Nevada
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91-1948357
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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500 Union Street, Suite
406, Seattle, Washington
USA
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98101
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(Address
of principal executive offices)
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(Zip
Code)
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206-903-1351
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||
(Registrant's
telephone number, including area code)
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||
N/A
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||
(Former
name, address, and fiscal year, if changed since last
report)
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TABLE
OF CONTENTS
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Page Number
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PART
1
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FINANCIAL
INFORMATION
|
3
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ITEM
1
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Financial
Statements (unaudited)
|
3
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Balance
Sheets as of December 31, 2008 and September 30, 2008
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4
|
|
Statements
of Operations
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||
For
the three months ended December 31, 2008 and 2007, and the period from
October 8, 1998 (Date of Inception) to December 31, 2008
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5
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Statements
of Cash Flows
|
||
For
the three months ended December 31, 2008 and 2007 and for the period from
October 8, 1998 (Date of Inception) to December 31, 2008
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6
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Notes
to the Financial Statements.
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7
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|
ITEM
2
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Management's
Discussion and Analysis of Financial Condition and Results of
Operation
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11
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ITEM
4
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Controls
and Procedures
|
12
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PART
II
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OTHER
INFORMATION
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13
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ITEM 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
13
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ITEM
6
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Exhibits
and Reports on Form 8-K
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13
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SIGNATURES
|
14
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ITEM
1.
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FINANCIAL
STATEMENTS
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December
31, 2008
|
September
30, 2008
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|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$
|
803
|
$
|
255
|
||||
Prepaid
Expenses
|
1,026
|
1,766
|
||||||
Total
Current Assets
|
1,829
|
2,021
|
||||||
Deferred
Financing Costs, net
|
-
|
-
|
||||||
TOTAL
ASSETS
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$
|
1,829
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$
|
2,021
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||||
CURRENT
LIABILITIES
|
||||||||
Note
payable to a related party
|
$
|
50,750
|
$
|
50,750
|
||||
Accrued
expenses and other liabilities
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65,632
|
110,562
|
||||||
Accrued
expenses and other liabilities due to related parties
|
571,555
|
504,662
|
||||||
Accounts
payable
|
331,115
|
780,912
|
||||||
Accounts
payable due to related parties
|
253,151
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264,429
|
||||||
Total
Current Liabilities
|
1,272,203
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1,711,315
|
||||||
Long-term
Notes Payable
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-
|
425,340
|
||||||
Commitments
and Contingencies
|
-
|
-
|
||||||
STOCKHOLDERS'
DEFICIT
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||||||||
Preferred
stock - $0. 001 par value, 50, 000,000 shares authorized, no shares issued
and outstanding
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-
|
-
|
||||||
Common
stock - $0.001 par value, 200,000,000 shares authorized, 27,742,901 and
18,353,891 shares issued and outstanding, respectively
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27,743
|
18,354
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||||||
Additional
paid in capital
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5,905,777
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4,521,760
|
||||||
Deficit
accumulated during the development stage
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(7,203,894
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)
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(6,674,748
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)
|
||||
Total
Stockholders' Equity (Deficiency)
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(1,270,374
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)
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(2,134,634
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)
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||||
TOTAL
LIABILITIES & EQUITY
|
$
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1,829
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$
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2,021
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Three
Months Ended December 31, 2008
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Three
Months Ended December 31, 2007
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Period
of Inception from October 8, 1998 to December 31, 2008
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||||||||||
Revenues
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$
|
-
|
$
|
-
|
$
|
-
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||||||
Expenses
|
||||||||||||
Research
and development
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214,105
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-
|
1,451,522
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|||||||||
Administrative
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300,335
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282,914
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4,289,624
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|||||||||
Total
Operating Expense
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514,440
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282,914
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5,741,146
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|||||||||
Loss
from Operations
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(514,440
|
)
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(282,914
|
)
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(5,741,146
|
)
|
||||||
Other
Income (Expense)
|
||||||||||||
Settlement
of debt
|
-
|
-
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43,400
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|||||||||
Interest
expense
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(14,706
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)
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(24,646
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(351,821
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)
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|||||||
Loss
of deposit
|
-
|
-
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(1,154,327
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)
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||||||||
Net
Loss
|
$
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(529,146
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)
|
$
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(307,560
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)
|
$
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(7,203,894
|
)
|
|||
Net
Loss Applicable to Common Stockholders Basic and diluted
|
$
|
(0.02
|
)
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$
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(0.02
|
)
|
||||||
Weighted
Average Shares used in computing basic and diluted net loss per
share
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26,439,503
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17,183,239
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Three
Months Ended
|
Three
Months Ended
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October
8, 1998
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||||||||||
December
31,
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December
31,
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to
December 31,
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||||||||||
2008
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2007
|
2008
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
loss
|
$
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(529,146
|
)
|
$
|
(307,560
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)
|
$
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(7,203,894
|
)
|
|||
Reconciliation
of net loss to net cash used in operating activities:
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||||||||||||
Depreciation,
amortization and tangible and intangible asset impairments
|
-
|
-
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19,808
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|||||||||
Issuance
of capital stock for expenses
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876,007
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118,000
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1,174,463
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|||||||||
Stock
based compensation
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35,304
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38,120
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477,457
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|||||||||
Stock
Options Issued in exchange for services
|
-
|
-
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236,988
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|||||||||
Amortization
of Deferred Financing
|
-
|
8,000
|
96,000
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|||||||||
Loss
of deposit
|
-
|
-
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1,154,327
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|||||||||
Capital
contributions - expenses
|
-
|
-
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10,950
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|||||||||
Increase
(decrease) in cash resulting from changes in assets
and liabilities:
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||||||||||||
Prepaid
expenses
|
740
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(18,602
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)
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(1,026
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)
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|||||||
Accounts
payable and accrued expenses
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(382,357
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)
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162,179
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2,703,383
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||||||||
Net
Cash Used in Operating Activities
|
548
|
137
|
|
(1,331,544
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)
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase
of property and equipment
|
-
|
-
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(12,308
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)
|
||||||||
Purchase
of investment - deposit
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-
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-
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(1,154,327
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)
|
||||||||
Net
Cash Used in Investing Activities
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-
|
-
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(1,166,635
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)
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||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Proceeds
from issuance of common stock
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-
|
-
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2,022,892
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|||||||||
Proceeds
from issuance of convertible debt
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-
|
-
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425,340
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|||||||||
Proceeds
from issuance of notes payable
|
-
|
-
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300,951
|
|||||||||
Repayment
of notes payable
|
-
|
-
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(250,201
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)
|
||||||||
Net
Cash Provided by Financing Activities
|
-
|
-
|
2,498,982
|
|||||||||
Net
Change in Cash
|
548
|
137
|
|
803
|
||||||||
Cash
at Beginning of Period
|
255
|
91
|
-
|
|||||||||
Cash
at End of Period
|
$
|
803
|
$
|
228
|
$
|
803
|
||||||
Supplemental disclosure of cash flow information | ||||||||||||
Cash paid during the period for interest | - | 35,139 | 141,413 | |||||||||
Issuance of common stock to retire debt | 482,095 | - | - |
1.
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ORGANIZATION
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2.
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GOING
CONCERN
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3.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
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4.
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ADOPTION
OF ACCOUNTING STANDARDS
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Level 1:
|
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Quoted
(observable) market prices in active markets for identical assets or
liabilities.
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Level 2:
|
|
Inputs
other than Level 1 that are observable, such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the asset or
liability.
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Level 3:
|
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Unobservable
inputs that are supported by little or no market activity and that are
significant to the fair value of the asset or
liability.
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5.
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DEVELOPMENT
OF TECHNOLOGIES OWNED BY THE
COMPANY
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6.
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NOTES
PAYABLE
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7.
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LINE
OF CREDIT
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8.
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COMMON
CAPITAL STOCK
|
9.
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STOCK
OPTIONS
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9.
|
STOCK OPTIONS -
continued
|
Options
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual Term
|
|||||||
Outstanding
as of September 30, 2008
|
1,485,000
|
||||||||
Granted
|
-
|
||||||||
Exercised
|
-
|
||||||||
Expired
|
-
|
||||||||
Forfeited
|
-
|
||||||||
Outstanding
as of December 31, 2008
|
1,485,000
|
$
|
0.55
|
3.02
|
10.
|
SIGNIFICANT
TRANSACTIONS WITH RELATED PARTIES
|
11.
|
CANCELLATION
OF AGREEMENT TO PURCHASE SHARES OF
SCI
|
12.
|
SUBSEQUENT
EVENTS
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
ITEM
2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS – continued
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
ITEM
6.
|
EXHIBITS
AND REPORTS ON FORM 8-K
|
3.1
|
Amended
and Restated Articles of Incorporation, filed aa an exhibit to the
Company’s annual report on Form 10-KSB filed on February 9, 2006, and
incorporated herein by reference.
|
3.2
|
Bylaws
incorporated herein by reference to the Company’s Registration Statement
on Form 10-SB filed on March 11,
1999.
|
4.1
|
2005
Combined Incentive and Non-Qualified Stock Option Plan of the Company,
filed as an exhibit to the Company’s Registration Statement on Form SB-2
filed on August 1, 2005, File no. 333-127100, and incorporated herein by
reference.
|
10.1
|
Intellectual
Property Agreement dated June 16, 2004 between the Company and Kenneth
Turpin, filed as an exhibit to the Company’s Registration Statement on
Form SB-2 filed on August 1, 2005, File No. 333-127100, and incorporated
herein by reference.
|
10.2
|
Letter
Agreement dated November 10, 2006 between the Company and Bradley E.
Sparks, Chief Executive Officer, President and a member of the Board of
Directors.
|
10.3
|
Letter
Agreement dated October 23, 2008 between the Company and RATLAB, LLC, and
affiliates.
|
31.1
|
Certification
of the Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
31.2
|
Certification
of the Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
32.1
|
Certificate
Pursuant to 18 U.S.C. Section 1350 signed by the Chief
Executive Officer
|
Date:
February 23, 2009
|
By:
|
/s/ Bradley
E. Sparks
|
|
Bradley
E. Sparks
|
|||
Chief
Executive Officer, President, and Director
|
|||
Date:
February 23, 2009
|
By:
|
/s/ Bradley
E. Sparks
|
|
Bradley
E. Sparks
|
|||
Chief
Financial Officer, and Secretary Treasurer
|
|||