incorporated by reference from
Registrant’s Form 8-K filed on December 11,
2006
|
||
(15)
|
Incorporated by reference from
Registrant’s Form 10KSB for the fiscal year ended December 31,
2006
|
||
(16)
|
Incorporated by reference from
Registrant’s form 8-K filed on January 10,
2007
|
||
(17)
|
Incorporated
by reference from Registrant’s form 8K filed on February 8,
2007
|
||
(18)
|
Incorporated
by reference from Registrant’s form 8K filed on February 16,
2007
|
||
(19)
|
Incorporated
by reference from Registrant’s form 8K filed on May 3,
2007
|
||
(20)
|
Incorporated
by reference from Registrant’s form 8K filed on May 22
2007
|
||
(21)
|
Incorporated
by reference from Registrant’s form 8K filed on June 8,
2007
|
||
(22)
|
Incorporated
by reference from Registrant’s form 8K filed on June 15,
2007
|
||
(23)
|
Incorporated
by reference from Registrant’s form 8K filed on July 2,
2007
|
||
(24)
|
Incorporated
by reference from Registrant’s form 8K filed on July 18,
2007
|
||
(25)
|
Incorporated
by reference from Registrant’s form 8K filed on August 30,
2007
|
||
(26)
|
Incorporated
by reference from Registrant’s form 8K filed on October 9,
2007
|
||
(27)
|
Incorporated
by reference from Registrant’s form 8K filed on October 23,
2007
|
||
(28)
|
Incorporated
by reference from Registrant’s form 8K filed on November 9,
2007
|
||
(29)
|
Incorporated
by reference form Registrant’s Form 10QSB for the nine months ended
September 30, 2007
|
||
(30)
|
Incorporated
by reference from Registrant’s form 8K filed on November 15,
2007
|
||
(31)
|
Incorporated
by reference from Registrant’s form 8K filed on December 11,
2007
|
||
(32)
|
Incorporated
by reference from Registrant’s form 8K filed on December 20,
2007
|
||
(33)
|
Incorporated
by reference from Registrant’s form 8K filed on February 25,
2008
|
||
(34)
|
Incorporated
by reference from Registrant’s form 8K filed on March 11,
2008
|
||
(35)
|
Incorporated
by reference from Registrant’s form 8K filed on March 27,
2008
|
||
(36)
|
Incorporated
by reference from Registrant’s form 8K filed on September 3,
2008
|
||
(37)
|
Incorporated
by reference from Registrant’s form 8K filed on November 6,
2008
|
||
(38)
|
Incorporated
by reference from Registrant’s form 8K filed on December 11,
2008
|
||
(39)
|
Incorporated
by reference from Registrant’s form 8K filed on January 13,
2009
|
||
(40)
|
Incorporated
by reference from Registrant’s form 8K filed on January 28,
2009
|
||
(41)
|
Incorporated
by reference from Registrant’s form 8K filed on January 29,
2009
|
||
(42)
|
Incorporated
by reference from Registrant’s form 10K for the twelve months ended
December 31, 2009
|
||
(43)
|
Incorporated
by reference from Registrant’s form 8K filed on March 17,
2009
|
||
Save
The World Air, Inc.
|
||||
By:
|
/s/ CECIL BOND KYTE
|
|||
Cecil Bond Kyte
|
||||
Date:
March 30, 2009
|
Chief Executive
Officer
|
|||
NAME
|
TITLE
|
DATE
|
||
/s/
CECIL BOND KYTE
|
Chief
Executive Officer and Chairman of the Board of Directors
|
March
30, 2009
|
||
Cecil
Bond Kyte
|
||||
/s/
CHARLES R. BLUM
|
President
|
March
30, 2009
|
||
Charles
R. Blum
|
||||
/s/
EUGENE E. EICHLER
|
Interim
Chief Financial Officer
|
March
30, 2009
|
||
Eugene
E. Eichler
|
||||
/s/
JOHN PRICE
|
Director
|
March
30, 2009
|
||
John
Price
|
||||
/s/
NATHAN SHELTON
|
Director
|
March
30, 2009
|
||
Nathan
Shelton
|
||||
/s/
STEVEN BOLIO
|
Director
|
March
30, 2009
|
||
Steven
Bolio
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
balance sheets
|
F-3 |
Consolidated
statements of operations
|
F-4 |
Consolidated
statements of stockholders’ deficiency
|
F-5 |
Consolidated
statements of cash flows
|
F-18 |
Notes
to consolidated financial statements
|
F-19 |
December 31,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$
|
59,346
|
$
|
47,660
|
||||
Accounts
receivable
|
80
|
1,380
|
||||||
Inventories
|
—
|
30,256
|
||||||
Other
current assets
|
33,195
|
20,552
|
||||||
Total
current assets
|
92,621
|
99,848
|
||||||
Property and Equipment,
net
|
131,969
|
201,058
|
||||||
Other
assets
|
11,250
|
4,500
|
||||||
Total
assets
|
$
|
235,840
|
$
|
305,406
|
||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable- related parties
|
$
|
93,003
|
$
|
323,413
|
||||
Accounts
payable – License Agreements
|
716,500
|
161,250
|
||||||
Accounts
payable- other
|
384,467
|
555,736
|
||||||
Accrued
expenses
|
795,448
|
742,719
|
||||||
Accrued
research and development fees
|
8,347
|
53,347
|
||||||
Accrued
professional fees
|
390,535
|
274,499
|
||||||
Loan
payable- related party
|
78,280
|
83,596
|
||||||
Loans
and other payable due to Morale/Matthews
|
—
|
1,748,452
|
||||||
Convertible
debentures, net- related parties
|
12,466
|
227,136
|
||||||
Convertible
debentures, net- others
|
290,659
|
495,044
|
||||||
Total
current liabilities
|
2,769,705
|
4,665,192
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders’
deficiency
|
||||||||
Common
stock, $.001par value: 200,000,000 shares authorized, 62,940,891 and
46,470,413, shares issued and outstanding at December
31, 2008 and 2007, respectively
|
62,941
|
46,471
|
||||||
Common
stock to be issued
|
16,500
|
4,000
|
||||||
Additional
paid-in capital
|
40,129,758
|
32,280,083
|
||||||
Deficit
accumulated during the development stage
|
(42,743,064
|
)
|
(36,690,340)
|
|||||
Total
stockholders’ deficiency
|
(2,533,865
|
)
|
(4,359,786
|
)
|
||||
Total
liabilities and stockholder’s deficiency
|
$
|
235,840
|
$
|
305,406
|
Inception
|
||||||||||||
(February
|
||||||||||||
18,
1998) to
|
||||||||||||
Years
Ended December 31,
|
December
31,
|
|||||||||||
2008
|
2007
|
2008
|
||||||||||
Net
sales
|
$ |
—
|
$
|
39,000
|
$
|
69,000
|
||||||
Cost
of goods sold
|
—
|
10,720
|
24,120
|
|||||||||
Gross
profit
|
—
|
28,280
|
44,880
|
|||||||||
Operating
expenses
|
3,062,537
|
|
3,956,345
|
29,921,858
|
||||||||
Research
and development expenses
|
652,363
|
600,816
|
5,458,593
|
|||||||||
Non-cash
patent settlement cost
|
—
|
—
|
1,610,066
|
|||||||||
Loss
before other income
|
(3,714,900
|
)
|
(4,528,881
|
)
|
(36,945,637
|
)
|
||||||
Other
income (expense)
|
||||||||||||
Other
income (loss)
|
(4,648)
|
3,384
|
(1,140)
|
|||||||||
Interest
income
|
—
|
91
|
16,342
|
|||||||||
Interest
expense
|
(1,461,927)
|
(1,736,537
|
)
|
(5,954,306
|
)
|
|||||||
Loss
on disposition of equipment
|
(14,426
|
)
|
—
|
(14,426
|
)
|
|||||||
Settlement
of Debt Due Morale/ Matthews
|
(927,903)
|
—
|
|
(927,903)
|
||||||||
Settlement
of litigation and debt
|
71,880
|
—
|
1,089,088
|
|||||||||
Loss
before provision for income taxes
|
(6,051,924
|
)
|
(6,261,943
|
)
|
(42,737,982
|
)
|
||||||
Provision
for income taxes
|
800
|
800
|
5,082
|
|||||||||
Net
loss
|
$ |
(6,052,724
|
)
|
$
|
(6,262,743
|
)
|
$
|
(42,743,064
|
)
|
|||
Net
loss per common share, basic and diluted
|
$ |
(0.11
|
)
|
$
|
(0.16
|
)
|
||||||
Weighted
average common shares outstanding, basic and diluted
|
55,130,756
|
38,378,845
|
Price
per
|
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share
|
Shares
|
Amount
|
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
|
||||||||||||||||||||||||
Stock
issued for professional services on June 26, 2000
|
5.31
|
1,257
|
1
|
—
|
6,674
|
—
|
—
|
6,675
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued for employee compensation on June26, 2000
|
5.31
|
22,000
|
22
|
—
|
|
116,798
|
—
|
—
|
116,820
|
|||||||||||||||||||||||
Stock
issued for consulting services on June26, 2000
|
5.31
|
9,833
|
10
|
—
|
52,203
|
—
|
—
|
52,213
|
||||||||||||||||||||||||
Stock
issued for promotional services on July28, 2000
|
4.88
|
9,675
|
9
|
—
|
47,205
|
—
|
—
|
47,214
|
||||||||||||||||||||||||
Stock
issued for consulting services on July28, 2000
|
4.88
|
9,833
|
10
|
—
|
47,975
|
—
|
—
|
47,985
|
||||||||||||||||||||||||
Stock
issued for consulting services on August4, 2000
|
2.13
|
35,033
|
35
|
—
|
74,585
|
—
|
—
|
74,620
|
||||||||||||||||||||||||
Stock
issued for promotional services on August16, 2000
|
2.25
|
25,000
|
25
|
—
|
56,225
|
—
|
—
|
56,250
|
||||||||||||||||||||||||
Stock
issued for consulting services on September5, 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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
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
|
)
|
||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
—
|
—
|
—
|
|||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
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
issued for settlement of payables on December 21,
2005
|
—
|
—
|
—
|
57,092
|
—
|
—
|
—
|
57,092
|
||||||||||||||||||||||||
Stock
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
|
Net
loss for year ended December 31, 2005
|
—
|
—
|
—
|
—
|
—
|
—
|
(3,115,186
|
)
|
(3,115,186
|
)
|
||||||||||||||||||||||
Balance,
December 31, 2005
|
31,387,418
|
$
|
31,387
|
$
|
612,521
|
$
|
18,336,178
|
$
|
(142,187
|
)
|
$
|
(20,246,074
|
)
|
$
|
(1,408,175
|
)
|
||||||||||||||||
Stock
issued, for previously settled payables
|
—
|
846,549
|
847
|
(612,521
|
)
|
611,674
|
—
|
—
|
—
|
|||||||||||||||||||||||
Stock
issued upon exercise of warrants on March 23, 2006
|
1.50
|
25,000
|
25
|
—
|
37,475
|
—
|
—
|
37,500
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on March 27, 2006
|
1.50
|
50,000
|
50
|
—
|
74,950
|
—
|
—
|
75,000
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Stock
issued upon exercise of warrants on March 27, 2006
|
0.50
|
25,000
|
25
|
—
|
12,475
|
—
|
—
|
12,500
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on March 30, 2006
|
1.00
|
10,000
|
10
|
—
|
9,990
|
—
|
—
|
10,000
|
||||||||||||||||||||||||
Stock
issued upon exercise of warrants on April 10, 2006
|
0.50
|
36,250
|
36
|
—
|
18,089
|
—
|
—
|
18,125
|
||||||||||||||||||||||||
Common
stock issued for convertible debt on April 10, 2006
|
0.70
|
269,600
|
270
|
—
|
188,450
|
—
|
—
|
188,720
|
||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
Common
stock issued upon exercise of warrants on August 7, 2006
|
1.50
|
175,000
|
175
|
—
|
262,325
|
—
|
—
|
262,500
|
||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
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
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deferred
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Compensation
|
Stage
|
Deficiency
|
|||||||||||||||||||||||||
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
|
||||||||||||||||||||||||
Intrinsic
value of beneficial conversion associated with convertible
notes
|
—
|
—
|
—
|
—
|
274,312
|
—
|
—
|
274,312
|
||||||||||||||||||||||||
Fair
value of warrants issued to non-employee for services
|
—
|
—
|
—
|
—
|
35,340
|
—
|
—
|
35,340
|
||||||||||||||||||||||||
Fair
value of options issued to an officer
|
—
|
—
|
—
|
—
|
16,302
|
—
|
—
|
16,302
|
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
|
||||||||||||||||||||||||
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
|
Price
per
|
Common
Stock
|
Common
Stock to be
|
Additional
Paid-in
|
Deficit
Accumulated During the Development
|
Total
Stockholders'
|
|||||||||||||||||||||||
Share
|
Shares
|
Amount
|
Issued
|
Capital
|
Stage
|
Deficiency
|
||||||||||||||||||||||
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
|
)
|
|||||||||||||||||||
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
|
|||||||||||||||||||||
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
|
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
|
)
|
Price per |
Common
Stock
|
Common
Stock
to
be
|
Additional
Paid-in
|
Deficit
Accumulated
During
the
Development
|
Total
Stockholders’
|
|||||||||||||||||||||||
Share | Shares | Amount |
Issued
|
Capital
|
Stage
|
Deficiency
|
||||||||||||||||||||||
Common
stock issued for convertible debt
|
0.17-0.53
|
5,575,082
|
5,574
|
16,500
|
1,936,171
|
—
|
1,958,245
|
|||||||||||||||||||||
Common
stock issued for Morale/ Matthews settlement
|
0.38
|
7,421,896
|
7,422
|
—
|
2,776,289
|
—
|
2,783,711
|
|||||||||||||||||||||
Common
stock issued for services
|
0.17
– 0.49
|
2,398,850
|
2,399
|
—
|
516,230
|
—
|
518,629
|
|||||||||||||||||||||
Common
stock issued upon exercise of warrants
|
0.50
|
1,064,650
|
1,065
|
—
|
531,260
|
—
|
532,325
|
|||||||||||||||||||||
Fair
value of options issued as compensations
|
—
|
—
|
—
|
—
|
645,745
|
—
|
645,745
|
|||||||||||||||||||||
Fair
value of warrants issued and intrinsic value of beneficial conversion
associated with convertible notes
|
—
|
—
|
—
|
—
|
1,323,077
|
—
|
1,323,077
|
|||||||||||||||||||||
Fair
value of warrants issued to PIPE holders
|
—
|
—
|
—
|
—
|
116,913
|
—
|
116,913
|
|||||||||||||||||||||
Common
stock issued for services
|
0.17
|
10,000
|
10
|
(4,000
|
)
|
3,990
|
—
|
—
|
||||||||||||||||||||
Net
loss for year ended December 31, 2008
|
—
|
—
|
—
|
—
|
—
|
(6,052,724
|
)
|
(6,052,724
|
)
|
|||||||||||||||||||
Balance,
December 31, 2008
|
62,940,891
|
$
|
62,941
|
$
|
16,500
|
$
|
40,129,758
|
$
|
(42,743,064
|
)
|
$
|
(2,533,865
|
)
|
Inception
(February
18, 1998)
|
||||||||||||
Years
Ended December 31,
|
to
December 31,
|
|||||||||||
2008
|
2007
|
2008
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
Loss
|
$
|
(6,052,724
|
)
|
$
|
(6,262,743
|
)
|
$
|
(42,743,064
|
)
|
|||
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
|
)
|
||||||||
Settlement
of Debt Due Morale/Matthews
|
927,903
|
—
|
927,903
|
|||||||||
Stock
based compensation expense
|
645,745
|
67,592
|
3,614,921
|
|||||||||
Issuance
of common stock for services
|
518,629
|
4.000
|
5,190,731
|
|||||||||
Issuance
of options for legal settlement
|
—
|
—
|
31,500
|
|||||||||
Issuance
of warrants for legal settlement
|
—
|
—
|
4,957
|
|||||||||
Issuance
of warrants for financing fees
|
116,913
|
35,340
|
152,253
|
|||||||||
Non-cash
increase in convertible notes recorded as expense
|
89,470
|
74,492
|
163,962
|
|||||||||
Patent
acquisition cost
|
—
|
—
|
1,610,066
|
|||||||||
Amortization
of issuance costs and original issue debt discounts including
beneficial conversion
feature-part of interest expense |
1,245,408
|
1,573,596
|
5,618,309
|
|||||||||
Amortization
of deferred compensation
|
—
|
—
|
3,060,744
|
|||||||||
Loss
on disposition of assets
|
14,426
|
—
|
14,426
|
|||||||||
Depreciation
and amortization of leasehold improvements
|
37,530
|
167,380
|
393,129
|
|||||||||
Bad
debt
|
1,300
|
—
|
1,300
|
|||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
—
|
( 1,380)
|
(1,380
|
)
|
||||||||
Inventory
|
30,256
|
(8,942
|
)
|
—
|
||||||||
Prepaid
expenses and other
|
(12,643
|
)
|
60,680
|
(33,195
|
)
|
|||||||
Other
assets
|
(6,750
|
)
|
—
|
(11,250
|
)
|
|||||||
Accounts
payable and accrued expenses
|
277,336
|
1,191,661
|
3,701,111
|
|||||||||
Net
cash used in operating activities
|
(2,167,200
|
)
|
(3,098,324
|
)
|
(18,815,785
|
)
|
||||||
Cash
flows from investing activities
|
||||||||||||
Purchase
of equipment
|
(345
|
)
|
(46,415
|
)
|
(553,452
|
)
|
||||||
Proceeds
from sale of equipment
|
17,477
|
—
|
17,478
|
|||||||||
Net
cash used in investing activities
|
17,132
|
(46,415
|
)
|
(535,974
|
)
|
|||||||
Cash
flows from financing activities
|
||||||||||||
Net
proceeds under equity line of credit
|
—
|
912,691
|
1,262,386
|
|||||||||
(Decrease)
increase in payables to related parties and stockholder
|
(5,316
|
)
|
103,930
|
610,064
|
||||||||
Advances
from founding executive officer
|
—
|
—
|
517,208
|
|||||||||
Net
proceeds from issuance of convertible notes and warrants
|
1,634,745
|
2,157,800
|
6,460,423
|
|||||||||
Repayment
of convertible notes
|
—
|
(226,250)
|
(226,250
|
)
|
||||||||
Proceeds
from exercise of warrants
|
532,325
|
—
|
10,787,274
|
|||||||||
Net
cash provided by financing activities
|
2,161,754
|
2,948,171
|
19,411,105
|
|||||||||
Net
(decrease) increase in
cash
|
11,686
|
(196,568
|
)
|
59,346
|
||||||||
Cash, beginning of
period
|
47,660
|
244,228
|
—
|
|||||||||
Cash, end of
period
|
$
|
59,346
|
$
|
47,660
|
$
|
59,346
|
||||||
Supplemental
disclosures of cash flow information
|
||||||||||||
Cash
paid during the year for
|
||||||||||||
Interest
|
$
|
1,355
|
$
|
1,239
|
$
|
136,399
|
||||||
Income
taxes
|
$
|
—
|
$
|
800
|
$
|
3,482
|
||||||
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
|
—
|
—
|
612,521
|
|||||||||
Conversion
of related party debt to convertible debentures
|
—
|
—
|
45,000
|
|||||||||
Conversion
of convertible debentures to common stock
|
1,958,245
|
526,480
|
4,931,679
|
|||||||||
Issuance
of shares for settlement of loans and other payable to
Morale/Matthews
|
2,783,711
|
—
|
2,783,711
|
|||||||||
Write
off of deferred compensation
|
—
|
—
|
142,187
|
|||||||||
Non-cash
equity-warrant valuation and intrinsic value of beneficial conversion
associated with
convertible notes |
1,323,077
|
1,253,548
|
5,406,415
|
●
|
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.
|
December 31,
|
||||||||
2008
|
2007
|
|||||||
Office
equipment
|
$
|
31,966
|
$
|
53,043
|
||||
Delivery
equipment
|
—
|
34,672
|
||||||
Furniture
and fixtures
|
13,898
|
18,957
|
||||||
Machinery
and equipment
|
49,986
|
54,161
|
||||||
Dies
and molds
|
—
|
3,000
|
||||||
Testing
equipment
|
147,312
|
147,312
|
||||||
Leasehold
improvements
|
—
|
245,512
|
||||||
Subtotal
|
243,162
|
556,657
|
||||||
Less
accumulated depreciation
|
(111,193
|
)
|
(355,599
|
)
|
||||
Total
current assets
|
$
|
131,969
|
$
|
201,058
|
Maturity
dates
|
December
31,
2008 |
December
31,
2007 |
||||||||||
Note
payable Morale Orchards, LLC, 2006 Note
|
December
5, 2006
|
$
|
—
|
$
|
671,992
|
|||||||
Note
payable Morale Orchards, LLC, 2007 Note
|
January
10, 2007
|
—
|
601,250
|
|||||||||
Discount
on Morale Orchards, LLC 2007 Note
|
—
|
—
|
(17,886
|
)
|
||||||||
Loan
payable to Morale Orchards, LLC
|
Due
on demand
|
—
|
20,334
|
|||||||||
Fees
due to Matthews & Partners
|
—
|
—
|
472,762
|
|||||||||
Total
|
$
|
—
|
$
|
1,748,452
|
Maturity
dates
|
December
31,
2008
|
December
31,
2007 |
|||||||
2007
Spring Offering
|
—
|
$
|
—
|
$
|
341,000
|
||||
2007
Summer Offering
|
—
|
—
|
93,500
|
||||||
2007
Fall Offering
|
—
|
—
|
622,600
|
||||||
2007
Winter Offering
|
February
29, 2009
|
66,000
|
—
|
||||||
|
|
||||||||
2008
Summer Offering
|
August
31, 2009
|
341,000
|
—
|
||||||
2008
Fall Offering
|
October
31, 2009
|
152,020
|
—
|
||||||
|
|||||||||
2008
Winter Offering
|
December
5, 2009
|
337,700
|
—
|
||||||
Sub-total
|
896,,720
|
1,057,100
|
|||||||
Less,
remaining debt discount
|
(593,595
|
)
|
(334,920
|
)
|
|||||
Total
|
303,125
|
722,180
|
|||||||
|
|||||||||
Less:
Convertible debentures, net, related parties
|
(12,466
|
)
|
(227,136
|
)
|
|||||
Convertible
debentures, net, others
|
$
|
290,659
|
$
|
495,044
|
■
|
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.
|
|
●
|
On
November 17, 2008, the Company entered into a Consultant Agreement with
Core Consulting Group to advise the Company regarding Public and Investor
Relations concerning various Company business and public
disclosures. Core shall be paid $2,500 a month for six (6)
months and 1,000,000 non-refundable restricted shares of common
stock. The Company valued the shares at $170,000 based upon the
trading price of the common stock at the date of the
agreement.
|
|
●
|
On
November 17, 2008, the Company entered into a Service Agreement with IRTH
Communications,
IRTH will perform certain IR/PR services, internet development,
communications, and business consulting services to private and publicly
held companies. Compensation for services will be $7,500 for the following
12 months. IRTH will receive 625,000 non-refundable restricted
shares of common stock. The Company valued the shares at $106,250 based
upon the trading price of the common stock at the date of the
agreement.
|
|
●
|
During
2008, the Company issued 238,850 shares of its common stock for services
valued in the aggregate at $81,879. The Company valued the shares at
prices ranging from $0.16 to $0.49 per share based upon the trading price
of the common stock at the date of the
agreements.
|
|
●
|
During
2008, the Company issued 535,000 shares of its common stock to settle
$160,500 of outstanding accounts
payable.
|
Weighted
Avg.
Options
|
Weighted
Avg.
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
|
2,700,000
|
0.28
|
||||||
Options
exercised
|
—
|
—
|
||||||
Options
forfeited
|
(2,287,220
|
)
|
1.00
|
|||||
Options
cancelled
|
—
|
—
|
||||||
Options,
December 31,
2008
|
4,601,225
|
$
|
0.53
|
Outstanding
Options
|
Exercisable
Options
|
||||||||||||||||||||
Weighted
|
|||||||||||||||||||||
Option
|
Life
|
Average
Exercise
|
|||||||||||||||||||
Exercise Price Per Share
|
Shares
|
(Years)
|
Exercise Price
|
Shares
|
Price
|
||||||||||||||||
$ 0.21 - $ 0.99
|
4,213,679 |
8.4
|
$ | 0.45 | 3,963,679 | $ | 0.46 | ||||||||||||||
$ 1.00 - $ 1.99
|
|
327,546 |
5.8
|
$ | 1.41 | 327,546 | $ | 1.41 | |||||||||||||
$ 2.00 - $ 2.26
|
60,000 |
2.6
|
|
$ | 2.26 | 60,000 | $ | 2.26 | |||||||||||||
4,601,225 |
|
$ | 0.53 | 4,351,225 | $ | 0.54 |
2008
|
2007
|
|||||||||
Expected
life (years
|
5.05
|
5.06
|
||||||||
Risk
free interest rate
|
4.37
|
% |
|
4.42
|
% |
|
||||
Volatility
|
124.05
|
%
|
|
116.82
|
%
|
|
||||
Expected
dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
|
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, December31, 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, December31, 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
|
3,931,708
|
0.42
|
||||||
Warrants
exercised
|
(1,064,650
|
)
|
0.50
|
|||||
Warrants
cancelled
|
(10,386,083
|
)
|
0.56
|
|||||
Warrants
outstanding, December 31, 2008
|
10,400,003
|
$
|
0.70
|
Outstanding
Warrants
|
Exercisable
Warrants
|
||||||||||||||||||||
Weighted
|
|||||||||||||||||||||
Warrant
|
Life
|
Average
Exercise
|
|||||||||||||||||||
Exercise Price Per Share
|
Shares
|
(Years)
|
Exercise Price
|
Shares
|
Price
|
||||||||||||||||
$ 0.30 - $ 0.99
|
7,776,559 |
2.0
|
$ | 0.47 | 7,776,559 | $ | 0.47 | ||||||||||||||
$ 1.00 - $ 1.99
|
2,057,966 |
2.8
|
$ | 1.00 | 2,057,966 | $ | 1.00 | ||||||||||||||
$ 2.00 - $ 2.70
|
565,478 |
0.7
|
$ | 2.67 | 565,478 | $ | 2.67 | ||||||||||||||
10,400,003 |
|
$ | 0.70 | 10,400,003 | $ | 0.70 |
Years Ending
December 31,
|
||||
2009
|
$
|
43,840
|
||
Total
|
$
|
43,840
|
For the years ended
December 31,
|
||||||||
2008
|
2007
|
|||||||
Current:
|
||||||||
Federal
|
$ | — | $ | — | ||||
State
|
800 | 800 | ||||||
Total
current
|
800 | 800 | ||||||
Deferred:
|
||||||||
Federal
|
— | — | ||||||
State
|
— | — | ||||||
Total
deferred
|
— | — | ||||||
Total
income tax provision
|
$ | 800 | $ | 800 |
December 31,
|
||||||||
2008
|
2007
|
|||||||
Computed
tax provision (benefit) at federal statutory rate (34%)
|
$ | (2,062,414 | ) | $ | (2,129,061 | ) | ||
State
income taxes, net of federal benefit
|
(257,605 | ) | (268,524 | ) | ||||
Permanent
items
|
558,142 | 561,162 | ||||||
Credits
|
— | — | ||||||
Valuation
allowance
|
1,762,677 | 1,837,223 | ||||||
Income
tax provision
|
$ | 800 | $ | 800 |
December 31,
2008
|
December 31,
2007
|
|||||||||||||||
Deferred
tax
|
Deferred
tax
|
Deferred
tax
|
Deferred
tax
|
|||||||||||||
assets
|
liabilities
|
assets
|
liabilities
|
|||||||||||||
Current:
|
||||||||||||||||
Accrued
liabilities
|
$
|
419,138
|
$
|
---
|
$
|
538,747
|
$
|
—
|
||||||||
Other
|
272
|
---
|
272
|
—
|
||||||||||||
419,41
|
539,019
|
—
|
||||||||||||||
Noncurrent:
|
|
|||||||||||||||
Net
operating loss carry forwards
|
12,326,918
|
---
|
10,122,130
|
—
|
||||||||||||
Unexercised
stock options and warrants
|
815,781
|
---
|
1,133,210
|
|
—
|
|||||||||||
Credit
carryovers
|
256,757
|
---
|
256,757
|
—
|
||||||||||||
Depreciation
|
57,470
|
---
|
62,543
|
—
|
||||||||||||
Valuation
allowance
|
(13,876,336
|
) |
---
|
(12,113,659
|
) |
—
|
||||||||||
Total
deferred taxes net of valuation allowance
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|