0001446159 2001-12-31 0001446159 us-gaap:CommonStockMember 2001-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2001-12-31 0001446159 us-gaap:RetainedEarningsMember 2001-12-31 0001446159 2002-04-22 0001446159 2002-12-31 0001446159 us-gaap:CommonStockMember 2002-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2002-12-31 0001446159 us-gaap:RetainedEarningsMember 2002-12-31 0001446159 2002-04-23 2002-12-31 0001446159 us-gaap:CommonStockMember 2002-04-23 2002-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2002-04-23 2002-12-31 0001446159 us-gaap:RetainedEarningsMember 2002-04-23 2002-12-31 0001446159 2003-01-01 2003-12-31 0001446159 us-gaap:CommonStockMember 2003-01-01 2003-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2003-01-01 2003-12-31 0001446159 us-gaap:RetainedEarningsMember 2003-01-01 2003-12-31 0001446159 2003-12-31 0001446159 us-gaap:CommonStockMember 2003-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2003-12-31 0001446159 us-gaap:RetainedEarningsMember 2003-12-31 0001446159 2004-01-01 2004-12-31 0001446159 us-gaap:CommonStockMember 2004-01-01 2004-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2004-01-01 2004-12-31 0001446159 us-gaap:RetainedEarningsMember 2004-01-01 2004-12-31 0001446159 2004-12-31 0001446159 us-gaap:CommonStockMember 2004-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2004-12-31 0001446159 us-gaap:RetainedEarningsMember 2004-12-31 0001446159 2005-01-01 2005-12-31 0001446159 us-gaap:CommonStockMember 2005-01-01 2005-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2005-01-01 2005-12-31 0001446159 us-gaap:RetainedEarningsMember 2005-01-01 2005-12-31 0001446159 2005-12-31 0001446159 us-gaap:CommonStockMember 2005-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2005-12-31 0001446159 us-gaap:RetainedEarningsMember 2005-12-31 0001446159 us-gaap:StockOptionMember 2005-12-31 0001446159 us-gaap:WarrantMember 2005-12-31 0001446159 2006-01-01 2006-12-31 0001446159 us-gaap:CommonStockMember 2006-01-01 2006-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2006-01-01 2006-12-31 0001446159 us-gaap:RetainedEarningsMember 2006-01-01 2006-12-31 0001446159 us-gaap:StockOptionMember 2006-01-01 2006-12-31 0001446159 us-gaap:WarrantMember 2006-01-01 2006-12-31 0001446159 bior:WarrantOneMember 2006-01-01 2006-12-31 0001446159 2006-12-31 0001446159 us-gaap:CommonStockMember 2006-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2006-12-31 0001446159 us-gaap:RetainedEarningsMember 2006-12-31 0001446159 us-gaap:StockOptionMember 2006-12-31 0001446159 us-gaap:WarrantMember 2006-12-31 0001446159 2007-03-01 2007-03-31 0001446159 2007-07-01 2007-07-31 0001446159 2007-01-01 2007-12-31 0001446159 us-gaap:CommonStockMember 2007-01-01 2007-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2007-01-01 2007-12-31 0001446159 us-gaap:RetainedEarningsMember 2007-01-01 2007-12-31 0001446159 us-gaap:StockOptionMember 2007-01-01 2007-12-31 0001446159 us-gaap:WarrantMember 2007-01-01 2007-12-31 0001446159 bior:StockOptionsOneMember 2007-01-01 2007-12-31 0001446159 bior:WarrantTwoMember 2007-01-01 2007-12-31 0001446159 2007-12-31 0001446159 us-gaap:CommonStockMember 2007-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2007-12-31 0001446159 us-gaap:RetainedEarningsMember 2007-12-31 0001446159 us-gaap:StockOptionMember 2007-12-31 0001446159 us-gaap:WarrantMember 2007-12-31 0001446159 us-gaap:MinimumMember 2008-07-01 2008-12-31 0001446159 us-gaap:MaximumMember 2008-07-01 2008-12-31 0001446159 2008-01-01 2008-12-31 0001446159 us-gaap:CommonStockMember 2008-01-01 2008-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2008-01-01 2008-12-31 0001446159 us-gaap:RetainedEarningsMember 2008-01-01 2008-12-31 0001446159 us-gaap:StockOptionMember 2008-01-01 2008-12-31 0001446159 us-gaap:WarrantMember 2008-01-01 2008-12-31 0001446159 us-gaap:MinimumMember 2008-01-01 2008-12-31 0001446159 us-gaap:MaximumMember 2008-01-01 2008-12-31 0001446159 bior:ValueAt2009Member 2008-01-01 2008-12-31 0001446159 bior:StockOptionsTwoMember 2008-01-01 2008-12-31 0001446159 bior:WarrantThreeMember 2008-01-01 2008-12-31 0001446159 bior:WarrantThreeMember us-gaap:MinimumMember 2008-01-01 2008-12-31 0001446159 bior:StockOptionsTwoMember us-gaap:MinimumMember 2008-01-01 2008-12-31 0001446159 bior:GainLoss2012Member 2008-01-01 2008-12-31 0001446159 bior:ValueAt2012Member 2008-01-01 2008-12-31 0001446159 bior:GainLoss2010Member 2008-01-01 2008-12-31 0001446159 bior:ValueAt2010Member 2008-01-01 2008-12-31 0001446159 bior:StockOptionsTwoMember us-gaap:MaximumMember 2008-01-01 2008-12-31 0001446159 us-gaap:PatentsMember 2008-01-01 2008-12-31 0001446159 bior:GainLoss2011Member 2008-01-01 2008-12-31 0001446159 bior:WarrantThreeMember us-gaap:MaximumMember 2008-01-01 2008-12-31 0001446159 bior:ValueAt2011Member 2008-01-01 2008-12-31 0001446159 2008-12-31 0001446159 us-gaap:CommonStockMember 2008-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2008-12-31 0001446159 us-gaap:RetainedEarningsMember 2008-12-31 0001446159 us-gaap:StockOptionMember 2008-12-31 0001446159 us-gaap:WarrantMember 2008-12-31 0001446159 2009-01-02 0001446159 2009-03-31 2009-06-30 0001446159 bior:ValueAt2009Member 2009-03-31 2009-06-30 0001446159 bior:GainLoss2012Member 2009-03-31 2009-06-30 0001446159 bior:ValueAt2012Member 2009-03-31 2009-06-30 0001446159 bior:GainLoss2010Member 2009-03-31 2009-06-30 0001446159 bior:ValueAt2010Member 2009-03-31 2009-06-30 0001446159 bior:GainLoss2011Member 2009-03-31 2009-06-30 0001446159 bior:ValueAt2011Member 2009-03-31 2009-06-30 0001446159 2009-07-01 2009-09-30 0001446159 bior:ValueAt2009Member 2009-07-01 2009-09-30 0001446159 bior:GainLoss2012Member 2009-07-01 2009-09-30 0001446159 bior:ValueAt2012Member 2009-07-01 2009-09-30 0001446159 bior:GainLoss2010Member 2009-07-01 2009-09-30 0001446159 bior:ValueAt2010Member 2009-07-01 2009-09-30 0001446159 bior:GainLoss2011Member 2009-07-01 2009-09-30 0001446159 bior:ValueAt2011Member 2009-07-01 2009-09-30 0001446159 2009-10-01 2009-10-31 0001446159 2009-10-01 2009-12-31 0001446159 bior:ValueAt2009Member 2009-10-01 2009-12-31 0001446159 bior:GainLoss2012Member 2009-10-01 2009-12-31 0001446159 bior:ValueAt2012Member 2009-10-01 2009-12-31 0001446159 bior:GainLoss2010Member 2009-10-01 2009-12-31 0001446159 bior:ValueAt2010Member 2009-10-01 2009-12-31 0001446159 bior:GainLoss2011Member 2009-10-01 2009-12-31 0001446159 bior:ValueAt2011Member 2009-10-01 2009-12-31 0001446159 2009-01-01 2009-12-31 0001446159 bior:WarrantFourMember us-gaap:MaximumMember 2009-01-01 2009-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2009-01-01 2009-12-31 0001446159 us-gaap:WarrantMember 2009-01-01 2009-12-31 0001446159 us-gaap:StockOptionMember 2009-01-01 2009-12-31 0001446159 bior:ValueAt2009Member 2009-01-01 2009-12-31 0001446159 us-gaap:RetainedEarningsMember 2009-01-01 2009-12-31 0001446159 bior:StockOptionsThreeMember us-gaap:MaximumMember 2009-01-01 2009-12-31 0001446159 bior:StockOptionsThreeMember 2009-01-01 2009-12-31 0001446159 bior:StockOptionsThreeMember us-gaap:MinimumMember 2009-01-01 2009-12-31 0001446159 bior:WarrantFourMember 2009-01-01 2009-12-31 0001446159 us-gaap:CommonStockMember 2009-01-01 2009-12-31 0001446159 bior:WarrantFourMember us-gaap:MinimumMember 2009-01-01 2009-12-31 0001446159 2009-12-31 0001446159 us-gaap:CommonStockMember 2009-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2009-12-31 0001446159 us-gaap:RetainedEarningsMember 2009-12-31 0001446159 us-gaap:StockOptionMember 2009-12-31 0001446159 us-gaap:WarrantMember 2009-12-31 0001446159 2010-01-01 2010-03-31 0001446159 bior:GainLoss2012Member 2010-01-01 2010-03-31 0001446159 bior:ValueAt2012Member 2010-01-01 2010-03-31 0001446159 bior:GainLoss2010Member 2010-01-01 2010-03-31 0001446159 bior:ValueAt2010Member 2010-01-01 2010-03-31 0001446159 bior:GainLoss2011Member 2010-01-01 2010-03-31 0001446159 bior:ValueAt2011Member 2010-01-01 2010-03-31 0001446159 2010-04-01 2010-06-30 0001446159 bior:GainLoss2012Member 2010-04-01 2010-06-30 0001446159 bior:ValueAt2012Member 2010-04-01 2010-06-30 0001446159 bior:GainLoss2010Member 2010-04-01 2010-06-30 0001446159 bior:ValueAt2010Member 2010-04-01 2010-06-30 0001446159 bior:GainLoss2011Member 2010-04-01 2010-06-30 0001446159 bior:ValueAt2011Member 2010-04-01 2010-06-30 0001446159 2010-06-01 2010-06-30 0001446159 2010-07-22 0001446159 2010-07-01 2010-09-30 0001446159 bior:GainLoss2012Member 2010-07-01 2010-09-30 0001446159 bior:ValueAt2012Member 2010-07-01 2010-09-30 0001446159 bior:GainLoss2010Member 2010-07-01 2010-09-30 0001446159 bior:ValueAt2010Member 2010-07-01 2010-09-30 0001446159 bior:GainLoss2011Member 2010-07-01 2010-09-30 0001446159 bior:ValueAt2011Member 2010-07-01 2010-09-30 0001446159 2010-09-01 2010-09-30 0001446159 2010-01-01 2010-12-31 0001446159 us-gaap:CommonStockMember 2010-01-01 2010-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001446159 us-gaap:RetainedEarningsMember 2010-01-01 2010-12-31 0001446159 us-gaap:StockOptionMember 2010-01-01 2010-12-31 0001446159 us-gaap:WarrantMember 2010-01-01 2010-12-31 0001446159 bior:StockOptionsFourMember 2010-01-01 2010-12-31 0001446159 bior:WarrantFiveMember 2010-01-01 2010-12-31 0001446159 bior:WarrantFiveMember us-gaap:MinimumMember 2010-01-01 2010-12-31 0001446159 bior:WarrantFiveMember us-gaap:MaximumMember 2010-01-01 2010-12-31 0001446159 2010-12-31 0001446159 us-gaap:CommonStockMember 2010-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2010-12-31 0001446159 us-gaap:RetainedEarningsMember 2010-12-31 0001446159 us-gaap:StockOptionMember 2010-12-31 0001446159 us-gaap:WarrantMember 2010-12-31 0001446159 2010-12-01 2010-12-31 0001446159 2011-01-01 2011-01-31 0001446159 bior:ConvertibleNotesOneMember 2011-01-01 2011-01-31 0001446159 bior:ConvertibleNotesTwoMember 2011-01-01 2011-01-31 0001446159 bior:ConvertibleNotesThreeMember 2011-01-01 2011-01-31 0001446159 2011-03-31 0001446159 2011-06-30 0001446159 2011-09-07 0001446159 2011-07-01 2011-09-30 0001446159 2011-01-01 2011-09-30 0001446159 2011-09-30 0001446159 2011-01-01 2011-12-31 0001446159 us-gaap:MinimumMember 2011-01-01 2011-12-31 0001446159 us-gaap:MaximumMember 2011-01-01 2011-12-31 0001446159 bior:WarrantSixMember us-gaap:MaximumMember 2011-01-01 2011-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2011-01-01 2011-12-31 0001446159 us-gaap:WarrantMember 2011-01-01 2011-12-31 0001446159 us-gaap:StockOptionMember 2011-01-01 2011-12-31 0001446159 us-gaap:RetainedEarningsMember 2011-01-01 2011-12-31 0001446159 bior:StockOptionsFiveMember us-gaap:MaximumMember 2011-01-01 2011-12-31 0001446159 us-gaap:CommonStockMember 2011-01-01 2011-12-31 0001446159 bior:WarrantSixMember 2011-01-01 2011-12-31 0001446159 bior:WarrantSixMember us-gaap:MinimumMember 2011-01-01 2011-12-31 0001446159 bior:StockOptionsFiveMember 2011-01-01 2011-12-31 0001446159 bior:StockOptionsFiveMember us-gaap:MinimumMember 2011-01-01 2011-12-31 0001446159 2011-12-31 0001446159 us-gaap:CommonStockMember 2011-12-31 0001446159 us-gaap:AdditionalPaidInCapitalMember 2011-12-31 0001446159 us-gaap:RetainedEarningsMember 2011-12-31 0001446159 us-gaap:StockOptionMember 2011-12-31 0001446159 us-gaap:WarrantMember 2011-12-31 0001446159 bior:NotePayableIssuedThreeMember 2011-12-31 0001446159 bior:NotePayableIssuedSevenMember 2011-12-31 0001446159 bior:NotePayableIssuedNineMember 2011-12-31 0001446159 bior:NotePayableIssuedTenMember 2011-12-31 0001446159 bior:NotePayableToIndividualsMember 2011-12-31 0001446159 bior:NotePayableIssuedOneMember 2011-12-31 0001446159 bior:NotePayableIssuedTwoMember 2011-12-31 0001446159 bior:NotePayableIssuedFourMember 2011-12-31 0001446159 bior:NotePayableIssuedFiveMember 2011-12-31 0001446159 bior:NotePayableIssuedSixMember 2011-12-31 0001446159 bior:NotePayableIssuedEightMember 2011-12-31 0001446159 bior:NotePayableIssuedElevenMember 2011-12-31 0001446159 us-gaap:ConvertibleNotesPayableMember 2011-12-31 0001446159 bior:NotePayableIssuedTwelveMember 2011-12-31 0001446159 2012-03-28 0001446159 bior:FirstAdvanceMember 2012-03-28 0001446159 bior:SecondAdvanceMember 2012-03-28 0001446159 us-gaap:StockOptionMember 2012-01-01 2012-03-31 0001446159 us-gaap:WarrantMember 2012-01-01 2012-03-31 0001446159 us-gaap:StockOptionMember 2012-03-31 0001446159 us-gaap:WarrantMember 2012-03-31 0001446159 2012-04-01 2012-04-30 0001446159 us-gaap:StockOptionMember 2012-04-01 2012-06-30 0001446159 us-gaap:WarrantMember 2012-04-01 2012-06-30 0001446159 us-gaap:StockOptionMember 2012-06-30 0001446159 us-gaap:WarrantMember 2012-06-30 0001446159 2012-08-13 0001446159 2012-08-01 2012-08-31 0001446159 2012-07-01 2012-09-30 0001446159 us-gaap:StockOptionMember 2012-07-01 2012-09-30 0001446159 us-gaap:WarrantMember 2012-07-01 2012-09-30 0001446159 bior:WarrantOneMember 2012-07-01 2012-09-30 0001446159 bior:WarrantTwoMember 2012-07-01 2012-09-30 0001446159 us-gaap:MinimumMember 2012-07-01 2012-09-30 0001446159 us-gaap:MaximumMember 2012-07-01 2012-09-30 0001446159 bior:WarrantFourMember 2012-07-01 2012-09-30 0001446159 bior:WarrantFiveMember 2012-07-01 2012-09-30 0001446159 us-gaap:BoardOfDirectorsChairmanMember 2012-07-01 2012-09-30 0001446159 bior:WarrantSevenMember 2012-07-01 2012-09-30 0001446159 us-gaap:WarrantMember us-gaap:MaximumMember 2012-07-01 2012-09-30 0001446159 bior:WarrantEightMember 2012-07-01 2012-09-30 0001446159 bior:WarrantElevenMember 2012-07-01 2012-09-30 0001446159 us-gaap:DirectorMember 2012-07-01 2012-09-30 0001446159 bior:WarrantThirteenMember 2012-07-01 2012-09-30 0001446159 bior:SokPartnersMember 2012-07-01 2012-09-30 0001446159 bior:WarrantFourteenMember 2012-07-01 2012-09-30 0001446159 bior:StockOptionsSixMember 2012-07-01 2012-09-30 0001446159 us-gaap:WarrantMember us-gaap:MinimumMember 2012-07-01 2012-09-30 0001446159 2012-01-01 2012-09-30 0001446159 bior:StockOptionsOneMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedOneMember 2012-01-01 2012-09-30 0001446159 us-gaap:MinimumMember 2012-01-01 2012-09-30 0001446159 bior:WarrantFourteenMember 2012-01-01 2012-09-30 0001446159 us-gaap:ConvertibleNotesPayableMember 2012-01-01 2012-09-30 0001446159 bior:WarrantSevenMember us-gaap:MinimumMember 2012-01-01 2012-09-30 0001446159 bior:StockOptionsSixMember 2012-01-01 2012-09-30 0001446159 bior:WarrantTenMember 2012-01-01 2012-09-30 0001446159 us-gaap:FurnitureAndFixturesMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedTwelveMember 2012-01-01 2012-09-30 0001446159 bior:WarrantTwoMember 2012-01-01 2012-09-30 0001446159 bior:WarrantSixMember 2012-01-01 2012-09-30 0001446159 us-gaap:AdditionalPaidInCapitalMember 2012-01-01 2012-09-30 0001446159 bior:WarrantThreeMember 2012-01-01 2012-09-30 0001446159 us-gaap:StockOptionMember 2012-01-01 2012-09-30 0001446159 bior:StockOptionsThreeMember 2012-01-01 2012-09-30 0001446159 bior:WarrantFifteenMember 2012-01-01 2012-09-30 0001446159 bior:WarrantEightMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedSevenMember 2012-01-01 2012-09-30 0001446159 bior:WarrantSevenMember us-gaap:MaximumMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedTenMember us-gaap:MaximumMember 2012-01-01 2012-09-30 0001446159 bior:StockOptionsFourMember 2012-01-01 2012-09-30 0001446159 us-gaap:RetainedEarningsMember 2012-01-01 2012-09-30 0001446159 bior:StockOptionsTwoMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedFiveMember 2012-01-01 2012-09-30 0001446159 us-gaap:MaximumMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedFourMember 2012-01-01 2012-09-30 0001446159 bior:WarrantThirteenMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedTenMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedElevenMember 2012-01-01 2012-09-30 0001446159 bior:StockOptionsSevenMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedEightMember 2012-01-01 2012-09-30 0001446159 bior:WarrantElevenMember 2012-01-01 2012-09-30 0001446159 us-gaap:OfficeEquipmentMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedThreeMember 2012-01-01 2012-09-30 0001446159 bior:WarrantSevenMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedSixMember 2012-01-01 2012-09-30 0001446159 bior:WarrantFourMember 2012-01-01 2012-09-30 0001446159 us-gaap:CommonStockMember 2012-01-01 2012-09-30 0001446159 bior:WarrantTwelveMember 2012-01-01 2012-09-30 0001446159 bior:WarrantFiveMember 2012-01-01 2012-09-30 0001446159 bior:WarrantOneMember 2012-01-01 2012-09-30 0001446159 bior:AmuelHerschkowitzMember 2012-01-01 2012-09-30 0001446159 bior:StockOptionsFiveMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedNineMember 2012-01-01 2012-09-30 0001446159 bior:WarrantNineMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedTenMember us-gaap:MinimumMember 2012-01-01 2012-09-30 0001446159 bior:NotePayableIssuedTwoMember 2012-01-01 2012-09-30 0001446159 2012-09-30 0001446159 bior:StockOptionsOneMember 2012-09-30 0001446159 bior:NotePayableIssuedFourMember 2012-09-30 0001446159 bior:WarrantFourteenMember 2012-09-30 0001446159 bior:StockOptionsSixMember 2012-09-30 0001446159 bior:NotePayableIssuedThreeMember 2012-09-30 0001446159 bior:WarrantTenMember 2012-09-30 0001446159 bior:WarrantTwoMember 2012-09-30 0001446159 bior:WarrantSixMember 2012-09-30 0001446159 us-gaap:AdditionalPaidInCapitalMember 2012-09-30 0001446159 us-gaap:WarrantMember 2012-09-30 0001446159 bior:WarrantThreeMember 2012-09-30 0001446159 bior:NotePayableIssuedEightMember 2012-09-30 0001446159 us-gaap:StockOptionMember 2012-09-30 0001446159 bior:StockOptionsThreeMember 2012-09-30 0001446159 bior:WarrantFifteenMember 2012-09-30 0001446159 bior:WarrantEightMember 2012-09-30 0001446159 bior:NotePayableIssuedSevenMember 2012-09-30 0001446159 bior:NotePayableIssuedElevenMember 2012-09-30 0001446159 bior:StockOptionsFourMember 2012-09-30 0001446159 bior:RelatedPartyMember 2012-09-30 0001446159 bior:NotePayableIssuedFiveMember 2012-09-30 0001446159 us-gaap:RetainedEarningsMember 2012-09-30 0001446159 bior:StockOptionsTwoMember 2012-09-30 0001446159 bior:NotePayableIssuedOneMember 2012-09-30 0001446159 bior:NotePayableIssuedTenMember 2012-09-30 0001446159 bior:WarrantThirteenMember 2012-09-30 0001446159 us-gaap:MaximumMember 2012-09-30 0001446159 bior:SokPartnersMember 2012-09-30 0001446159 us-gaap:MinimumMember 2012-09-30 0001446159 bior:StockOptionsSevenMember 2012-09-30 0001446159 bior:WarrantFourMember 2012-09-30 0001446159 bior:WarrantElevenMember 2012-09-30 0001446159 bior:NotePayableIssuedNineMember 2012-09-30 0001446159 bior:WarrantSevenMember 2012-09-30 0001446159 bior:NotePayableIssuedSixMember 2012-09-30 0001446159 bior:NotePayableIssuedTwelveMember 2012-09-30 0001446159 bior:NotePayableIssuedTwoMember 2012-09-30 0001446159 us-gaap:CommonStockMember 2012-09-30 0001446159 bior:WarrantFiveMember 2012-09-30 0001446159 bior:WarrantTwelveMember 2012-09-30 0001446159 bior:NotePayableToIndividualsMember 2012-09-30 0001446159 bior:WarrantOneMember 2012-09-30 0001446159 bior:AmuelHerschkowitzMember 2012-09-30 0001446159 us-gaap:ConvertibleNotesPayableMember 2012-09-30 0001446159 bior:StockOptionsFiveMember 2012-09-30 0001446159 bior:WarrantNineMember 2012-09-30 0001446159 2002-04-23 2012-09-30 0001446159 2012-11-05 0001446159 2002-04-23 2012-11-05 xbrli:shares iso4217:USD iso4217:USDxbrli:shares xbrli:pure BioDrain Medical, Inc. 0001446159 --12-31 Smaller Reporting Company bior 99060672 10-Q false 2012-09-30 Q3 2012 0 463838 9383 77728 122985 0 102136 0 50294 39819 97605 134416 30148 23007 301032 299378 4600 3832 140588 140588 446220 443798 1055559 1156082 731135 723350 566574 616137 479910 2353268 2495569 630153 89300 166063 87787 320740 986035 8844952 14358917 11868956 17573810 0 0 0 0 -36057 6015 8985 -51057 -91118 6470 43930 -141518 -181361 6536 43974 -231871 -302170 6686 46867 -355723 -514641 8231 105877 -628749 -712497 8237 660430 -1381164 -309445 81308 2753039 -3143792 -2342030 113830 3573507 -6029368 -2189557 140023 5052497 -7382077 -2189557 -2189557 -2703264 320740 8844952 -11868956 -2228858 14358917 -17573810 986035 446220 443798 28741 0 16446 0 0.01 0.01 80000000 200000000 200000000 200000000 32074000 98603484 20264 22638 51615 99210 211872 11161 12981 69962 85478 148698 9103 9657 -18347 13732 63174 428843 1014667 2518114 5034810 14499267 135358 402479 300719 519019 2048554 60989 149247 13508 74572 963057 61033 176118 23703 168462 835569 23006 213921 18678 78275 709463 663217 1528590 2837366 5718587 17636984 -51057 -51057 -90461 -90461 -90353 -90353 -123852 -123852 -273026 -273026 -752415 -752415 -1762628 -1762628 -2892230 -2892230 -1352709 -1352709 -654114 -1518933 -4486879 -4486879 -2855713 -5704855 -5704855 -17573810 -0.02 -0.07 -0.03 -0.04 -0.10 -1.83 27236303 22193681 79467603 55370243 9608160 0 601542 647032 653599 668563 823077 823676 8130841 11383121 14002290 32074000 98603484 10000 5985 4015 0 598549 400 239 161 250 150 100 23942 14964 35000 216 34784 21548 110 66 44 6567 1451 869 582 86869 650 389 261 38906 44810 287 44523 28739 5000 30 4970 1593502 45528 1547974 0 -1250 1250 2993 4552862 125000 4552862 0 20127 -20127 50000 49000 1000 2012690 100000 2857 -2857 285714 0 2059 -2059 205899 87500 2500 85000 250000 -479910 -486564 6654 2793 2793 13644 13644 73907 73907 354994 354994 111835 111835 11382 11382 593829 350000 343000 7000 700000 110000 107800 2200 220000 25000 24500 500 50000 40000 39200 800 80000 75000 73500 1500 150000 398905 390927 7978 797810 346714 346714 129684 129684 84600 84600 -222296 -222296 0 -300 300 30000 25000 24500 500 50000 256454 247100 9354 935446 87275 1746 85529 174550 187045 3741 183304 374090 354602 354602 -25553 -25553 90000 1800 88200 180000 6425 129 6296 12850 355124 7102 348022 710248 132938 132938 30150 30150 119474 119474 47908 47908 -31332 -31332 -31506 -31506 25000 2500 22500 250000 107549 4889 102660 488860 1000 6 994 4906 4766 140 599 14024 17357 1286 16071 128571 45000 3000 42000 300000 161107 161107 91504 91504 26234 26234 400000 346666 53334 5333334 110000 97059 12941 1294117 18000 16000 2000 200000 15000 13500 1500 150000 20000 15840 4160 416010 22500 20920 1580 158036 50000 44118 5882 588236 35000 30000 5000 500000 32000 22590 9410 941034 82463 82463 9478 9478 12256 12256 1357494 1357494 147116 147116 210000 175000 35000 3500000 40000 34285 5715 253456 217248 36208 571429 3620809 112500 106875 5625 562500 1000 1000 4130 4130 -128571 -100000 100000 -412963 412963 55000 46772 8228 822842 201250 195500 5750 575000 162500 154375 8125 812500 20000 20000 229132 229132 232000 216533 15467 1546667 8000 7404 596 59613 14000 12923 1077 107692 15000 13295 1705 170455 16000 12567 3433 343348 12000 9310 2690 269058 10000 7313 2687 268670 8500 4218 4282 428212 300000 253846 46154 4615385 19500 16500 3000 300000 268549 268549 60463 60463 10000 6503 3497 349650 39500 36867 2633 263333 300000 253846 46154 4615385 493884 460958 32926 3292557 185299 156791 28508 2850754 1125000 1050000 75000 7500000 57042 53873 3169 316898 59534 48063 11471 1147078 56584 50926 5658 565834 12000 8129 3871 387097 59590 55617 3973 397267 25000 22222 2778 277778 179990 154277 25713 2571285 18000 12901 5099 509915 50000 34277 15723 1572327 22000 14593 7407 740741 93750 87500 6250 625000 9022 6185 2837 283718 11021 11021 0.0167 1.67 0.35 0.0167 0.0167 1.67 0.0167 0.0167 0.0167 1.67 1.67 0.35 0.35 0.5 0.5 0.07 0.5 0.5 0.5 0.5 0.5 0.5 0.27 0.5 0.5 0.5 0.5 0.5 0.1 0.22 0.135 0.15 0.09 0.075 0.085 0.09 0.1 0.085 0.07 0.06 0.07 0.20 0.01 0.01 0.35 0.15 0.20 0.15 0.1342 0.13 0.088 0.0466 0.0466 0.0466 0.0397 0.065 0.065 0.0286 0.15 0.15 0.01 0.065 0.15 0.065 0.18 0.052 0.10 0.032 0.031 0.15 0.07 0.0353 0.032 0.0297 1822 768 10333 265393 663770 3331070 142813 3775250 5645190 0 0 355124 0 476398 40242 92700 30150 15553 47908 84999 45187 330471 19277 -10475 39819 0 36811 134416 22523 -7141 23007 0 0 -14957 40550 387294 1685029 53189 149347 827780 -1185888 -780709 -5834075 0 0 12258 0 0 142495 0 0 -154753 250500 372284 1956250 0 50000 150000 10267 0 75667 22500 0 0 991500 437576 4360381 1254233 759860 6090964 68345 -20849 102136 52000 99784 211644 89300 0 546600 0 807800 1031800 0 395078 415078 <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE 1 &#8212; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Nature of Operations and Continuance of Operations</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">BioDrain Medical, Inc. (the "Company") was incorporated under the laws of the State of Minnesota in 2002. The Company has developed an environmentally safe system for the collection and disposal of infectious fluids that result from surgical procedures and post-operative care. The Company also makes ongoing sales of our proprietary cleaning fluid to users of our systems. In April 2009, the Company received 510(k) clearance from the FDA to authorize the Company to market and sell its STREAMWAY&#174; FMS products.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations and has a stockholders&#8217; deficit. These factors raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Since inception, the Company raised approximately $4,360,000 in equity and $2,208,000 in debt financing, including $1,153,000 in equity and $525,000 in convertible debt in 2011. The Company has raised approximately $438,000 in equity and $373,000 in convertible debt through the third quarters of 2012, inclusively. The Company is currently engaged in a private placement of units of common stock and warrants. The Company is also engaged in a corporate restructuring, including actively seeking to convert indebtedness into equity. See &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations &#8211; Liquidity and Capital Resources&#8221;.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b></b>&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Recent Accounting Developments</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">We reviewed all other significant newly issued accounting pronouncements and determined they are either not applicable to our business or that no material effect is expected on our financial position and results of our operations.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Valuation of Intangible Assets</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">We review identifiable intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Our intangible assets are currently solely the costs of obtaining trademarks and patents. Events or changes in circumstances that indicate the carrying amount may not be recoverable include, but are not limited to, a significant change in the medical device marketplace and a significant adverse change in the business climate in which we operate. If such events or changes in circumstances are present, the undiscounted cash flows method is used to determine whether the intangible asset is impaired. Cash flows would include the estimated terminal value of the asset and exclude any interest charges. If the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, the asset is considered impaired, and the impairment is measured by reducing the carrying value of the asset to its fair value using the discounted cash flows method. The discount rate utilized is based on management's best estimate of the related risks and return at the time the impairment assessment is made.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Our accounting estimates and assumptions bear various risks of change, including the length of the current economic downturn facing the United States, the expansion of the slowdown in consumer spending in the U.S. medical markets despite the early expressed opinions of financial experts that the medical market would not be as affected as other markets and failure to gain acceptance in the medical market.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b></b>&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Accounting Policies and Estimates</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Presentation of Taxes Collected from Customers</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Sales taxes are imposed on the Company&#8217;s sales to nonexempt customers. The Company collects the taxes from customers and remits the entire amounts to the governmental authorities. The Company&#8217;s accounting policy is to exclude the taxes collected and remitted from revenues and expenses.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Shipping and Handling</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Shipping and handling charges billed to customers are recorded as revenue. Shipping and handling costs are recorded within cost of goods sold on the statement of operations.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Advertising</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Advertising costs are expensed as incurred. There were no advertising expenses in the three and nine months ended September 30, 2012 and $0 and $1,100 in the three and nine months ended September 30, 2011, respectively.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Research and Development</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Research and development costs are charged to operations as incurred. There were $4,800 in research and development in the three and nine months ended September 30, 2012, and no research and development expenses in the three and nine months ended September 30, 2011.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Revenue Recognition</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company recognizes revenue in accordance with the SEC&#8217;s Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by Staff Accounting Bulletin No. 104 (together, SAB 101), and ASC 605- Revenue Recognition.</p> <p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable and collectability is probable. Delivery is considered to have occurred upon either shipment of the product or arrival at its destination based on the shipping terms of the transaction. The Company&#8217;s standard terms specify that shipment is FOB BioDrain and the Company will, therefore, recognize revenue upon shipment in most cases. This revenue recognition policy applies to shipments of the STREAMWAY FMS units as well as shipments of cleaning solution kits. When these conditions are satisfied, the Company recognizes gross product revenue, which is the price it charges generally to its customers for a particular product. Under the Company&#8217;s standard terms and conditions, there is no provision for installation or acceptance of the product to take place prior to the obligation of the customer. The customer&#8217;s right of return is limited only to the Company&#8217;s standard one-year warranty whereby the Company replaces or repairs, at its option, and it would be rare that the STREAMWAY FMS unit or significant quantities of cleaning solution kits may be returned. Additionally, since the Company buys both the STREAMWAY FMS units and cleaning solution kits from &#8220;turnkey&#8221; suppliers, the Company would have the right to replacements from the suppliers if this situation should occur.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Receivables</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Receivables are reported at the amount the Company expects to collect on balances outstanding at fiscal year-end. The Company has determined there will be no losses on balances outstanding at the nine months ended September 30, 2012.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b></b>&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Inventories</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventory balances are as&#160;follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2">September&#160;30,</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2">December&#160;31,</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2011</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 66%;">Finished goods</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 14%;">64,709</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 14%;">94,331</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Raw materials</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">69,707</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3,274</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">134,416</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">97,605</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Property and Equipment</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. Estimated useful asset life by classification is as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="padding-bottom: 1pt; width: 86%;">&#160;</td> <td style="padding-bottom: 1pt; width: 2%;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; width: 12%;">Years</td> </tr> <tr style="vertical-align: top;"> <td>Computers and office equipment</td> <td>&#160;</td> <td style="text-align: center;">3</td> </tr> <tr style="vertical-align: top;"> <td>Furniture and fixtures</td> <td>&#160;</td> <td style="text-align: center;">5</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Intangible Assets</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Intangible assets consist of patent costs. These assets are not subject to amortization until the property patented is in production. The assets are reviewed for impairment annually, and impairment losses, if any, are charged to operations when identified. No impairment losses have been identified by management.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Income Taxes</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company accounts for income taxes in accordance with ASC 740- Income Taxes (&#8220;ASC 740&#8221;). Under ASC 740, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company reviews income tax positions expected to be taken in income tax returns to determine if there are any income tax uncertainties. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by taxing authorities, based on technical merits of the positions. The Company has identified no income tax uncertainties.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Tax years subsequent to 2007 remain open to examination by federal and state tax authorities.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Patents and Intellectual Property</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">In June 2008, the Company completed and executed an agreement to secure exclusive ownership of the Company&#8217;s primary patent from an inventor, Marshall Ryan. Mr. Ryan received a combination of cash and warrants, and he will receive a 4% royalty on STREAMWAY FMS (the Product) sales for the life of the patent. At the signing of the agreement, Mr. Ryan received $75,000 in exchange for the exclusive assignment of the patent. In addition, on June 30, 2009, Mr. Ryan, through his Mid-State Stainless, Inc. entity, was entitled to receive $100,000 as payment (currently recorded as an account payable, less payments, with the Company) for past research and development activities. Should Mr. Ryan be utilized in the future for additional product development activities, he will be compensated at a rate of $95.00 per hour.<br />&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Mr. Ryan also received a warrant, with immediate vesting, to purchase 150,000 shares of the Company's common stock at a price of $.35 per share. The warrant has a five-year term ending on June 30, 2013 and was assigned a value of $28,060 using a Black-Scholes formula. This amount was expensed as consulting expense in 2008 using a five-year expected life, a 3.73% risk-free interest rate, an expected 59% volatility and a zero dividend rate.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Subsequent Events</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><i>Other Restructuring.</i> The Company continues an ongoing restructuring process negotiating with a significant number of creditors other than Dr. Herschkowitz and SOK to convert their indebtedness into common stock</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has evaluated all other subsequent events through the date of this filing. The Company does not believe there are any other subsequent events that require disclosure.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Interim Financial Statements</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has prepared the unaudited interim financial statements and related unaudited financial information in the footnotes in accordance with accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) and the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;) for interim financial statements. These interim financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly the Company&#8217;s financial position, the results of its operations and its cash flows for the interim periods. These interim financial statements should be read in conjunction with the annual financial statements and the notes thereto contained in the Form 10-K filed with the SEC on April 16, 2012, as amended. The nature of the Company&#8217;s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE 2 &#8211; DEVELOPMENT STAGE OPERATIONS</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company was formed April 23, 2002. Since inception to November 5, 2012, 99,060,672 shares of common stock have been issued between par value and $1.67. Operations since incorporation have been devoted to raising capital, obtaining financing, development of the Company&#8217;s product, and administrative services.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE 3 &#8211; STOCKHOLDERS&#8217; DEFICIT, STOCK OPTIONS AND WARRANTS</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">In connection with the financing completed in October 2008, the Company has affected two reverse stock splits, one on June 6, 2008 and another on October 20, 2008. In accordance with SAB Topic 4C, all stock options and warrants and their related exercise prices are stated at their post-reverse stock split values.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has an equity incentive plan, which allows issuance of incentive and non-qualified stock options to employees, directors and consultants of the Company, where permitted under the plan. The exercise price for each stock option is determined by the board of directors. Vesting requirements are determined by the board of directors when granted and currently range from immediate to three years. Options under this plan have terms ranging from three to ten years.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><i>&#160;</i></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><i>Accounting for share-based payment</i></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has adopted ASC 718- Compensation-Stock Compensation ("ASC 718"). Under ASC 718 stock-based employee compensation cost is recognized using the fair value based method for all new awards granted after January 1, 2006 and unvested awards outstanding at January 1, 2006. Compensation costs for unvested stock options and non-vested awards that were outstanding at January 1, 2006, are being recognized over the requisite service period based on the grant-date fair value of those options and awards, using a straight-line method. We elected the modified-prospective method under which prior periods are not retroactively restated.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">ASC 718 requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model or other acceptable means. The Company uses the Black-Scholes option valuation model which requires the input of significant assumptions including an estimate of the average period of time employees will retain vested stock options before exercising them, the estimated volatility of the Company's common stock price over the expected term, the number of options that will ultimately be forfeited before completing vesting requirements, the expected dividend rate and the risk-free interest rate. Changes in the assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related expense recognized. The assumptions the Company uses in calculating the fair value of stock-based payment awards represent the Company's best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based compensation expense could be materially different in the future.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Since the Company's common stock has no significant public trading history, and the Company has experienced no significant option exercises in its history, the Company is required to take an alternative approach to estimating future volatility and estimated life and the future results could vary significantly from the Company's estimates. The Company compiled historical volatilities over a period of 2 to 7 years of 15 small-cap medical companies traded on major exchanges and 10 mid-range medical companies on the OTC Bulletin Board and combined the results using a weighted average approach. In the case of ordinary options to employees the Company determined the expected life to be the midpoint between the vesting term and the legal term. In the case of options or warrants granted to non-employees, the Company estimated the life to be the legal term unless there was a compelling reason to make it shorter.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">When an option or warrant is granted in place of cash compensation for services, the Company deems the value of the service rendered to be the value of the option or warrant. In most cases, however, an option or warrant is granted in addition to other forms of compensation and its separate value is difficult to determine without utilizing an option pricing model. For that reason the Company also uses the Black-Scholes option-pricing model to value options and warrants granted to non-employees, which requires the input of significant assumptions including an estimate of the average period the investors or consultants will retain vested stock options and warrants before exercising them, the estimated volatility of the Company's common stock price over the expected term, the number of options and warrants that will ultimately be forfeited before completing vesting requirements, the expected dividend rate and the risk-free interest rate. Changes in the assumptions can materially affect the estimate of fair value of stock-based consulting and/or compensation and, consequently, the related expense recognized.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Since the Company has limited trading history in its stock and no first-hand experience with how its investors and consultants have acted in similar circumstances, the assumptions the Company uses in calculating the fair value of stock-based payment awards represent its best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based consulting and interest expense could be materially different in the future.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif; text-align: right;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><i>Valuation and accounting for options and warrants</i></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company determines the grant date fair value of options and warrants using a Black-Scholes option valuation model based upon assumptions regarding risk-free interest rate, expected dividend rate, volatility and estimated term. For grants issued during 2008, the Company used a 2.0 to 4.5% risk-free interest rate, 0% dividend rate, 53-66% volatility and estimated term of 2.5 to 7.5 years. Values computed using these assumptions ranged from $.102 per share to $.336 per share. Warrants or options awarded for services rendered are expensed over the period of service (normally the vesting period) as compensation expense for employees or an appropriate consulting expense category for awards to consultants and directors. Warrants granted in connection with a common equity financing are included in stockholders&#8217; equity, provided that there is no re-pricing provision that requires them to be treated as a liability (See Note 10) and warrants granted in connection with a debt financing are treated as a debt discount and amortized using the interest method as interest expense over the term of the debt.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Warrants issued in connection with the $100,000 convertible debt that&#160;closed March 1, 2007 created a debt discount of $40,242 that is being amortized as additional interest over its 5-year term. Warrants issued in connection with the $170,000 convertible &#8220;bridge&#8221; debt that&#160;closed in July 2007 created a calculated debt discount of $92,700 that was fully expensed over its loan term that matured April 30, 2008.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company issued $100,000 in convertible debt in October 2009 and issued a warrant, in connection with the debt, for 200,000 shares of common stock at $.65 per share. The Company determined that the warrant had an initial value of $30,150 that was treated as a debt discount and amortized as additional interest expense over the 24-month term of the note.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company also issued $200,000 in convertible debt in June 2010 and issued a warrant, in connection with the debt, to purchase 1,111,112 shares of common stock at $.46 per share. The Company determined that the value of the June 2010 warrant is $96,613.This value is treated as a debt discount and amortized as additional interest expense over the 22-month term of the note.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company also issued $32,000 in convertible debt in September 2010 and issued a warrant to purchase 320,000 shares of common stock at $.18 per share.&#160; The Company determined that this warrant has a value of $15,553 that was treated as a debt discount and amortized as additional interest expense over the 18-month term of the note.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company also issued $16,800 in convertible debt in December 2010 and issued a warrant to purchase 200,000 shares of common stock at $.084 per share. The Company determined that this warrant has a value of $7,232 that was treated as a debt discount and amortized as additional interest expense over the 24- month term of the note.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">In January 2011, the Company issued three convertible notes of $50,000 each and also issued warrants to purchase 1,595,239 common shares at $.20 per share. The value of the warrants was determined to be $47,908 and is being treated as a debt discount and amortized as additional interest expense over the 24-month term of the notes.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">For grants of stock options and warrants in 2011 the Company used a 0.34 to 2.44% risk-free interest rate, 0% dividend rate, 54-66% volatility and estimated term of 3 to 10 years. Values computed using these assumptions ranged from $0.0126 to $0.3412 per share.&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">For grants of stock options and warrants in 2012 the Company used a 0.38% risk-free interest rate, 0% dividend rate, 54%, 59% and 66% volatility and estimated terms of 3, 5 and 10 years. Value computed using these assumptions ranged from $0.0120 to $0.1090, per share.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following summarizes transactions for stock options and warrants for the periods indicated:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="font: 10pt times new roman, times, serif; margin-left: 18pt; width: 80%; border-collapse: collapse;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="6">Stock&#160;Options&#160;(1)</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="6">Warrants&#160;(1)</td> <td style="font-weight: bold;">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="2">Number&#160;of <br />Shares</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="2">Average <br />Exercise <br />Price</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="2">Number&#160;of <br />Shares</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="2">Average <br />Exercise <br />Price</td> <td style="font-weight: bold;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="width: 40%;">Outstanding at December 31, 2005</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 12%; text-align: right;">17,956</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 12%; text-align: right;">1.67</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 12%; text-align: right;">20,950</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 12%; text-align: right;">2.62</td> <td style="width: 1%; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 1pt;">Issued</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">23,942</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">1.67</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">71,826</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.85</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Outstanding at December 31, 2006</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">41,898</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.67</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">92,776</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.25</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 1pt;">Issued</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">5,984</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">1.67</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">28,502</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.35</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Outstanding at December 31, 2007</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">47,882</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.67</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">121,278</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.04</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,243,292</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.20</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,075,204</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.45</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt;">Expired</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">(11,971</td> <td style="padding-bottom: 1pt; text-align: left;">)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3.76</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Outstanding at December 31, 2008</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,291,174</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.26</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,184,511</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.45</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt;">Issued</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">205,000</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.37</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">2,188,302</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.65</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Outstanding at December 31, 2009</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,496,174</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.27</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">7,372,813</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.49</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,210,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.17</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,435,662</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.34</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(207,956</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.43</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(8,979</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.67</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt;">Exercised</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">(128,571</td> <td style="padding-bottom: 1pt; text-align: left;">)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.46</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Outstanding at December 31, 2010</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,498,218</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.19</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">10,670,925</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.44</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,483,334</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">18,222,243</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.14</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(83,941</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.73</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(2,010,917</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.48</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Exercised</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(100,000</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Outstanding at December 31, 2011</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,797,611</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.11</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">26,882,251</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.23</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">87,500</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.20</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(382,716</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(648,597</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.35</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Exercised</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Outstanding at March 31, 2012</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,414,895</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.12</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">26,321,154</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.21</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,601,285</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(345,679</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(1,170,000</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.62</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt;">Exercised</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">(412,963</td> <td style="padding-bottom: 1pt; text-align: left;">)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.01</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Outstanding at June 30, 2012</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">4,656,253</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.13</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">27,752,439</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.19</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9,514,286</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.08</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,320,809</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.14</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(700,000</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(1,292,858</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.60</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 1pt;">Exercised</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 2.5pt;">Outstanding at September 30, 2012</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">13,470,539</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.09</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,780,390</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.17</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="margin-top: 0pt; margin-bottom: 0pt; font: 10pt times new roman, times, serif; width: 100%;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 18pt;"></td> <td style="width: 27.35pt;">(1)</td> <td>Adjusted for the reverse stock splits in total at June 6, 2008 and October 20, 2008.</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">At September 30, 2012, 11,993,687 stock options are fully vested and currently exercisable with a weighted average exercise price of $0.09 and a weighted average remaining term of 7.39 years. All warrants are fully vested and exercisable. Stock-based compensation recognized for the nine months ending September 2012 and September 2011 was $663,770 and $265,393, respectively. The Company has $34,752 of unrecognized compensation expense related to non-vested stock options that are expected to be recognized over a weighted average period of approximately 2 years as of September 2012.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following summarizes the status of options and warrants outstanding at September 30, 2012:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="font: 10pt times new roman, times, serif; width: 80%; border-collapse: collapse;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-weight: bold; text-align: center;" colspan="4">Range&#160;of&#160;Exercise&#160;Prices</td> <td style="font-weight: bold; text-align: center;" colspan="2">Shares</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold; text-align: center;" colspan="2">Weighted <br />Average <br />Remaining <br />Life</td> <td style="font-weight: bold;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;" colspan="2">Options:</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="width: 1%; text-align: left;">$</td> <td style="width: 15%; text-align: right;">0.01</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 50%;">&#160;</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 14%; text-align: right;">1,785,268</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;"></td> <td style="width: 14%; text-align: right;">3.13</td> <td style="width: 1%; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.07</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">214,286</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9.94</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.08</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9,300,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9.88</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,360,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2.46</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.35</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">775,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.62</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.50</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">30,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.12</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt; text-align: left;">$</td> <td style="padding-bottom: 1pt; text-align: right;">1.67</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">5,985</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt; text-align: right;">0.12</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 2.5pt; text-align: left;" colspan="2">Total</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">13,470,539</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: right;">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;" colspan="2">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;" colspan="2">Warrants:</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">200,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3.19</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.02</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">71,826</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.70</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.075</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">8,657,746</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.59</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.10</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,128,572</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.58</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.12</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">500,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.58</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.13</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">631,429</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.64</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">8,455,427</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">4.30</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.16</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">500,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.52</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.17</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,882,353</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.52</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.18</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">200,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.36</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.20</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,532,739</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.33</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.25</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,375,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.99</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.35</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">350,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.36</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.46</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,685,748</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.60</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt; text-align: left;">$</td> <td style="padding-bottom: 1pt; text-align: right;">0.65</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">609,550</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt; text-align: right;">0.42</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 2.5pt; text-align: left;" colspan="2">Total</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,780,390</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: right;">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Stock options and warrants expire on various dates from October 2012 to September 2022.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Under the&#160;terms of the Company's agreement with investors in the October 2008 financing, 1,920,000 shares of common stock were the maximum number of shares allocated to the Company's existing shareholders at the time of the offering (also referred to as the original shareholders or the "Founders"). Since the total of the Company's fully diluted shares of common stock was greater than 1,920,000 shares, in order for the Company to proceed with the offering, the Board of Directors approved a reverse stock split of 1-for-1.2545. After this split was approved, additional options and warrants were identified, requiring a second reverse stock split in order to reach the 1,920,000 shares. The second reverse stock split on the reduced 1-for-1.2545 balance was determined to be 1-for-1.33176963. Taken together, if only one reverse stock split was performed, the number would have been a reverse stock split of 1-for-1.670705.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">On June 6, 2008, the Board of Directors approved the first reverse stock split. The authorized number of shares of common stock of 20,000,000 was proportionately divided by 1.2545 to arrive at 15,942,607.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">On October 20, 2008, the Board of Directors (i) approved the second reverse stock split pursuant to which the authorized number of shares of common stock of 15,942,607 was proportionately divided by 1.33177 to arrive at 11,970,994 shares and (ii) approved a resolution to increase the number of authorized shares of the Company's common stock from 11,970,994 to 40,000,000, which was approved by the Company&#8217;s shareholders holding a majority of the shares entitled to vote thereon at a special meeting of shareholders held on December 3, 2008.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The shareholders approved an increase in authorized shares to 80 million shares in an annual shareholder meeting held on June 22, 2010 and approved an increase in authorized shares to 200 million shares in a special shareholder meeting held on September 7, 2011.<!-- Field: /Page --></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>&#160;</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Stock, Stock Options and Warrants Granted by the Company</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following table is the listing of stock options and warrants as of September 30, 2012 by year of grant:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif; text-align: center;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif; text-align: center;">&#160;</p> <table style="font: 10pt times new roman, times, serif; width: 80%; border-collapse: collapse;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td>Stock Options:</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Year</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Shares</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Price</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="width: 70%; text-align: left;">2007</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 12%; text-align: right;">5,985</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 12%; text-align: right;">1.67</td> <td style="width: 1%; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">2008</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,243,292</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.01-.35</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">2009</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">105,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.35-.50</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">2010</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,360,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.15</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">2011</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,241,976</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.075 - .25</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 1pt; text-align: left;">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">9,514,286</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">.07 &#8211; .08</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">13,470,539</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">.01-1.67</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="font: 10pt times new roman, times, serif; width: 80%; border-collapse: collapse;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td>Warrants:</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Year</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Shares</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Price</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="width: 70%; text-align: left;">2006</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 12%; text-align: right;">35,913</td> <td style="width: 1%; text-align: left;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 12%; text-align: right;">.02</td> <td style="width: 1%; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">2007</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">2008</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,628,771</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.02-.46</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">2009</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">448,207</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.13-.65</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="text-align: left;">2010</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,435,662</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.01-.65</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="text-align: left;">2011</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">18,222,243</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.075-.25</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: #ccffcc;"> <td style="padding-bottom: 1pt; text-align: left;">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">8,009,594</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">.10-.20</td> <td style="padding-bottom: 1pt; text-align: left;">&#160;</td> </tr> <tr style="vertical-align: bottom; background-color: white;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,780,390</td> <td style="padding-bottom: 2.5pt; text-align: left;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">.01-.65</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE 4 - LOSS PER SHARE</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following table presents the shares used in the basic and diluted loss per common share computations:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Three Months Ended September<br />30,</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Nine Months Ended <br />September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Period from <br />April 23, 2002 <br />(Inception) to <br />September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Numerator:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 35%;">Net loss available in basic and diluted calculation</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(2,855,713</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(654,114</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(5,704,855</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(1,518,933</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(17,573,810</td> <td style="text-align: left; width: 1%;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Denominator:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Weighted average common shares outstanding-basic</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">79,467,603</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">27,236,303</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">55,370,243</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">22,193,681</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9,608,160</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Effect of diluted stock options and warrants (1)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Weighted average common shares outstanding-diluted</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">79,467,603</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">27,236,303</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">55,370,243</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">22,193,681</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">9,608,160</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Loss per common share-basic and diluted</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.04</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.02</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.10</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.07</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(1.83</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> </tr> </table> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">(1) The number of shares underlying options and warrants outstanding as of September 30, 2012 and September 30, 2011 are 45,250,929 and 31,298,440 respectively. The effect of the shares that would be issued upon exercise of such options and warrants has been excluded from the calculation of diluted loss per share because those shares are anti-dilutive.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE 5 &#8211; INCOME TAXES</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods.&#160; Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.&#160; Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">There is no income tax provision in the accompanying statements of operations due to the cumulative operating losses that indicate a 100% valuation allowance for the deferred tax assets and state income taxes is appropriate.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Federal and state income tax return operating loss carryovers as of September 30, 2012, were approximately $16,959,000 and will begin to expire in 2017.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The valuation allowance has been recorded due to the uncertainty of realization of the benefits associated with the net operating losses. Future events and changes in circumstances could cause this valuation allowance to change.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The components of deferred income taxes at September 30, 2012 and December 31, 2011 are as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2" nowrap="nowrap">September&#160;30,</td> <td nowrap="nowrap">&#160;</td> <td nowrap="nowrap">&#160;</td> <td style="text-align: center;" colspan="2" nowrap="nowrap">December&#160;31,</td> <td nowrap="nowrap">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right;" colspan="2">&#160;</td> <td>&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Deferred Tax Asset:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 70%;">Net Operating Loss</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">3,957,000</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">2,626,000</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Other</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">28,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">49,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Total Deferred Tax Asset</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,985,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,675,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less Valuation Allowance</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3,985,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">2,675,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Net Deferred Income Taxes</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">&#8212;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">&#8212;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE&#160;6 &#8211; LONG-TERM DEBT</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Long-term debt is as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap"> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>September&#160;30,</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>2012</b></p> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap"> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>December&#160;31,</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>2011</b></p> </td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt; width: 70%;">Notes payable to two individuals, net of discounts of $0 and $1,341 with interest only payments at 12% to March 2012 when the remaining balance was payable. The notes are convertible into 285,715 shares of common stock in the Company at $.35 per share.</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">100,000</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">98,659</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on October 26, 2009 to the parents of one the Company&#8217;s former directors. The note bears interest at 8%, matured on March 31, 2012 and is convertible into shares of common stock at $.35 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Notes payable issued to two individuals in January, 2010. The notes bear interest at 8% and matured on March 31, 2012. &#160;The notes were converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on June 12, 2010 to the parents of one of the Company's former directors, net of a discount of $0 and $14,931. The note bears interest at 12%, matured on March 31, 2012, and is convertible into common stock at $.18 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">200,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">185,069</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on June 14, 2011 to an institutional investor.&#160; The note accrued interest at 8%, during the three months ended March 31, 2012. The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">63,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on July 12, 2011 to an institutional investor.&#160; The note bears interest at 8%, matured on April 16, 2012. &#160;The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">37,500</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on September 16, 2010 to an institutional investor.&#160; The note bears interest at 10%, matured on March 15, 2012 and is convertible into common stock at $.18 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on December 23, 2010 to the parents of one of our former directors, net of a discount of $0 and $4,960.&#160; The note bears interest at 12%, matures December 23, 2012 and is convertible into common stock at $.084 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">16,800</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">11,840</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued December 31, 2010 to a law firm that accepted this note in full payment of their past due legal fees.&#160; The Note had interest at 6%. The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">457,300</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on September 21, 2010 to the parents of one of our former directors, net of a discount of $0 and $0.&#160; The note bears interest at 12%, matures&#160;December 23, 2012 and is convertible into shares of common stock at $.18 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">32,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">32,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Notes payable issued in January 2011 to three individuals, net of a debt discount of $0 and $23,954. The notes bear interest at 10%, have a 24 month term and are convertible into common stock at $0.084 to $0.10 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">126,046</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued January 1, 2011 to a law firm that accepted this note in full payment of their past due legal fees.&#160; The Note bears interest at 6%, matures December 31, 2014 and is convertible into common stock at $.15 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">89,300</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">89,300</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">On November 18, 2011 the Company issued a convertible note with an institutional investor at 8% interest. The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">50,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued in 2006, and then extended to March 31, 2012, to an investor for $.35 per share of common stock, the note bears interest at 10.25%.</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">10,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">10,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-indent: 0px; padding-left: 0px;">Total</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">648,100</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">1,460,714</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-indent: 0px; padding-left: 0px;">Less amount due within one year &#8211; (1)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">558,800</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">830,561</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; text-indent: 0px; padding-left: 0px;">Long-Term Debt</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">89,300</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">630,153</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">(1) The short-term notes have all matured except for the $16,800 that matures in December 2012. The Company is currently negotiating with the note holders.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Cash payments for interest were $0 for the nine months ended September 30, 2012 and $208 for the nine months ended September 30, 2011.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Principal payments on long term debt and related party debt required during the 12 month periods ended September 30:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 85%;">2013</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">1,516,082</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">0</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">89,300</td> <td style="text-align: left;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE&#160;7 &#8211; RENT OBLIGATION</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company leased its principal office under a non-cancelable lease that extended five years. In addition to rent, the Company paid real estate taxes and repairs and maintenance on the leased property. Rent expense was $39,593 in the nine months ended September 30, 2012 and $37,095 in the nine months ended September 30, 2011. The Company moved its headquarters on May 1, 2012. The rental management remains the same and the Company is operating on a month to month lease with no escalations.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE&#160;8 &#8211; LIABILITY FOR EQUITY-LINKED FINANCIAL INSTRUMENTS</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company adopted ASC 815- Derivatives and Hedging (&#8220;ASC 815&#8221;) on January 1, 2009. ASC 815 mandates a two-step process for evaluating whether an equity-linked financial instrument or embedded feature is indexed to the entity's own stock. It was effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, which was the Company's first quarter of 2009. Many of the warrants issued by the Company contain a strike price adjustment feature, which upon adoption of ASC 815, changed the classification (from equity to liability) and the related accounting for warrants with a $479,910 estimated fair value of as of January 1, 2009. An adjustment was made to remove $486,564 from paid-in capital (the cumulative values of the warrants on their grant dates), a positive adjustment of $6,654 was made to accumulated deficit, representing the gain on valuation from the grant date to January 1, 2009, and $479,910 was booked as a liability. The warrants issued in 2011 do not contain a strike price adjustment feature and, therefore, are not treated as a liability.<!-- Field: /Page --></p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The January 1, 2009 valuation was computed using the Black-Scholes valuation model based upon a 2.5-year expected term, an expected volatility of 63%, an exercise price of $.46 per share, a stock price of $.35, a zero dividend rate and a 1.37% risk free interest rate. Subsequent to January 1, 2009 these warrants were re-valued at the end of each quarter and a gain or loss was recorded based upon their increase or decrease in value during the quarter. Likewise, new warrants that were issued during 2009 and 2010&#160;were valued, using the Black-Scholes valuation model on their date of grant and an entry was made to reduce paid-in capital and increase the liability for equity-linked financial instruments. These warrants were also re-valued at the end of each quarter based upon their expected life, the stock price, the exercise price, assumed dividend rate, expected volatility and risk free interest rate. A significant reduction in the liability was realized in 2010 primarily due to a reduction from $.50 to $.22 per share in the underlying stock price. The Company realized a slight increase in the liability for existing warrants during the first quarter of 2012 primarily due to a reduction in the spread between the exercise price and the market price of the underlying shares, additionally; there was an increase in the liability due to the extension of some existing warrants. The Company realized a decrease in the liability for existing warrants in the third quarter of 2012 as many of the existing warrants expired and the spread of the remaining warrants between exercise and market price was more consistent.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The inputs to the Black-Scholes model during 2009, 2010, 2011 and 2012 were as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="background-color: #ccffcc; vertical-align: top;"> <td style="width: 80%;">Stock price</td> <td style="width: 2%;">&#160;</td> <td style="text-align: center; width: 18%;">$ .08 to $.50</td> </tr> <tr style="background-color: white; vertical-align: top;"> <td>Exercise price</td> <td>&#160;</td> <td style="text-align: center;">$ .01 to $.65</td> </tr> <tr style="background-color: #ccffcc; vertical-align: top;"> <td>Expected life</td> <td>&#160;</td> <td style="text-align: center;">2.0 to 6.5 years</td> </tr> <tr style="background-color: white; vertical-align: top;"> <td>Expected volatility</td> <td>&#160;</td> <td style="text-align: center;">54% to 68%</td> </tr> <tr style="background-color: #ccffcc; vertical-align: top;"> <td>Assumed dividend rate</td> <td>&#160;</td> <td style="text-align: center;">- %</td> </tr> <tr style="background-color: white; vertical-align: top;"> <td>Risk-free interest rate</td> <td>&#160;</td> <td style="text-align: center;">.13% to 2.97%</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The original valuations, annual gain/ (loss) and end of year valuations are shown below:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 100%; border-collapse: collapse; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Initial&#160;Value</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Annual Gain&#160;(Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />12/31/09</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">2010 Gain <br />(Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />12/31/10</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">2011 Gain (Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />12/31/2011</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">2012 <br />Gain <br />(Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />9/30/2012</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 28%;"><font style="font-size: 8pt;">January 1, 2009 adoption</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">479,910</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">(390,368</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">)</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">870,278</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">868,772</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">1,506</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">(88,290</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">)</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">89,796</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">61,934</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">27,862</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 6/30/2009</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">169,854</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">20,847</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">149,007</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">147,403</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,604</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(4,689</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,293</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,293</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">-</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 9/30/2009</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">39,743</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(738</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">40,481</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">40,419</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">62</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(1,562</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,624</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,618</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">Warrants issued in quarter ended 12/31/2009</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">12,698</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">617</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">12,081</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">12,053</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">28</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">(724</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">752</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">556</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">196</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: right;"><font style="font-size: 8pt;">Subtotal</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">702,205</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,071,847</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 3/31/2010</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">25,553</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">25,014</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">539</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(5,571</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,109</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">3,209</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">2,900</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 6/30/2010</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">31,332</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">30,740</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">592</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(6,122</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,714</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">3,247</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">3,467</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">Warrants issued in quarter ended 9/30/2010</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">31,506</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">20,891</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">10,615</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">(44,160</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">54,775</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">1,420</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">53,355</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: right; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">Total</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">790,596</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">(369,642</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">1,071,847</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">1,145,292</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">14,946</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">(151,118</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">166,063</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">78,276</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">87,787</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>NOTE 9&#8211; RELATED PARTY</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company entered into agreements, in 2008, with our Chairman of the Board, Lawrence Gadbaw, and in 2009 with a board member, Peter Morawetz, to pay Mr. Gadbaw $25,000 and Mr. Morawetz $30,000 upon the Company raising $3 million in new equity. Mr. Gadbaw received 277,778 shares at $.09 per share in June 2012 as compensation in lieu of the $25,000 cash for raising $3 million in new equity. Mr. Gadbaw was paid the balance due under his separation agreement from 2008. This amount was $46,000 upon signing the agreement in 2008 payable at $2,000 per month; the payments to Mr. Gadbaw are complete. Mr. Gadbaw is due $4,000 in accounts payable as of&#160;September 30, 2012 pertaining to his monthly fee as Chairman of the Board of Directors. Mr. Gadbaw also received a warrant for 30,000 shares at $.15 per share in June 30, 2012<b> </b>as compensation for service as Chairman.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="background-color: white; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 28, 2012, the Company, entered into a Convertible Note Purchase Agreement, dated as of March 28, 2012 (the &#8220;SOK Purchase Agreement&#8221;) with SOK Partners, LLC (&#8220;SOK Partners&#8221;), an investment partnership. Josh Kornberg, who is a member of the Company&#8217;s Board of Directors, and Dr. Samuel Herschkowitz are affiliates of the manager of SOK Partners and Ricardo Koenigsberger, a director, is a holder of membership units of SOK Partners. Pursuant to the SOK Purchase Agreement, the Company issued a 20.0% convertible note due August 2012 in the principal amount of up to $600,000. Principal and accrued interest on the note is due and payable on August 28, 2012. The Company&#8217;s obligations under the note are secured by the grant of a security interest in substantially all tangible and intangible assets of the Company. The SOK Purchase Agreement and the note include customary events of default that include, among other things, non-payment defaults, covenant defaults, inaccuracy of representations and warranties, cross-defaults to other indebtedness and bankruptcy and insolvency defaults. The occurrence of an event of default could result in the acceleration of the Company&#8217;s obligations under the note, and interest rate of twenty-four (24%) percent per annum accrues if the note is not paid when due. The balances of the Samuel Herschkowitz and SOK Partners notes are $240,000 and $357,282, respectively, as of the month ended September 30, 2012. See &#8220;Part II Other Information; Item 5 Other Information&#8221;.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 28, 2012, the Company received an advance of $84,657 under the note, including a cash advance of $60,000 net of a prepayment of interest on the first $300,000 in advances under the note. The holder of the note is entitled to convert the note into shares of common stock of the Company at an initial conversion price per share of $0.065 per share, subject to adjustment in the event of (1) certain issuances of common stock or convertible securities at a price lower than the conversion price of the note, and (2) recapitalizations, stock splits, reorganizations and similar events. In addition, the Company is required to issue two installments of an equity bonus to SOK Partners in the form of common stock valued at the rate of $0.065 per share. In March 2012, the Company issued the first equity bonus to SOK Partners, consisting of 4,615,385 shares of common stock, with a second installment due within five business days after SOK Partners has made aggregate advances under the note of at least $300,000. In May 2012 the Company issued the second installment consisting of 4,615,385 shares of common stock subsequent to SOK Partners surpassing the aggregate advances of $300,000. Until the maturity date of the note, if the Company obtains financing from any other source without the consent of SOK Partners, then the Company is required to issue additional bonus equity in an amount equal to $600,000 less the aggregate advances on the note made prior to the breach.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">As long as any amount payable under the note remains outstanding, SOK Partners or its designee is entitled to appoint a new member to the Company&#8217;s Board of Directors, who will be appointed upon request. Mr. Koenigsberger was appointed to the Board by SOK Partners on June 25, 2012.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">On March 28, 2012, the Company signed an Amended and Restated Note Purchase Agreement, dated as of December 20, 2011, with Dr. Samuel Herschkowitz (as amended, the &#8220;Herschkowitz Purchase Agreement&#8221;). Pursuant to the Herschkowitz Purchase Agreement, the Company issued a 20.0% convertible note due June 20, 2012 in the principal amount of $240,000 for previous advances under the note. The Company&#8217;s obligations under the note are secured by the grant of a security interest in substantially all tangible and intangible assets of the Company. The Company has previously issued to Dr. Herschkowitz an equity bonus consisting of 1,546,667 shares of common stock. An additional 7,500,000 shares were transferred to Dr. Herschkowitz effective in April 2012, upon the occurrence of an event of default on the note. On August 13, 2012, the Company entered into a settlement and forbearance agreement (the &#8220;Forbearance Agreement&#8221;) relating to the defaults under the note and other matters.<!-- Field: /Page --></p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="background-color: white; margin: 0pt 0px; font: 10pt times new roman, times, serif;">Under the Forbearance Agreement, among other things, (i) Dr. Herschkowitz agreed to forbear from asserting his rights as a secured creditor to substantially all of the Company&#8217;s assets, resulting from the Company&#8217;s defaults; (ii) the Company issued an aggregate 26.5 million shares of common stock to Dr. Herschkowitz and SOK and adjusted the conversion price of their convertible notes to $0.014 per share from $0.065 per share, to satisfy the Company&#8217;s obligations to adjust for dilution; (iii) Dr. Herschkowitz and SOK agreed to extend the maturity of their notes to December 31, 2012; (iv) the Company agreed to pay certain compensation to Dr. Herschkowitz upon the achievement of financial milestones and (v) Dr. Herschkowitz clarified and waived certain of his rights, including the right to interest at a penalty rate upon default. Based on the principal balance and accrued interest through September 30, 2012, as a result of the adjusted conversion price, the notes held by Dr. Herschkowitz and SOK in the aggregate were convertible into approximately 42.7 million shares of common stock. The terms and conditions of the Forbearance Agreement are described in the Company&#8217;s Form 10-Q report for the quarter ended June 30, 2012 under &#8220;Part II Other Information; Item 5 Other Information&#8221;.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b></b>&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">As long as any amount payable under the note remains outstanding, Dr. Herschkowitz or his designee is entitled to appoint a special advisor to the Company&#8217;s Board of Directors, who will be appointed as a member of the Board upon request. Pursuant to this authority, Josh Kornberg was appointed to the Board on March 9, 2012. Mr. Kornberg was appointed the Interim CEO, President and CFO on April 24, 2012. On July 22, 2012 Mr. Kornberg was approved by the Board of Directors as the Company&#8217;s CEO/President.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">On November 6, 2012, the Company issued and sold convertible promissory notes in the total principal amount of $156,243 to Dr. Herschkowitz and certain of his assignees.&#160; The Company issued to these parties an aggregate 1,562,430 shares of common stock in consideration of placement of the notes. The notes bear interest at a rate of 20% per annum and are secured by a security interest in the Company&#8217;s accounts receivable, patents and certain patent rights and are convertible into common stock upon certain mergers or other fundamental transactions at a conversion price based on the trading price prior to the transaction. The proceeds from this transaction were used to pay off approximately $155,000 in principal amount of secured indebtedness.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Nature of Operations and Continuance of Operations</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">BioDrain Medical, Inc. (the "Company") was incorporated under the laws of the State of Minnesota in 2002. The Company has developed an environmentally safe system for the collection and disposal of infectious fluids that result from surgical procedures and post-operative care. The Company also makes ongoing sales of our proprietary cleaning fluid to users of our systems. In April 2009, the Company received 510(k) clearance from the FDA to authorize the Company to market and sell its STREAMWAY&#174; FMS products.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations and has a stockholders&#8217; deficit. These factors raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Since inception, the Company raised approximately $4,360,000 in equity and $2,208,000 in debt financing, including $1,153,000 in equity and $525,000 in convertible debt in 2011. The Company has raised approximately $438,000 in equity and $373,000 in convertible debt through the third quarters of 2012, inclusively. The Company is currently engaged in a private placement of units of common stock and warrants. The Company is also engaged in a corporate restructuring, including actively seeking to convert indebtedness into equity. See &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations &#8211; Liquidity and Capital Resources&#8221;.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Recent Accounting Developments</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">We reviewed all other significant newly issued accounting pronouncements and determined they are either not applicable to our business or that no material effect is expected on our financial position and results of our operations.</p> <div><b><font style="font-family: times new roman,times;" size="2">Valuation of Intangible Assets</font></b></div> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">We review identifiable intangible assets for impairment&#160;whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Our intangible assets are currently solely the costs of obtaining trademarks and patents. Events or changes in circumstances that indicate the carrying amount may not be recoverable include, but are not limited to, a significant change in the medical device marketplace and a significant adverse change in the business climate in which we operate. If such events or changes in circumstances are present, the undiscounted cash flows method is used to determine whether the intangible asset is impaired. Cash flows would include the estimated terminal value of the asset and exclude any interest charges. If the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, the asset is considered impaired, and the impairment is measured by reducing the carrying value of the asset to its fair value using the discounted cash flows method. The discount rate utilized is based on management''s best estimate of the related risks and return at the time the impairment assessment is made.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Our accounting estimates and assumptions bear various risks of change, including the length of the current economic downturn facing the United States, the expansion of the slowdown in consumer spending in the U.S. medical markets despite the early expressed opinions of financial experts that the medical market would not be as affected as other markets and failure to gain acceptance in the medical market.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Accounting Policies and Estimates</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Presentation of Taxes Collected from Customers</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Sales taxes are imposed on the Company&#8217;s sales to nonexempt customers. The Company collects the taxes from customers and remits the entire amounts to the governmental authorities. The Company&#8217;s accounting policy is to exclude the taxes collected and remitted from revenues and expenses.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Shipping and Handling</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Shipping and handling charges billed to customers are recorded as revenue. Shipping and handling costs are recorded within cost of goods sold on the statement of operations.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Advertising</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Advertising costs are expensed as incurred. There were no advertising expenses in the three and nine months ended September 30, 2012 and $0 and $1,100 in the three and nine months ended September 30, 2011, respectively.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Research and Development</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Research and development costs are charged to operations as incurred. There were $4,800 in research and development in the three and nine months ended September 30, 2012, and no research and development expenses in the three and nine months ended September 30, 2011.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Revenue Recognition</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company recognizes revenue in accordance with the SEC&#8217;s Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by Staff Accounting Bulletin No. 104 (together, SAB 101), and ASC 605- Revenue Recognition.</p><p style="text-indent: 0.5in; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable and collectability is probable. Delivery is considered to have occurred upon either shipment of the product or arrival at its destination based on the shipping terms of the transaction. The Company&#8217;s standard terms specify that shipment is FOB BioDrain and the Company will, therefore, recognize revenue upon shipment in most cases. This revenue recognition policy applies to shipments of the STREAMWAY FMS units as well as shipments of cleaning solution kits. When these conditions are satisfied, the Company recognizes gross product revenue, which is the price it charges generally to its customers for a particular product. Under the Company&#8217;s standard terms and conditions, there is no provision for installation or acceptance of the product to take place prior to the obligation of the customer. The customer&#8217;s right of return is limited only to the Company&#8217;s standard one-year warranty whereby the Company replaces or repairs, at its option, and it would be rare that the STREAMWAY FMS unit or significant quantities of cleaning solution kits may be returned. Additionally, since the Company buys both the STREAMWAY FMS units and cleaning solution kits from &#8220;turnkey&#8221; suppliers, the Company would have the right to replacements from the suppliers if this situation should occur.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Receivables</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Receivables are reported at the amount the Company expects to collect on balances outstanding at fiscal year-end. The Company has determined there will be no losses on balances outstanding at the nine months ended September 30, 2012.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Inventories</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventory balances are as&#160;follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2">September&#160;30,</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2">December&#160;31,</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2011</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 66%;">Finished goods</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 14%;">64,709</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 14%;">94,331</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Raw materials</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">69,707</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3,274</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">134,416</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">97,605</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Property and Equipment</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. Estimated useful asset life by classification is as follows:</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 86%;">&#160;</td><td style="width: 2%;">&#160;</td><td style="border-bottom: black 1pt solid; text-align: center; width: 12%;">Years</td></tr><tr style="background-color: #ccffcc; vertical-align: top;"><td>Computers and office equipment</td><td>&#160;</td><td style="text-align: center;">3</td></tr><tr style="background-color: white; vertical-align: top;"><td>Furniture and fixtures</td><td>&#160;</td><td style="text-align: center;">5</td></tr></table><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Intangible Assets</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Intangible assets consist of patent costs. These assets are not subject to amortization until the property patented is in production. The assets are reviewed for impairment annually, and impairment losses, if any, are charged to operations when identified. No impairment losses have been identified by management.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Income Taxes</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company accounts for income taxes in accordance with ASC 740- Income Taxes (&#8220;ASC 740&#8221;). Under ASC 740, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company reviews income tax positions expected to be taken in income tax returns to determine if there are any income tax uncertainties. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by taxing authorities, based on technical merits of the positions. The Company has identified no income tax uncertainties.</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Tax years subsequent to 2007 remain open to examination by federal and state tax authorities.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Patents and Intellectual Property</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">In June 2008, the Company completed and executed an agreement to secure exclusive ownership of the Company&#8217;s primary patent from an inventor, Marshall Ryan. Mr. Ryan received a combination of cash and warrants, and he will receive a 4% royalty on STREAMWAY FMS (the Product) sales for the life of the patent. At the signing of the agreement, Mr. Ryan received $75,000 in exchange for the exclusive assignment of the patent. In addition, on June 30, 2009, Mr. Ryan, through his Mid-State Stainless, Inc. entity, was entitled to receive $100,000 as payment (currently recorded as an account payable, less payments, with the Company) for past research and development activities. Should Mr. Ryan be utilized in the future for additional product development activities, he will be compensated at a rate of $95.00 per hour.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Mr. Ryan also received a warrant, with immediate vesting, to purchase 150,000 shares of the Company's common stock at a price of $.35 per share. The warrant has a five-year term ending on June 30, 2013 and was assigned a value of $28,060 using a Black-Scholes formula. This amount was expensed as consulting expense in 2008 using a five-year expected life, a 3.73% risk-free interest rate, an expected 59% volatility and a zero dividend rate.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Subsequent Events</b></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><i>Other Restructuring.</i> The Company continues an ongoing restructuring process negotiating with a significant number of creditors other than Dr. Herschkowitz and SOK to convert their indebtedness into common stock</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="text-align: justify; margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has evaluated all other subsequent events through the date of this filing. The Company does not believe there are any other subsequent events that require disclosure.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>Interim Financial Statements</b></p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The Company has prepared the unaudited interim financial statements and related unaudited financial information in the footnotes in accordance with accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) and the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;) for interim financial statements. These interim financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly the Company&#8217;s financial position, the results of its operations and its cash flows for the interim periods. These interim financial statements should be read in conjunction with the annual financial statements and the notes thereto contained in the Form 10-K filed with the SEC on April 16, 2012, as amended. The nature of the Company&#8217;s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventory balances are as&#160;follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2">September&#160;30,</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2">December&#160;31,</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">2011</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 66%;">Finished goods</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 14%;">64,709</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 14%;">94,331</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Raw materials</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">69,707</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3,274</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">134,416</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">97,605</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Estimated useful asset life by classification is as follows:</p><p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p><table style="width: 100%; font: 10pt times new roman, times, serif;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 86%;">&#160;</td><td style="width: 2%;">&#160;</td><td style="border-bottom: black 1pt solid; text-align: center; width: 12%;">Years</td></tr><tr style="background-color: #ccffcc; vertical-align: top;"><td>Computers and office equipment</td><td>&#160;</td><td style="text-align: center;">3</td></tr><tr style="background-color: white; vertical-align: top;"><td>Furniture and fixtures</td><td>&#160;</td><td style="text-align: center;">5</td></tr></table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following summarizes transactions for stock options and warrants for the periods indicated:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif; margin-left: 18pt;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="6">Stock&#160;Options&#160;(1)</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="6">Warrants&#160;(1)</td> <td style="font-weight: bold;">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="2">Number&#160;of <br />Shares</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="2">Average <br />Exercise <br />Price</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="2">Number&#160;of <br />Shares</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="2">Average <br />Exercise <br />Price</td> <td style="font-weight: bold;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 40%;">Outstanding at December 31, 2005</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">17,956</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">1.67</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">20,950</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">2.62</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Issued</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">23,942</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">1.67</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">71,826</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.85</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Outstanding at December 31, 2006</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">41,898</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.67</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">92,776</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.25</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Issued</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">5,984</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">1.67</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">28,502</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.35</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Outstanding at December 31, 2007</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">47,882</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.67</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">121,278</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.04</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,243,292</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.20</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,075,204</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.45</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Expired</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">(11,971</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3.76</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Outstanding at December 31, 2008</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,291,174</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.26</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,184,511</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.45</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Issued</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">205,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.37</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">2,188,302</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.65</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Outstanding at December 31, 2009</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,496,174</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.27</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">7,372,813</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.49</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,210,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.17</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,435,662</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.34</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(207,956</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.43</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(8,979</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.67</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Exercised</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">(128,571</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.46</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Outstanding at December 31, 2010</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,498,218</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.19</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">10,670,925</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.44</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,483,334</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">18,222,243</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.14</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(83,941</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.73</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(2,010,917</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.48</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Exercised</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(100,000</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Outstanding at December 31, 2011</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,797,611</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.11</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">26,882,251</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.23</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">87,500</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.20</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(382,716</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(648,597</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.35</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Exercised</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Outstanding at March 31, 2012</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,414,895</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.12</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">26,321,154</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.21</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,601,285</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(345,679</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(1,170,000</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.62</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Exercised</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">(412,963</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">0.01</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Outstanding at June 30, 2012</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">4,656,253</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.13</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">27,752,439</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.19</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Issued</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9,514,286</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.08</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">5,320,809</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.14</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Expired</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(700,000</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">(1,292,858</td> <td style="text-align: left;">)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.60</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Exercised</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Outstanding at September 30, 2012</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">13,470,539</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.09</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,780,390</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">0.17</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="margin-top: 0pt; width: 100%; font: 10pt times new roman, times, serif; margin-bottom: 0pt;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 18pt;"></td> <td style="width: 27.35pt;">(1)</td> <td>Adjusted for the reverse stock splits in total at June 6, 2008 and October 20, 2008.</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following summarizes the status of options and warrants outstanding at September 30, 2012:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center; font-weight: bold;" colspan="4">Range&#160;of&#160;Exercise&#160;Prices</td> <td style="text-align: center; font-weight: bold;" colspan="2">Shares</td> <td style="font-weight: bold;">&#160;</td> <td style="font-weight: bold;">&#160;</td> <td style="text-align: center; font-weight: bold;" colspan="2">Weighted <br />Average <br />Remaining <br />Life</td> <td style="font-weight: bold;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;" colspan="2">Options:</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 15%;">0.01</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 50%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 14%;">1,785,268</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;"></td> <td style="text-align: right; width: 14%;">3.13</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.07</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">214,286</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9.94</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.08</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9,300,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9.88</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,360,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2.46</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.35</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">775,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.62</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.50</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">30,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.12</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">$</td> <td style="text-align: right; padding-bottom: 1pt;">1.67</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">5,985</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="text-align: right; padding-bottom: 1pt;">0.12</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;" colspan="2">Total</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">13,470,539</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="text-align: right; padding-bottom: 2.5pt;">&#160;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;" colspan="2">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;" colspan="2">Warrants:</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.01</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">200,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3.19</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.02</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">71,826</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.70</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.075</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">8,657,746</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.59</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.10</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,128,572</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.58</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.12</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">500,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.58</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.13</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">631,429</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.64</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.15</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">8,455,427</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">4.30</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.16</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">500,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.52</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.17</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,882,353</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.52</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.18</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">200,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.36</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.20</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,532,739</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.33</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.25</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,375,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1.99</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.35</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">350,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.36</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">$</td> <td style="text-align: right;">0.46</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,685,748</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">0.60</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">$</td> <td style="text-align: right; padding-bottom: 1pt;">0.65</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">609,550</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="text-align: right; padding-bottom: 1pt;">0.42</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;" colspan="2">Total</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,780,390</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="text-align: right; padding-bottom: 2.5pt;">&#160;</td> <td style="text-align: left; padding-bottom: 2.5pt;"></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following table is the listing of stock options and warrants as of September 30, 2012 by year of grant:</p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>Stock Options:</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Year</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Shares</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Price</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 70%;">2007</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">5,985</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">1.67</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2008</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,243,292</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.01-.35</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2009</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">105,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.35-.50</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2010</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,360,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.15</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2011</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,241,976</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.075 - .25</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">9,514,286</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">.07 &#8211; .08</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">13,470,539</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">.01-1.67</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>Warrants:</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Year</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Shares</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2">Price</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 70%;">2006</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">35,913</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">.02</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2007</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2008</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">1,628,771</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.02-.46</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2009</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">448,207</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.13-.65</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2010</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,435,662</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.01-.65</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2011</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">18,222,243</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">.075-.25</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">2012</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">8,009,594</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">.10-.20</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: right;">31,780,390</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">.01-.65</td> <td style="text-align: left; padding-bottom: 2.5pt;"></td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The following table presents the shares used in the basic and diluted loss per common share computations:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Three Months Ended September<br />30,</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Nine Months Ended <br />September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Period from <br />April 23, 2002 <br />(Inception) to <br />September 30,</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Numerator:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 35%;">Net loss available in basic and diluted calculation</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(2,855,713</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(654,114</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(5,704,855</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(1,518,933</td> <td style="text-align: left; width: 1%;">)</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 10%;">(17,573,810</td> <td style="text-align: left; width: 1%;">)</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Denominator:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Weighted average common shares outstanding-basic</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">79,467,603</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">27,236,303</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">55,370,243</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">22,193,681</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">9,608,160</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td>Effect of diluted stock options and warrants (1)</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Weighted average common shares outstanding-diluted</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">79,467,603</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">27,236,303</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">55,370,243</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">22,193,681</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">9,608,160</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Loss per common share-basic and diluted</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.04</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.02</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.10</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(0.07</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(1.83</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> </tr> </table> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">(1) The number of shares underlying options and warrants outstanding as of September 30, 2012 and September 30, 2011 are 45,250,929 and 31,298,440 respectively. The effect of the shares that would be issued upon exercise of such options and warrants has been excluded from the calculation of diluted loss per share because those shares are anti-dilutive.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The components of deferred income taxes at September 30, 2012 and December 31, 2011 are as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center;" colspan="2" nowrap="nowrap">September&#160;30,</td> <td nowrap="nowrap">&#160;</td> <td nowrap="nowrap">&#160;</td> <td style="text-align: center;" colspan="2" nowrap="nowrap">December&#160;31,</td> <td nowrap="nowrap">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2012</td> <td style="padding-bottom: 1pt;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap">2011</td> <td style="padding-bottom: 1pt;">&#160;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td>&#160;</td> <td colspan="2">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right;" colspan="2">&#160;</td> <td>&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">Deferred Tax Asset:</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">&#160;</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; width: 70%;">Net Operating Loss</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">3,957,000</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">2,626,000</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 1pt;">Other</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">28,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">49,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Total Deferred Tax Asset</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">3,985,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">2,675,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Less Valuation Allowance</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">3,985,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">2,675,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Net Deferred Income Taxes</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">&#8212;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">&#8212;</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Long-term debt is as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td>&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap"> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>September&#160;30,</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>2012</b></p> </td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="padding-bottom: 1pt; font-weight: bold;" nowrap="nowrap">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap"> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>December&#160;31,</b></p> <p style="text-align: center; margin: 0pt 0px; font: 10pt times new roman, times, serif;"><b>2011</b></p> </td> <td style="padding-bottom: 1pt; font-weight: bold;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt; width: 70%;">Notes payable to two individuals, net of discounts of $0 and $1,341 with interest only payments at 12% to March 2012 when the remaining balance was payable. The notes are convertible into 285,715 shares of common stock in the Company at $.35 per share.</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">100,000</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">&#160;</td> <td style="text-align: right; width: 12%;">98,659</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on October 26, 2009 to the parents of one the Company&#8217;s former directors. The note bears interest at 8%, matured on March 31, 2012 and is convertible into shares of common stock at $.35 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Notes payable issued to two individuals in January, 2010. The notes bear interest at 8% and matured on March 31, 2012. &#160;The notes were converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on June 12, 2010 to the parents of one of the Company's former directors, net of a discount of $0 and $14,931. The note bears interest at 12%, matured on March 31, 2012, and is convertible into common stock at $.18 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">200,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">185,069</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on June 14, 2011 to an institutional investor.&#160; The note accrued interest at 8%, during the three months ended March 31, 2012. The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">63,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on July 12, 2011 to an institutional investor.&#160; The note bears interest at 8%, matured on April 16, 2012. &#160;The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">37,500</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on September 16, 2010 to an institutional investor.&#160; The note bears interest at 10%, matured on March 15, 2012 and is convertible into common stock at $.18 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">100,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on December 23, 2010 to the parents of one of our former directors, net of a discount of $0 and $4,960.&#160; The note bears interest at 12%, matures December 23, 2012 and is convertible into common stock at $.084 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">16,800</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">11,840</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued December 31, 2010 to a law firm that accepted this note in full payment of their past due legal fees.&#160; The Note had interest at 6%. The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">457,300</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued on September 21, 2010 to the parents of one of our former directors, net of a discount of $0 and $0.&#160; The note bears interest at 12%, matures&#160;December 23, 2012 and is convertible into shares of common stock at $.18 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">32,000</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">32,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Notes payable issued in January 2011 to three individuals, net of a debt discount of $0 and $23,954. The notes bear interest at 10%, have a 24 month term and are convertible into common stock at $0.084 to $0.10 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">126,046</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued January 1, 2011 to a law firm that accepted this note in full payment of their past due legal fees.&#160; The Note bears interest at 6%, matures December 31, 2014 and is convertible into common stock at $.15 per share.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">89,300</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">89,300</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt;">On November 18, 2011 the Company issued a convertible note with an institutional investor at 8% interest. The note was converted into shares of common stock.</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">-</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">&#160;</td> <td style="text-align: right;">50,000</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt;">Note payable issued in 2006, and then extended to March 31, 2012, to an investor for $.35 per share of common stock, the note bears interest at 10.25%.</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">10,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">10,000</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-indent: 0px; padding-left: 0px;">Total</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">648,100</td> <td style="text-align: left;">&#160;</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">1,460,714</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-indent: 0px; padding-left: 0px;">Less amount due within one year &#8211; (1)</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">558,800</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> <td style="padding-bottom: 1pt;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: left;">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right;">830,561</td> <td style="text-align: left; padding-bottom: 1pt;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; text-indent: 0px; padding-left: 0px;">Long-Term Debt</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">89,300</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> <td style="padding-bottom: 2.5pt;">&#160;</td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">630,153</td> <td style="text-align: left; padding-bottom: 2.5pt;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;"></p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">(1) The short-term notes have all matured except for the $16,800 that matures in December 2012. The Company is currently negotiating with the note holders.</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">Principal payments on long term debt and related party debt required during the 12 month periods ended September 30:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left; width: 85%;">2013</td> <td style="width: 1%;">&#160;</td> <td style="text-align: left; width: 1%;">$</td> <td style="text-align: right; width: 12%;">1,516,082</td> <td style="text-align: left; width: 1%;">&#160;</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">2014</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">0</td> <td style="text-align: left;">&#160;</td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;">2015</td> <td>&#160;</td> <td style="text-align: left;">$</td> <td style="text-align: right;">89,300</td> <td style="text-align: left;">&#160;</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The inputs to the Black-Scholes model during 2009, 2010, 2011 and 2012 were as follows:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="background-color: #ccffcc; vertical-align: top;"> <td style="width: 80%;">Stock price</td> <td style="width: 2%;">&#160;</td> <td style="text-align: center; width: 18%;">$ .08 to $.50</td> </tr> <tr style="background-color: white; vertical-align: top;"> <td>Exercise price</td> <td>&#160;</td> <td style="text-align: center;">$ .01 to $.65</td> </tr> <tr style="background-color: #ccffcc; vertical-align: top;"> <td>Expected life</td> <td>&#160;</td> <td style="text-align: center;">2.0 to 6.5 years</td> </tr> <tr style="background-color: white; vertical-align: top;"> <td>Expected volatility</td> <td>&#160;</td> <td style="text-align: center;">54% to 68%</td> </tr> <tr style="background-color: #ccffcc; vertical-align: top;"> <td>Assumed dividend rate</td> <td>&#160;</td> <td style="text-align: center;">- %</td> </tr> <tr style="background-color: white; vertical-align: top;"> <td>Risk-free interest rate</td> <td>&#160;</td> <td style="text-align: center;">.13% to 2.97%</td> </tr> </table> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">The original valuations, annual gain/ (loss) and end of year valuations are shown below:</p> <p style="margin: 0pt 0px; font: 10pt times new roman, times, serif;">&#160;</p> <table style="width: 80%; border-collapse: collapse; font: 10pt times new roman, times, serif;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Initial&#160;Value</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Annual Gain&#160;(Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />12/31/09</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">2010 Gain <br />(Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />12/31/10</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">2011 Gain (Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />12/31/2011</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">2012 <br />Gain <br />(Loss)</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"><font style="font-size: 8pt;">Value at <br />9/30/2012</font></td> <td style="padding-bottom: 1pt;" nowrap="nowrap"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="width: 28%;"><font style="font-size: 8pt;">January 1, 2009 adoption</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">479,910</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">(390,368</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">)</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">870,278</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">868,772</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">1,506</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">(88,290</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">)</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">89,796</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">61,934</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">$</font></td> <td style="text-align: right; width: 5%;"><font style="font-size: 8pt;">27,862</font></td> <td style="text-align: left; width: 1%;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 6/30/2009</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">169,854</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">20,847</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">149,007</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">147,403</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,604</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(4,689</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,293</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,293</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">-</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 9/30/2009</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">39,743</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(738</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">40,481</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">40,419</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">62</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(1,562</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,624</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,618</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">Warrants issued in quarter ended 12/31/2009</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">12,698</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">617</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">12,081</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">12,053</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">28</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">(724</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">752</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">556</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right; padding-bottom: 1pt;"><font style="font-size: 8pt;">196</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: right;"><font style="font-size: 8pt;">Subtotal</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">702,205</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">1,071,847</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 3/31/2010</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">25,553</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">25,014</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">539</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(5,571</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,109</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">3,209</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">2,900</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: left;"><font style="font-size: 8pt;">Warrants issued in quarter ended 6/30/2010</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">31,332</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">30,740</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">592</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">(6,122</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">)</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">6,714</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">3,247</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: right;"><font style="font-size: 8pt;">3,467</font></td> <td style="text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">Warrants issued in quarter ended 9/30/2010</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">31,506</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">&#160;</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">20,891</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">10,615</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">(44,160</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">54,775</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">1,420</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: left;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 1pt solid; text-align: right;"><font style="font-size: 8pt;">53,355</font></td> <td style="text-align: left; padding-bottom: 1pt;"><font style="font-size: 8pt;">&#160;</font></td> </tr> <tr style="background-color: #ccffcc; vertical-align: bottom;"> <td style="text-align: right; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">Total</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">790,596</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">(369,642</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">1,071,847</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">1,145,292</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">14,946</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">(151,118</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">)</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">166,063</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">78,276</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> <td style="border-bottom: black 2.5pt double; text-align: left;"><font style="font-size: 8pt;">$</font></td> <td style="border-bottom: black 2.5pt double; text-align: right;"><font style="font-size: 8pt;">87,787</font></td> <td style="text-align: left; padding-bottom: 2.5pt;"><font style="font-size: 8pt;">&#160;</font></td> </tr> </table> 94331 64709 3274 69707 P5Y P3Y 0.04 75000 100000 95 150000 0.35 0.65 0.46 0.18 0.084 0.20 1.67 P3Y P10Y P2Y6M P7Y6M P5Y P3Y P10Y P3Y8M8D P2Y2M12D P2Y P6Y6M P1Y8M4D P2Y2D P2Y7D P1Y8M22D P10M10D P8M12D P3Y1M17D P2Y P0Y7M6D P1M13D P1Y4M10D P1Y8M12D P1Y7M20D P1Y7M2D P910M17D P0Y5M1D P1Y6M7D P2Y5M16D P9Y11M8D P6Y6M P0Y4M10D P1M13D P1Y3M29D P4Y3M18D P1Y6M29D P1Y11M26D P1Y6M29D P3Y2M8D P7M13D P1Y6M7D 2013-06-30 28060 0.0373 0.59 0.00 0.00 0.00 100000 200000 32000 16800 50000 50000 50000 0 1100 0 0 99060672 17956 20950 41898 92776 47882 121278 1291174 5184511 1496174 7372813 3498218 10670925 5797611 26882251 5414895 26321154 4656253 27752439 1785268 2685748 30000 200000 71826 631429 31780390 8657746 13470539 9300000 609550 500000 1360000 214286 350000 5985 3128572 2532739 8455427 500000 1375000 200000 775000 1882353 4263042 23942 71826 35913 5984 28502 5985 0 1243292 5075204 1243292 1628771 2188302 205000 105000 448207 2210000 3435662 1360000 3435662 18222243 2483334 18222243 1241976 -87500 2601285 9514286 5320809 2688785 0 9514286 13470539 8009594 -11971 -207956 -8979 -2010917 -83941 -382716 -648597 -345679 -1170000 -700000 -1292858 1.67 2.62 1.67 1.25 1.67 1.04 0.26 0.45 0.27 0.49 0.19 0.44 0.11 0.23 0.12 0.21 0.13 0.19 0.01 0.46 0.5 0.18 0.02 0.13 0.17 0.075 0.09 0.08 0.65 0.16 0.15 0.07 0.35 1.67 0.1 0.2 0.15 0.12 0.25 0.01 0.35 0.17 1.67 0.85 0.02 1.67 0.35 1.67 0 0.2 0.45 0.102 0.336 0.02 0.01 0.35 0.46 0.65 0.65 0.37 0.5 0.35 0.13 0.17 0.34 0.15 0.01 0.65 0.0126 0.3412 0.25 0.14 0.01 0.25 0.075 0.075 0.20 0.15 0.01 0.14 0.2 1.67 0 0.01 0.10 0.20 3.76 0.43 1.67 0.48 0.73 0.01 0.35 0.01 0.62 0.15 0.60 0.46 0.01 0.01 0.02 0.0013 0.0013 0.045 0.0297 0.0297 0.53 0.54 0.54 0.66 0.68 0.68 100000 The Company compiled historical volatilities over a period of 2 to 7 years of 15 small-cap medical companies traded on major exchanges and 10 mid-range medical companies on the OTC Bulletin Board and combined the results using a weighted average approach. P5Y P24M P22M P18M P24M P24M 170000 170000 2008-04-30 2012-12-23 2014-12-31 2012-12-23 200000 1111112 320000 200000 1595239 96613 7232 11993687 0.13 P2Y1M24D 34752 "Under the terms of the Company''''''''s agreement with investors in the October 2008 financing, 1,920,000 shares of common stock were the maximum number of shares allocated to the Company''''''''s existing shareholders at the time of the offering (also referred to as the original shareholders or the ""Founders""). Since the total of the Company''''''''s fully diluted shares of common stock was greater than 1,920,000 shares, in order for the Company to proceed with the offering, the Board of Directors approved a reverse stock split of 1-for-1.2545. After this split was approved, additional options and warrants were identified, requiring a second reverse stock split in order to reach the 1,920,000 shares. The second reverse stock split on the reduced 1-for-1.2545 balance was determined to be 1-for-1.33176963. Taken together, if only one reverse stock split was performed, the number would have been a reverse stock split of 1-for-1.670705. On June 6, 2008, the Board of Directors approved the first reverse stock split. The authorized number of shares of common stock of 20,000,000 was proportionately divided by 1.2545 to arrive at 15,942,607. On October 20, 2008, the Board of Directors (i) approved the second reverse stock split pursuant to which the authorized number of shares of common stock of 15,942,607 was proportionately divided by 1.33177 to arrive at 11,970,994 shares and (ii) approved a resolution to increase the number of authorized shares of the Company''''''''s common stock from 11,970,994 to 40,000,000, which was approved by the Company''''''''s shareholders holding a majority of the shares entitled to vote thereon at a special meeting of shareholders held on December 3, 2008." -654114 -1518933 -477433 -2855713 -5704855 -17573810 27236303 22193681 16557867 79467603 55370243 9608160 0 0 0 27236303 22193681 16557867 79467603 55370243 9608160 31298440 45250929 2626000 3957000 49000 28000 2675000 3985000 2675000 3985000 0 0 1.00 16959000 1460714 185069 11840 32000 126046 98659 100000 100000 63000 37500 100000 457300 89300 50000 10000 648100 0 200000 0 16800 89300 0 100000 0 32000 100000 10000 0 100000 0 820561 598800 1516082 0 89300 1341 14931 4960 0 23954 0 0 0 0 0 0.1025 0.12 0.08 0.08 0.1025 0.12 0.08 0.08 0.10 0.06 0.06 0.12 0.10 0.12 0.08 285715 0.35 0.35 0.084 0.1 0.15 0.18 0.18 0.18 0.084 24 months 208 0 16800 five years 37095 39593 0.35 0.50 0.08 0.46 0.65 0.01 479910 169854 39743 12698 702205 25553 31332 31506 -390368 61934 868772 -88290 20847 6293 147403 -4689 -738 1618 40419 -1562 617 556 12053 -724 3209 25014 -5571 3247 30740 -6122 1420 20891 -44160 870278 27862 1506 89796 149007 0 1604 6293 40481 6 62 1624 12081 196 28 752 1071847 2900 539 6109 3467 592 6714 53355 10615 54775 479910 0.22 0.50 486564 6654 25000 3000000 30000 2000 46000 4000 0.2000 0.2000 600000 240000 98659 100000 134657 240000 0.24 300000 84657 300000 357282 60000 0.065 4615385 600000 1546667 7500000 277778 0.09 30000 0.15 4615385 26500000 1722500 1457500 265000 26500000 175000 163333 11667 1166667 150189 0.065 0.15 (1) Founders shares, 1,000,000 pre-split (2) 23,492 (40,000 pre-split) shares valued at $.0167 per share as compensation for loan guarantees by management (5) Compensation for loan guarantees by management (3) Investment including 670 shares issued as a 10% finders fee (4) For payment of patent legal fees (6) For vendor contractual consideration (7) Employment agreements (8) Investment (10) Investment, "October 2008 financing". (9) Conversion of convertible notes by management Adjusted for the reverse stock splits in total at June 6, 2008 and October 20, 2008. The number of shares underlying options and warrants outstanding as of September 30, 2012 and September 30, 2011 are 45,250,929 and 31,298,440 respectively. The effect of the shares that would be issued upon exercise of such options and warrants has been excluded from the calculation of diluted loss per share because those shares are anti-dilutive. The short-term notes have all matured except for the $16,800 that matures in December 2012. The Company is currently negotiating with the note holders. 0.014 0.065 156243 1562430 0 438000 373000 4800 4800 0 0 150189 4360000 2208000 1153000 525000 0001446159us-gaap:StockOptionMemberus-gaap:MinimumMember2012-01-012012-09-30 0001446159us-gaap:StockOptionMemberus-gaap:MaximumMember2012-01-012012-09-30 0.01 1.67 0001446159bior:StockOptionsSixMemberus-gaap:MinimumMember2012-01-012012-09-30 0001446159bior:StockOptionsSixMemberus-gaap:MaximumMember2012-01-012012-09-30 0.07 0.08 0.0120 0.1090 0.0038 P7Y4M20D P2Y 2017 2012-03-31 2012-03-31 2012-03-31 2012-04-16 2012-03-15 0.54 0.68 0.00 0.0013 0.0297 0.54 0.68 0.00 0.0013 0.0297 0001446159us-gaap:MinimumMember2010-01-012010-12-31 0001446159us-gaap:MaximumMember2010-01-012010-12-31 0001446159us-gaap:MinimumMember2009-01-012009-12-31 0001446159us-gaap:MaximumMember2009-01-012009-12-31 P2Y P6Y6M P2Y P6Y6M 0001446159us-gaap:MinimumMember2011-12-31 0001446159us-gaap:MaximumMember2011-12-31 0001446159us-gaap:MinimumMember2010-12-31 0001446159us-gaap:MaximumMember2010-12-31 0001446159us-gaap:MinimumMember2009-12-31 0001446159us-gaap:MaximumMember2009-12-31 0.08 0.50 0.08 0.50 0.08 0.50 0.01 0.65 0.01 0.65 0.01 0.65 00014461592010-01-012010-09-30 0001446159bior:ValueAt2009Member2010-01-012010-09-30 0001446159bior:ValueAt2010Member2010-01-012010-09-30 0001446159bior:ValueAt2011Member2010-01-012010-09-30 0001446159bior:ValueAt2012Member2010-01-012010-09-30 0001446159bior:GainLoss2010Member2010-01-012010-09-30 0001446159bior:GainLoss2011Member2010-01-012010-09-30 0001446159bior:GainLoss2012Member2010-01-012010-09-30 790596 -369642 1071847 14946 166063 87787 1145292 -151118 78276 P2Y6M 0.63 0.46 0.35 0.0137 0001446159us-gaap:CommonStockMember2002-04-22 0001446159us-gaap:AdditionalPaidInCapitalMember2002-04-22 0001446159us-gaap:RetainedEarningsMember2002-04-22 0 0 0 0 0