þ
|
ANNUAL
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
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
Page
|
||||
PART I
|
3
|
|||
Item 1
|
Business
|
3
|
||
Item 2
|
Properties
|
27
|
||
Item 3
|
Legal Proceedings
|
27
|
||
Item 4
|
Submission of Matters to a Vote of Security
Holders
|
28
|
||
PART II
|
29
|
|||
Item 5
|
Market for Common Equity and Related Stockholder
Matters
|
29
|
||
Item 6
|
Management’s Discussion and Analysis or Plan of
Operation
|
30
|
||
Item 7
|
Financial Statements
|
37
|
||
Item 8
|
Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
|
37
|
||
Item 8A
|
Controls and Procedures
|
37
|
||
Item 8B
|
Other Information
|
38
|
||
PART III
|
39
|
|||
Item 9
|
Directors and Executive Officers of
Registrant
|
39
|
||
Item 10
|
Executive Compensation
|
43
|
||
Item 11
|
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
|
47
|
||
Item 12
|
Certain Relationships and Related
Transactions
|
48
|
||
Item 13
|
Exhibits
|
50
|
||
Item 14
|
Principal Accountant Fees and
Services
|
52
|
|
|
SIGNATURES
|
53
|
•
|
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.
|
●
|
The
EU has tightened standards on light duty vehicle emissions and fuel
quality for 2000 and 2005, broadened coverage (e.g., cold temperature),
and imposed low sulfur requirements for diesel fuel and gasoline; Euro 3,
4 and 5 standards for heavy duty trucks and buses, will require advanced
NOx and particulate matter post-combustion pollution control systems. The
auto industry has agreed to a voluntary commitment to reduce carbon
dioxide (“CO2“)
emissions per kilometer driven by 25% by
2008.
|
●
|
CARB
tightened CO, HC, NOx and PM requirements and established principles of
fuel neutrality (diesel vehicles meet the same standards as gasoline
vehicles) and usage neutrality (light trucks and sport utility vehicles
used primarily as passenger cars must meet the same standards as cars);
CARB decided that diesel PM is a toxic air contaminant leading to an
effort to further reduce PM emissions from existing diesel
vehicles.
|
●
|
EPA,
in conjunction with CARB, imposed the largest enforcement action in
history on the heavy engine industry; EPA adopted stringent national PM
and NOx standards for heavy duty trucks and buses and mandated low sulfur
diesel fuel to enable the advanced technologies necessary to achieve these
requirements.
|
●
|
China
and India adopted the Euro 1 auto and truck emissions standards and are
phasing out the use of unleaded
gasoline.
|
THC
|
NOx
|
CO
|
||||||||||
EURO2
Standard
|
1.20
|
g/km
|
0.30
|
g/km
|
5.50
|
g/km
|
||||||
With
ZEFS Device
|
0.52
|
g/km
|
0.10
|
g/km
|
1.42
|
g/km
|
||||||
%
Better than EURO2
|
56
|
%
|
65
|
%
|
74
|
%
|
THC
|
NOx
|
CO
|
||||||||||
EURO3
Standard
|
0.80
|
g/km
|
0.15
|
g/km
|
2.0
|
g/km
|
||||||
With
ZEFS Device
|
0.33
|
g/km
|
0.108
|
g/km
|
1.86
|
g/km
|
||||||
%
Better than EURO3
|
59
|
%
|
28
|
%
|
7
|
%
|
Technical Targets |
CO
g/km
|
HC
g/km
|
NOx
g/km
|
||||||||||
EURO3 Standard |
£2.0
|
£0.8
|
£0.15
|
||||||||||
Measured
Values
|
ZEFS
Device (“hot start”)(a)
|
0.90 | 0.20 | 0.13 | |||||||||
|
ZEFS/CAT-MATE
Device (“cold start”)(b)
|
1.04 | 0.18 | 0.12 |
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
110
|
RevTech
100
|
Merch
125
|
||||||||||
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
110
|
RevTech
100
|
Merch
125
|
||||||||||
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
110
|
RevTech
100
|
Merch
125
|
||||||||||
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
110
|
RevTech
100
|
Merch
125
|
||||||||||
AVERAGE
BASELINE
|
241.97 | 39.68 | 34.83 | |||||||||
AVERAGE
ECO CHARGR
|
253.16 | 41.08 | 34.82 | |||||||||
%
Improvement
|
4.6 | % | 3.5 | % | 0.0 | % |
Shanghai
Yide 300cc ATV Certification Test Results
|
||||||||||||||||
THC
|
NOx
|
CO
|
THC+NOx
|
|||||||||||||
EPA
Standard
|
35 | 1.5 | ||||||||||||||
CARB
Standard
|
1.2 | 15 | ||||||||||||||
ECO
ChargR and CAT-MATE
|
0.187 | 0.092 | 9.1985 | 0.279 | ||||||||||||
%
Below EPA
|
74 | % | 81 | % | ||||||||||||
%
Below CARB
|
84 | % | 39 | % |
Country
|
Number
|
Filing
date
|
Status
|
|||
Australia
|
2001258057
|
21
May 2001
|
GRANTED
|
|||
Bosnia
& Herzegovina
|
BAP
021290A
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
Brazil
|
0111365-8
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
Bulgaria
|
107391
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
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.
|
|||
Croatia
|
P20020982A
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
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
|
|||
Georgia
|
4098/01-2002
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
Hong
Kong
|
04100327.0
|
21
May 2001
|
Automatic
grant upon grant of the Chinese application
|
|||
Hungary
|
P
03 01796
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
India*
|
IN/PCT/2002/01523
|
21
May 2001
|
Under
Examination – response filed
|
|||
Indonesia
|
WO0200202844
|
21
May 2001
|
Accepted
– awaiting Deed of Letters Patent
|
|||
Israel
|
152902
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
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
|
|||
Morocco
|
PV/26.964
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
New
Zealand
|
523113
|
21
May 2001
|
GRANTED
|
|||
Norway
|
20025531
|
21
May 2001
|
Awaiting
examination
|
|||
Poland
|
P358837
|
21
May 2001
|
Awaiting
examination
|
|||
Serbia
|
P-870/02
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
Singapore
|
93310
[WO
01/90562]
|
21
May 2001
|
GRANTED
|
|||
South
Africa
|
2002/10013
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
Sri
Lanka
|
12918
|
21
May 2001
|
GRANTED
|
|||
Trinidad
& Tobago
|
TT/A/2002/00213
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
Ukraine
|
20021210144
|
21
May 2001
|
ABANDONED
on client’s instructions
|
|||
United
States
|
6901917
|
21
May 2001
|
GRANTED
|
|||
Vietnam
|
1-2002-01168
|
21
May 2001
|
GRANTED
|
Country
|
Number
|
Filing
date
|
Status
|
|||
Taiwan
|
1236519
|
19
July 2003
|
ABANDONED
on Client’s Instructions
|
|||
China
|
200480025660.X
|
15
July 2004
|
ABANDONED
on Client’s Instructions
|
|||
Europe
|
04737571.2
|
15
July 2004
|
ABANDONED
on Client’s Instructions
|
|||
India
|
300/KOL
NP/06
|
15
July 2004
|
ABANDONED
on Client’s Instructions
|
|||
Indonesia
|
WO0200600441
|
15
July 2004
|
ABANDONED
on Client’s Instructions
|
|||
Japan
|
Awaiting
|
15
July 2004
|
ABANDONED
on Client’s Instructions
|
|||
United
States
|
10/564747
|
15
July 2004
|
ABANDONED
on Client’s Instructions
|
Country
|
Number
|
Filing
date
|
Status
|
|||
Thailand
|
095155
|
3
November 2004
|
ABANDONED
on Client’s Instructions
|
|||
China
|
200480039739.8
|
4
November 2004
|
ABANDONED
on Client’s Instructions
|
|||
Japan
|
Awaiting
Number
|
4
November 2004
|
ABANDONED
on Client’s Instructions
|
|||
United
States
|
10/578311
|
4
November 2004
|
Application
filed – awaiting examination
|
|||
Europe
|
04796967.0
|
4
November 2006
|
ABANDONED
on Client’s Instructions
|
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
|
2004312099
|
23
December 2004
|
Examination
to be requested by December 2009
|
|||
Canada
|
2559287
|
23
December 2004
|
Examination
to be requested by December 2009
|
|||
China
|
200480042295.3
|
23
December 2004
|
Examination
requested December 2006
|
|||
Europe
|
04802122.4
|
23
December 2004
|
Application
filed - awaiting examination
|
|||
Indonesia
|
WO0200602208
|
23
December 2004
|
ABANDONED
on client’s instructions
|
|||
Japan
|
2006-548033
|
23
December 2004
|
ABANDONED
on client’s instructions
|
|||
Korea
|
2006-7016017
|
23
December 2004
|
Examination
Due by 23 December 2009
|
|||
Mexico
|
PA/a/2006/007863
|
23
December 2004
|
Application
filed – awaiting examination
|
|||
Malaysia
|
PI20050041
|
6
January 2005
|
Examination
to be requested by January 2010.
|
|||
New
Zealand
|
548993
|
23
December 2004
|
Application
filed – awaiting examination.
|
|||
Thailand
|
096762
|
4
January 2005
|
Examination
to be requested by January 2010
|
|||
Taiwan
|
93140533
|
24
December 2004
|
Examination
to be requested by December 2007.
|
|||
United
States
|
10/581637
|
23
December 2004
|
Application
filed – awaiting examination.
|
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
|
1008291
|
25
June 2004
|
Registered
|
|||
Madrid*
|
858359
|
21
December 2004
|
Registered
|
●
|
China;
|
●
|
European
Community;
|
●
|
Japan;
|
●
|
Korea;
- abandoned
|
●
|
Singapore;
and
|
●
|
United
States of
America. abandoned
|
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.
|
●
|
China
|
●
|
European
Community
|
●
|
United
States
|
●
|
Japan
|
●
|
Korea
|
●
|
Singapore
|
●
|
Vietnam
|
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.
|
Percent
below
|
Percent
of
|
|||||||||||||||||
current
market
|
Price
per share
|
Number
of shares
|
Shares
|
outstanding
|
||||||||||||||
price
|
(1)
|
issuable
(2)
|
outstanding
(3)
|
shares
(4)
|
||||||||||||||
0
|
%
|
$
|
1.4162
|
7,061,150
|
46,378,769
|
15.22
|
%
|
|||||||||||
10
|
%
|
$
|
1.2746
|
7,845,599
|
47,163,218
|
16.63
|
%
|
|||||||||||
25
|
%
|
$
|
1.0622
|
9,414,423
|
48,732,042
|
19.32
|
%
|
|||||||||||
50
|
%
|
$
|
0.7081
|
14,122,299
|
53,439,918
|
26.43
|
%
|
(1)
|
Represents
purchase prices equal to 97% of $1.46 and potential reductions of 10%, 25%
and 50%.
|
||||||||||||||||||
(2)
|
Represents
the number of shares issuable if the entire $10,000,000 remaining
commitment under the equity line of credit was drawn down at the indicated
purchase prices.
Since only 7,000,000 shares of our common stock are being
registered by us at this time, we would have to file another registration
statement and have it declared effective by the SEC in order to make
additional drawdown’s resulting in the issuance of more than the 7,000,000
shares of common stock being registered hereunder.
|
||||||||||||||||||
(3)
|
Based
on 39,317,619 shares of common stock issued and outstanding as of
September 20, 2006.
|
||||||||||||||||||
(4)
|
Percentage
of the total outstanding common stock after the issuance of the shares
indicated, without considering the 4.99% contractual restriction on the
number of shares that Dutchess may own at any point in time or other
restrictions on the number of shares we may
issue.
|
2006
|
2007
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First Quarter
|
$
|
5.00
|
$
|
0.56
|
$
|
1.17
|
$
|
0.60
|
||||||||
Second Quarter
|
$
|
3.13
|
$
|
1.45
|
$
|
0.80
|
$
|
0.25
|
||||||||
Third Quarter
|
$
|
2.74
|
$
|
1.11
|
$
|
0.60
|
$
|
0.17
|
||||||||
Fourth h Quarter
|
$
|
1.65
|
$
|
0.55
|
$
|
0.48
|
$
|
0.15
|
●
|
Gross
proceeds of $400,000 (net proceeds of $352,000) from the issuance of
convertible notes and warrants in a PIPE offering conducted by Spencer
Clarke, LLC of New York in March and April
2007.
|
●
|
Gross
and net proceeds of $500,000 from the issuance of a convertible note and
related warrants in a private offering to Morale Orchards on January 10,
2007. The face amount of the note is $612,500 due January 10,
2008.
|
●
|
Gross
proceeds of $992,055 (net proceeds of $912,691) from the issuance of stock
under our equity line of credit from
Dutchess.
|
●
|
Gross
and net proceeds of $410,000 from the issuance of convertible notes and
warrants in a Spring 2007 offering. The face amount of the
notes is $451,000.
|
●
|
Gross
and proceeds of $281,800 from the issuance of convertible notes in a
Summer 2007 offering. The face amount of the notes
is $309,980.
|
●
|
Gross
and net proceeds of $566,000 from the issuance of convertible notes in a
Fall 2007 offering. The face amount of the notes is
$622,600.
|
●
|
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. The Additional Warrants 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
|
$ | 65,280 | $ | 535,683 | (2) | |||
2009
|
44,800 | 200,000 | (3) | |||||
2010
|
0 | 125,000 | (4) | |||||
Total
|
$ | 110,080 | $ | 860,683 |
●
|
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.
|
Name |
Age
|
Position
|
Director
Since
|
|||
Charles R. Blum |
69
|
President, Chief Executive Officer, Director |
2007
|
|||
Steven Bolio |
62
|
Director |
2007
|
|||
Joseph Helleis (1) (2) |
69
|
Director |
2002
|
|||
Cecil B. Kyte (1) (3) |
36
|
Chairman, Director |
2006
|
|||
John F. Price PhD (1) (2) (3) |
63
|
Director |
2002
|
|||
Nathan Shelton |
60
|
Director |
2007
|
Name |
Age
|
Position | |||
Charles R. Blum |
69
|
President and Chief Executive Officer | |||
John Bautista (1) |
48
|
Executive Vice President and Chief Operating Officer | |||
Eugene E. Eichler (2) |
81
|
Interim Chief Financial Officer |
• |
|
Stockholders
may send correspondence, which should indicate that the sender is a
stockholder, to the Board or to any individual director, by mail to
Corporate Secretary, Save the World Air, Inc., 235 Tennant Avenue, Morgan
Hill, California 95037 or by e-mail to questions@stwa.com.
|
• |
|
Our
Secretary will be responsible for the first review and logging of this
correspondence and will forward the communication to the director or
directors to whom it is addressed unless it is a type of correspondence
which the Board has identified as correspondence which may be retained in
our files and not sent to directors. The Board has authorized the
Secretary to retain and not send to directors communications that:
(a) are advertising or promotional in nature (offering goods or
services), (b) solely relate to complaints by customers with respect
to ordinary course of business customer service and satisfaction issues or
(c) clearly are unrelated to our business, industry, management or
Board or committee matters. These types of communications will be logged
and filed but not circulated to directors. Except as set forth in the
preceding sentence, the Secretary will not screen communications sent to
directors.
|
• |
|
The
log of stockholder correspondence will be available to members of the
Board for inspection. At least once each year, the Secretary will provide
to the Board a summary of the communications received from stockholders,
including the communications not sent to directors in accordance with the
procedures set forth above.
|
• |
each
person whom the stockholder proposes to nominate for election as a
director:
|
|
• |
the
name, age, business address and residence address of such
person,
|
|
• |
the
principal occupation or employment of the
person,
|
• |
the
class and number of shares of the Company which are beneficially owned by
such person, if any, and
|
|
• |
any
other information relating to such person which is required to be
disclosed in solicitations for proxies for election of directors pursuant
to Regulation 14A under the Exchange Act and the rules
hereunder; and the stockholder giving the
notice
|
|
• | the name and record address of the stockholder and the class and number of shares of the Company which are beneficially owned by the stockholder, | |
• |
a
description of all arrangements or understandings between such stockholder
and each proposed nominee and any other person or persons (including their
names) pursuant to which nomination(s) are to be made by such
stockholder,
|
|
• | a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, | |
• |
any
other information relating to such person which is required to be
disclosed in solicitations for proxies for election of directors pursuant
to Regulation 14A under the Exchange Act and the rules
thereunder.
|
Long-Term
Compensation Awards
|
|||||||||||||||||
|
|
Securities
|
All
|
||||||||||||||
Fiscal
|
Annual Compensation |
Restricted Stock
Awards |
Underlying
Options
|
Other
Compensation
|
|||||||||||||
Name and Principal Position
|
Year
|
Salary ($)
|
($)
|
(#)
|
($)
|
||||||||||||
Blum,
Charles, R. (1) Chief Executive Officer
|
2007
|
$ | 200,000 | $ | 0 | 188,679 | $ | 0 | |||||||||
Eugene
E. Eichler (2) Chief Executive Officer and
|
2007
|
$ | 0 | $ | 0 | 0 | $ | 0 | |||||||||
Chief
Financial Officer
|
2006
|
$ | 300,000 | $ | 0 | 409,171 | $ | 0 | |||||||||
2005
|
$ | 240,000 | $ | 0 | 424,000 | $ | 0 | ||||||||||
Bruce
H. McKinnon (3) Chief Executive Officer and
|
2007
|
$ | 240,000 | $ | 0 | 0 | $ | 0 | |||||||||
Chief
Operating Officer
|
2006
|
$ | 240,000 | $ | 0 | 409,171 | $ | 0 | |||||||||
2005
|
$ | 192,000 | $ | 0 | 350,000 | $ | 0 | ||||||||||
John
Bautista (4)
|
2007
|
$ | 175,000 | $ | 0 | 0 | $ | 0 | |||||||||
Chief
Operating Officer
|
2006
|
$ | 170,833 | $ | 0 | 209,171 | $ | 0 |
(1)
|
Mr.
Blum was appointed Chief Executive Officer in July 2007. See
“Employment Agreements” below.
|
(2)
|
Mr. Eichler
was appointed Chief Operating Officer, Chief Financial Officer and
Treasurer in October 2001. In March 2004, Mr. Eichler relinquished
his position as Chief Operating Officer, and was appointed President of
the Company, a position he held until November 2005, when he assumed the
position of Chief Executive Officer, and he continued to serve as Chief
Financial Officer. On November 20, 2006, Mr. Eichler resigned,
due to disability, the position of Chief Executive Officer and on January
5, 2007 he resigned as Chief Financial Officer. On October 18,
2007, Mr. Eichler was appointed Interim Chief Financial
Officer. Mr. Eichler has been working full time for the Company
since June 15, 2007 without cash compensation. In lieu of cash
compensation for his past and future services as Interim Chief Financial
Officer, the Board extended the expiration date of Mr. Eichler’s options
to November 20, 2008. (See “Employment Agreements”
below).
|
(3)
|
Mr. McKinnon
was appointed Executive Vice President of Business Development in October
2001. In March 2004, Mr. McKinnon was appointed Chief Operating
Officer of the Company, a position he held until October 2005, when he
assumed the position of President. On November 20, 2006,
Mr. McKinnon was appointed Chief Executive Officer and he continued to
serve as President. On July 18, 2007, Mr. McKinnon was removed as Chief
Executive Officer and President. See “Employment Agreements”
below.
|
(4)
|
Mr.
Bautista was appointed Vice President of Operations in July
2005. In February 2006, Mr. Bautista was appointed Executive
Vice President and Chief Operating Officer. Mr. Bautista agreed to reduce
his salary to half on October 1, 2007. (See “Employment Agreements”
below).
|
(5)
|
The
number and value of vested restricted stock based upon the closing market
price of the common stock at December 30, 20067 ($0.31) were as
follows: Mr. Eichler, 571,429 vested shares valued at $177,143;
Mr. McKinnon, 435,714 vested shares valued at $135,071and Mr.
Bautista 85,714 vested shares
valued $26,571.
|
Individual
Grants
|
|||||||||||||
Number
of
|
Percent
of
|
||||||||||||
Securities
|
Total
Options
|
||||||||||||
Underlying
|
Granted
to
|
Exercise
or
|
|||||||||||
Options
|
Employees
in
|
Base
Price
|
Expiration
|
||||||||||
Name
|
Granted
|
Fiscal 2007
|
Per Share
|
Date
|
|||||||||
Charles
R. Blum
|
188,679
|
100%
|
$
.53
|
07/18/17
|
Number
of Securities
|
||||||||||||||||||||||||
Underlying
Unexercised
|
||||||||||||||||||||||||
Options
at
|
Value
of Unexercised
|
|||||||||||||||||||||||
Shares
|
Value
|
Fiscal
Year-End (#)
|
In-the-Money
Options ($)(1)
|
|||||||||||||||||||||
Acquired
on
|
Realized
|
|||||||||||||||||||||||
Name
|
Exercise
(#)
|
($)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
||||||||||||||||||
Charles
R. Blum
|
$ |
---
|
0 |
188,679
|
||||||||||||||||||||
Eugene
E. Eichler
|
---
|
$
|
---
|
1,371,127
|
0
|
$
|
0
|
$
|
0
|
|||||||||||||||
John
Bautista
|
$
|
---
|
309,171
|
0
|
$
|
0
|
$
|
0
|
(1)
|
Market
value of our common stock at fiscal year-end minus the exercise price. The
closing price of our common stock on December 31, 2007 the last
trading day of the year was $0.31 per
share.
|
Number
of Securities
|
||||||||||||
Remaining
Available
|
||||||||||||
for
Future Issuance
|
||||||||||||
Number
of Securities
|
Under
Equity
|
|||||||||||
to
be Issued upon
|
Weighted-Average
|
Compensation
Plans
|
||||||||||
Exercise
of
|
Exercise
Price of
|
(Excluding
Securities
|
||||||||||
Outstanding
Options,
|
Outstanding
Options,
|
Reflected
in the
|
||||||||||
Plan
Category
|
Warrants
and Rights
|
Warrants
and Rights
|
First
Column)
|
|||||||||
Equity
compensation plans approved by security holders
|
3,938,455
|
$
|
.97
|
3,061,545
|
||||||||
Equity
compensation plans not approved by security holders
|
250,000
|
$
|
.40
|
N/A
|
||||||||
Total
|
4,188,455
|
$
|
.95
|
N/A
|
•
|
each
person, or group of affiliated persons, known by us to be the beneficial
owner of more than 5% of the outstanding shares of our common
stock;
|
|
•
|
each
of our directors;
|
|
•
|
our
Chief Executive Officer and each of our two other most highly-compensated
executive officers serving as such as of December 31, 2007 whose
total annual salary and bonus exceeded $100,000, for services rendered in
all capacities to the Company (such individuals are hereafter referred to
as the “Named Executive Officers”); and
|
|
•
|
all
of our directors and executive officers as a
group.
|
Number of Shares
of
|
Percentage
of
|
|||||||
Common
Stock
|
Shares
Beneficially
|
|||||||
Name and Address of Beneficial Owner (1) |
Beneficially Owned
(2)
|
Owned
(2)
|
||||||
Named Executive Officers and Director | ||||||||
Blum, Charles R. -
Chief Executive Officer (3)
|
0 | * | ||||||
Eichler, Eugene E. –
Chief Financial Officer (4)
|
2,049,699 | 4.2 | % | |||||
Bautista, John -
Chief Operating Officer (5)
|
|
487,585 | 1.0 | % | ||||
Cecil B. Kyte –
Chairman, Director (6)
|
2,179,410 | 4.5 | % | |||||
Price, John F. –
Director (7)
|
621,000 | 1.3 | % | |||||
Helleis, Joseph –
Director (8)
|
555,000 | 1.2 | % | |||||
Shelton, Nathan –
Director (9)
|
154,585 | * | ||||||
Bolio, Steven –
Director
|
0 | * | ||||||
All directors and executive officers as a group | 6,047,279 | 11.5 | % | |||||
Five Percent Stockholders | ||||||||
Joseph R. and Joette
M. Dell (10)
|
3,750,352 | 7.5 | % | |||||
Leodis C. Matthews
(11)
|
3,107,668 | 6.3 | % |
* | Represents less than 1%. |
(1)
|
Unless
otherwise indicated, the address of each listed person is c/o Save
the World Air, Inc., 235 Tennant Avenue, Morgan Hill, California
95037
|
(2)
|
Percentage
of beneficial ownership is based upon 46,470,413 shares of our common
stock outstanding as of December 31, 2007. Beneficial ownership is
determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Shares of common
stock subject to options and warrants currently exercisable or
convertible, or exercisable or convertible within 60 days, are deemed
outstanding for determining the number of shares beneficially owned and
for computing the percentage ownership of the person holding such options,
but are not deemed outstanding for computing the percentage ownership of
any other person. Except as indicated by footnote, and subject to
community property laws where applicable, the persons named in the table
have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them.
|
(3) | Has options to purchase 188,679 shares of our common stock which will not vest until July 28, 2008. |
(4) | Includes warrants to purchase 107,143 shares of our common stock exercisable currently and options to purchase 1,371,127 shares of our common stock exercisable currently. |
(5) | Includes warrants to purchase 25, 000 shares of our common stock exercisable currently and options to purchase 309,171 shares of our common stock exercisable currently. |
(6) | Includes warrants to purchase 942,051 shares of our common stock exercisable currently and options to purchase 30,000 shares of our common stock exercisable currently. |
(7) | Includes options to purchase 180,000 shares of our common stock exercisable currently. |
(8) | Includes options to purchase 305,000 shares of our common stock exercisable currently. |
(9) | Includes options to purchase 104,585 shares of our common stock exercisable currently. |
(10) | Includes warrants to purchase 621,765 shares of our common stock exercisable currently and Notes convertible into 2,393,382 shares of our common stock exercisable currently. |
(11) |
Includes
warrants owned by Morales, LLC to purchase 797,794 shares of our common
stock exercisable currently and Notes
owned by Morale Orchards, LLC convertible into 1,595,588 shares of our
common stock exercisable currently. Morale
Orchards, LLC is beneficially owned by Leodis C. Matthews, who serves as
the Company’s outside litigation through
his law firm, Matthews &
Partners.
|
(i)
|
Morale
agrees to forgive and waive any and all accrued interest on the Morale
Notes from and after January 31,
2008;
|
(ii)
|
Morale
agrees to forgive and waive any and all accrued interest due on the
Additional Morale Note from the date of its issuance;
and
|
(iii)
|
The
Matthews Law Firm agrees to forgive any and all interest which may have
accrued on the Matthews Law Firm
Debt.
|
(a)
|
The
following documents are filed as part of this Form
10-KSB.
|
(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)
10.49(19)
10.50(20)
10.51(21)
10.52(22)
10.53(23)
10.54(23)
10.55(24)
10.56(25)
10.57(26)
10.58(26)
10.59(27)
10.60(28)
10.61(29)
10.62(30)
10.63(31)
10.64(32)
10.65(32)
10.66(33)
10.67(34)
10.68(34)
10.69(34)
|
Appointment
of New Directors, Nathan Shelton, Steven Bolio and Dennis
Kenneally
Issuance
of RAND Final Report
Delisting
from OTCBB to OTC Pink Sheets
Resignation
of Director, Dennis Kenneally
Resignation
of Officer, Bruce H. McKinnon
Form
of 9% Convertible Note issued in 2007 Spring Offering
Form
of Stock Purchase Warrant issued in 2007 Spring Offering
Termination
of North Hollywood Lease
Modification
Agreement of 10% 2007 PIPE Convertible Notes
Form
of 9% Convertible Note issued in 2007 Summer Offering
Form
of Stock Purchase Warrant issued in 2007 Summer Offering
Resignation
of Director, J. Joseph Brown
Resignation
of Chief Financial Officer and Appointment of Interim Chief Financial
Officer
Severance
Agreement dated June 15, 2007 between Registrant and Bruce H.
McKinnon
Resignation
of Director, Bruce H. McKinnon
Second
Modification Agreement of 10% 2007 PIPE Convertible Notes
Form
of 9% Convertible Note issued in 2007 Fall Offering
Form
of Stock Purchase Warrant issued in 2007 Fall Offering
Resignation
of Director, Joseph Helleis
Form
of 9% Convertible Note issued in 2008 Winter Offering
Form
of Stock Purchase Warrant issued in 2008 Winter Offering
Modification
and Satisfaction Agreement of Convertible Notes with Morale Orchards, LLP
and Matthews & Partners
|
||
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 |
Amount
|
||||||||
Type of
Fee
|
Fiscal
Year 2007
|
Fiscal
Year 2006
|
||||||
Audit(1)
|
$ | 193,186 | $ | 161,455 | ||||
Audit
Related(2)
|
0 | 0 | ||||||
Taxes
(3)
|
0 | 0 | ||||||
All
Other (4)
|
0 | 0 | ||||||
Total
|
$ | 193,186 | $ | 161,455 |
(1)
|
This
category consists of fees for the audit of our annual financial statements
included in the Company’s annual report on Form 10-KSB and review of
the financial statements included in the Company’s quarterly reports on
Form 10-QSB. 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.
|
Save The World Air, Inc. | |||
|
By:
|
/s/ Charles R. Blum | |
Charles R. Blum
|
|||
Chief Executive
Officer
|
|||
Date:
March 31, 2008
|
NAME
|
TITLE
|
DATE
|
||
/s/
CHARLES R. BLUM
|
President,
Chief Executive Officer and
Director
|
March
31, 2008
|
||
Charles
R. Blum
|
||||
/s/
EUGENE E. EICHLER
|
Interim
Chief Financial Officer
|
March
31, 2008
|
||
Eugene
E. Eichler
|
||||
/s/
CECIL B. KYTE
|
Chairman
of the Board
|
March
31, 2008
|
||
Cecil
B. Kyte
|
||||
/s/
STEVEN BOLIO
|
Director
|
March
31, 2008
|
||
Steven
Bolio
|
||||
/s/
NATHAN SHELTON
|
Director
|
March
31, 2008
|
||
Nathan
Shelton
|
||||
/s/
JOHN PRICE
|
Director
|
March
31, 2008
|
||
John
Price
|
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 - F-14 |
Consolidated
statements of cash
flows
|
F-15 |
Notes
to consolidated financial
statements
|
F-16 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 47,660 | $ | 244,228 | ||||
Accounts
receivable
|
1,380 | — | ||||||
Inventories
|
30,256 | 21,314 | ||||||
Other
current
assets
|
20,552 | 81,232 | ||||||
Total
current
assets
|
99,848 | 346,774 | ||||||
Equipment,
net
|
201,058 | 322,023 | ||||||
Other
assets
|
4,500 | 4,500 | ||||||
Total assets
|
$ | 305,406 | $ | 673,297 | ||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable- related
parties
|
$ | 323,413 | $ | 21,252 | ||||
Accounts
payable-
other
|
716,986 | 212,455 | ||||||
Accrued
expenses
|
742,719 | 468,413 | ||||||
Accrued
research and development
fees
|
53,347 | 95,000 | ||||||
Accrued
professional
fees
|
747,261 | 594,945 | ||||||
Loan
payable- related
party
|
83,596 | — | ||||||
Loan
payable-
other
|
20,334 | — | ||||||
Convertible
debentures, net- related
parties
|
227,136 | — | ||||||
Convertible
debentures, net-
others
|
1,078,408 | 177,926 | ||||||
Convertible
debenture, net- other
default
|
671,992 | — | ||||||
Total
current liabilities
|
4,665,192 | 1,569,991 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
deficiency
|
||||||||
Common
stock, $.001 par value: 200,000,000 shares authorized,
46,470,413 and 40,081,757, shares issued and outstanding at
December 31,
2007 and 2006, respectively
|
46,471 | 40,082 | ||||||
Common
stock to be issued
|
4,000 | 60,000 | ||||||
Additional
paid-in
capital
|
32,280,083 | 29,430,821 | ||||||
Deficit
accumulated during the development
stage
|
(36,690,340 | ) | (30,427,597 | ) | ||||
Total
stockholders’
deficiency
|
(4,359,786 | ) | (896,694 | ) | ||||
Total liabilities and stockholder’s
deficiency
|
$ | 305,406 | $ | 673,297 |
Inception
|
||||||||||||
(February
|
||||||||||||
18,
1998) to
|
||||||||||||
Years Ended
December 31,
|
December
31,
|
|||||||||||
2007
|
2006
|
2007
|
||||||||||
Net
sales
|
$ | 39,000 | $ | 30,000 | $ | 69,000 | ||||||
Cost
of goods sold
|
10,720 | 13,400 | 24,120 | |||||||||
Gross
profit
|
28,280 | 16,600 | 44,880 | |||||||||
Operating
expenses
|
3,956,345 | 7,412,227 | 26,859,321 | |||||||||
Research
and development expenses
|
600,816 | 401,827 | 4,806,230 | |||||||||
Non-cash
patent settlement cost
|
— | — | 1,610,066 | |||||||||
Loss
before other income
|
(4,528,881 | ) | (7,797,454 | ) | (33,230,737 | ) | ||||||
Other
expense
|
||||||||||||
Other
income
|
3,384 | — | 3,509 | |||||||||
Interest
income
|
91 | 15,422 | 16,342 | |||||||||
Interest
expense
|
(1,736,537 | ) | (2,398,691 | ) | (4,492,380 | ) | ||||||
Settlement
of litigation and
debt
|
— | — | 1,017,208 | |||||||||
Loss
before provision for income taxes
|
(6,261,943 | ) | (10,180,723 | ) | (36,686,058 | ) | ||||||
Provision
for income taxes
|
800 | 800 | 4,282 | |||||||||
Net
loss
|
$ | (6,262,743 | ) | $ | (10,181,523 | ) | $ | (36,690,340 | ) | |||
Net
loss per common share, basic and diluted
|
$ | (0.16 | ) | $ | (0.28 | ) | ||||||
Weighted
average common shares outstanding, basic and diluted
|
38,378,845 | 35,946,022 |
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 | ||||||||||||||||||||||||
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 |
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 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 | ||||||||||||||||||||||||
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 |
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 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 | |||||||||||||||||||||||||
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 |
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
|
|||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
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 | ) | — | — |
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
|
|||||||||||||||||||||||||
|
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 | ||||||||||||||||||||||||
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 |
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
|
|||||||||||||||||||||||||
|
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 | ||||||||||||||||||||||||
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 |
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 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 | ||||||||||||||||||||||||
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 | — | — |
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 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 | ||||||||||||||||||||||||
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 |
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 | ||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||
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 |
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 | ) |
Inception
(February 18, 1998)
|
||||||||||||
Years Ended
December 31,
|
to
December 31,
|
|||||||||||
2007
|
2006
|
2007
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
Loss
|
$ | (6,262,743 | ) | $ | (10,181,523 | ) | $ | (36,690,340 | ) | |||
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
|
67,592 | 2,716,889 | 2,969,176 | |||||||||
Issuance
of common stock for services
|
4.000 | — | 4,672,102 | |||||||||
Issuance
of options for legal settlement
|
— | — | 31,500 | |||||||||
Issuance
of warrants for legal settlement
|
— | — | 4,957 | |||||||||
Issuance
of warrants for financing fees
|
35,340 | — | 35,340 | |||||||||
Patent
acquisition cost
|
— | — | 1,610,066 | |||||||||
Amortization
of issuance costs and original issue debt discounts
including
beneficial conversion feature-part of interest expense
|
1,573,596 | 2,284,742 | 4,372,901 | |||||||||
Amortization
of deferred compensation
|
— | — | 3,060,744 | |||||||||
Depreciation
and amortization of leasehold improvements
|
167,380 | 154,457 | 355,599 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
(1,380 | ) | — | (1,380 | ) | |||||||
Inventory
|
(8,942 | ) | (21,314 | ) | (30,256 | ) | ||||||
Prepaid
expenses and other
|
60,680 | (72,223 | ) | (20,552 | ) | |||||||
Other
assets
|
— | — | (4,500 | ) | ||||||||
Accounts
payable and accrued expenses
|
1,191,661 | (78,615 | ) | 3,423,775 | ||||||||
Net
cash used in operating activities
|
(3,172,816 | ) | (5,197,587 | ) | (16,723,076 | ) | ||||||
Cash
flows from investing activities
|
||||||||||||
Purchase
of equipment
|
(46,415 | ) | (181,106 | ) | (553,107 | ) | ||||||
Net
cash used in investing activities
|
(46,415 | ) | (181,106 | ) | (553,107 | ) | ||||||
Cash
flows from financing activities
|
||||||||||||
Net
proceeds under equity line of credit
|
912,691 | 349,695 | 1,262,386 | |||||||||
(Decrease)
increase in payables to related parties and stockholder
|
103,930 | (158,733 | ) | 615,380 | ||||||||
Increase
in convertible notes
|
74,492 | — | 74,492 | |||||||||
Advances
from founding executive officer
|
— | — | 517,208 | |||||||||
Net
proceeds from issuance of convertible notes and warrants
|
2,157,800 | 1,365,500 | 4,825,678 | |||||||||
Repayment
of convertible notes
|
(226,250 | ) | — | (226,250 | ) | |||||||
Net
proceeds from issuance of common stock and common stock
issuable
|
— | 3,786,638 | 10,254,949 | |||||||||
Net
cash provided by financing activities
|
3,022,663 | 5,343,100 | 17,323,843 | |||||||||
Net
(decrease) increase in
cash
|
(196,568 | ) | (35,593 | ) | 47,660 | |||||||
Cash, beginning of
period
|
244,228 | 279,821 | — | |||||||||
Cash, end of
period
|
$ | 47,660 | $ | 244,228 | $ | 47,660 | ||||||
Supplemental
disclosures of cash flow information
|
||||||||||||
Cash
paid during the year for
|
||||||||||||
Interest
|
$ | 1,239 | $ | 128,634 | $ | 135,044 | ||||||
Income
taxes
|
$ | 800 | $ | 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 | 45,000 | |||||||||
Conversion
of convertible debentures to common stock
|
526,480 | 2,580,086 | 2,973,434 | |||||||||
Write
off of deferred compensation
|
— | 142,187 | 142,187 | |||||||||
Non-cash
equity-warrant valuation and intrinsic value of beneficial
|
1,253,548 | 1,259,696 | 3,966,425 | |||||||||
conversion
associated with convertible notes
|
||||||||||||
`
|
·
|
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,
|
||||||||
2007
|
2006
|
|||||||
Office
equipment
|
$ | 53,043 | $ | 50,670 | ||||
Delivery
equipment
|
34,672 | - | ||||||
Furniture
and
fixtures
|
18,957 | 18,957 | ||||||
Machinery
and
equipment
|
54,161 | 54,161 | ||||||
Dies
and
molds
|
3,000 | 3,000 | ||||||
Testing
equipment
|
147,312 | 147,312 | ||||||
Leasehold
improvements
|
245,512 | 236,142 | ||||||
Subtotal
|
556,657 | 510,242 | ||||||
Less
accumulated
depreciation
|
(355,599 | ) | (188,219 | ) | ||||
Total
current
assets
|
$ | 201,058 | $ | 322,023 |
For the years ended
December 31,
|
||||||||
2007
|
2006
|
|||||||
Current:
|
||||||||
Federal
|
$ | — | $ | — | ||||
State
|
800 | 800 | ||||||
Total
current
|
800 | 800 | ||||||
Deferred:
|
||||||||
Federal
|
— | — | ||||||
State
|
— | — | ||||||
Total
deferred
|
— | — | ||||||
Total
income tax
provision
|
$ | 800 | $ | 800 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Computed
tax provision (benefit) at federal statutory rate (34%)
|
$ | (2,129,061 | ) | $ | (3,461,446 | ) | ||
State
income taxes, net of federal
benefit
|
(268,524 | ) | (406,769 | ) | ||||
Permanent
items
|
561,162 | 1,087,922 | ||||||
Credits
|
— | — | ||||||
Valuation
allowance
|
1,837,223 | 2,781,093 | ||||||
Income
tax provision
|
$ | 800 | $ | 800 |
December 31, 2007
|
December 31, 2006
|
|||||||||||||||
Deferred
tax
|
Deferred
tax
|
Deferred
tax
|
Deferred
tax
|
|||||||||||||
assets
|
liabilities
|
assets
|
liabilities
|
|||||||||||||
Current:
|
||||||||||||||||
Accrued
liabilities
|
$ | 538,747 | $ | — | $ | 382,359 | $ | — | ||||||||
Other
|
272 | — | 272 | — | ||||||||||||
539,019 | — | 382,631 | — | |||||||||||||
Noncurrent:
|
||||||||||||||||
Net
operating loss carry
forwards
|
10,122,130 | — | 8,490,347 | — | ||||||||||||
Unexercised
stock options and
warrants
|
1,133,210 | — | 1,118,553 | — | ||||||||||||
Credit
carryovers
|
256,757 | — | 259,391 | — | ||||||||||||
Depreciation
|
62,543 | — | 25,515 | — | ||||||||||||
Valuation
allowance
|
(12,113,659 | ) | — | (10,276,437 | ) | — | ||||||||||
(539,019 | ) | — | (382,631 | ) | — | |||||||||||
Total
deferred taxes net of valuation allowance
|
$ | — | $ | — | $ | — | $ | — |
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 |
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
||||||||||
As
of December 31, 2007:
|
||||||||||||
Outstanding
|
4,188,455 | $ | 0.95 | 7.10 | ||||||||
Expected
to
Vest
|
4,188,455 | $ | 0.95 | 7.10 | ||||||||
Exercisable
|
3,999,766 | $ | 0.97 | 6.99 |
2007
|
2006
|
|||||||
Expected
life
(years)
|
5.06 | 5.15 | ||||||
Risk
free interest
rate
|
4.42 | % | 4.59 | % | ||||
Volatility
|
116.82 | % | 262.84 | % | ||||
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, 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 |
§
|
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.
|
Years Ending
December 31,
|
||||
2008
|
$ | 65,280 | ||
2009
|
44,800 | |||
Total
|
$ | 110,080 |
(i)
|
Morale
agrees to forgive and waive any and all accrued interest on the Morale
Notes from and after January 31,
2008;
|
(ii)
|
Morale
agrees to forgive and waive any and all accrued interest due on the
Additional Morale Note from the date of its issuance;
and
|
(iii)
|
The
Matthews Law Firm agrees to forgive any and all interest which may have
accrued on the Matthews Law Firm
Debt.
|