(Mark
One)
|
|
þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the transition period
from to
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Nevada
|
20-4907818
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
Large
Accelerated Filer
¨
|
Accelerated
Filer
¨
|
Non-Accelerated
Filer
¨
(Do
not check if a smaller reporting company)
|
Smaller
Reporting Company
x
|
Page
|
||
Part
I.
|
FINANCIAL
INFORMATION
|
|
Item
1.
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Consolidated
Financial Statements
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2
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Consolidated
Balance Sheets at September 30, 2010 (unaudited) and June 30,
2010
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2
|
|
Consolidated
Statements of Operations - Three Months Ended September 30, 2010
(unaudited) and September 30, 2009 (unaudited)
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3
|
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Consolidated
Statement of Stockholders' Deficit - Three Months Ended September 30, 2010
(unaudited)
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4
|
|
Consolidated
Statements of Cash Flows – Three Months Ended September 30, 2010
(unaudited) and September 30, 2009 (unaudited)
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6
|
|
Notes
to Consolidated Financial Statements (unaudited)
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7
|
|
Item
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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16
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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20
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Item
4T.
|
Controls
and Procedures
|
20
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Part
II.
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OTHER
INFORMATION
|
|
Item
1.
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Legal
Proceedings
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20
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Item
1A.
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Risk
Factors
|
|
Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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20
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Item
3.
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Defaults
Upon Senior Securities
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23
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Item
4.
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(Removed
and Reserved)
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23
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Item
5.
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Other
Information
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23
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Item
6.
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Exhibits
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23
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Signatures
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24
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September 30,
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June 30,
|
|||||||
2010
|
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 10,529 | $ | 270 | ||||
Prepaid
expenses and other current assets
|
2,735 | 3,158 | ||||||
Total
current assets
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13,264 | 3,428 | ||||||
Property
and equipment, net
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65,064 | 69,605 | ||||||
Deferred
costs
|
161,124 | 71,683 | ||||||
Patents,
net
|
91,715 | 92,284 | ||||||
Other
assets
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9,500 | 9,500 | ||||||
Total
assets
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$ | 340,667 | $ | 246,500 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Bank
overdraft
|
$ | - | $ | 2,747 | ||||
Accounts
payable
|
228,294 | 160,179 | ||||||
Accrued
expenses
|
61,786 | 75,656 | ||||||
Accrued
payroll
|
73,153 | 83,051 | ||||||
Deferred
revenue
|
104,484 | 50,761 | ||||||
Short-term
loan
|
379,165 | 109,000 | ||||||
Bank
loan
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511,875 | 524,750 | ||||||
Total
current liabilities
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1,358,757 | 1,006,144 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
deficit:
|
||||||||
Preferred
stock, $0.001 par value, 10,000,000 shares authorized, 111,111 shares
issued and outstanding as of September 30, 2010 and June 30,
2010
|
111 | 111 | ||||||
Common
stock, $0.001 par value, 1,000,000,000 shares authorized, 133,690,545
(unaudited) and 130,581,562 shares are issued and outstanding as of
September 30, and June 30, 2010, respectively
|
133,691 | 130,582 | ||||||
Additional
paid-in capital
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13,559,745 | 12,656,723 | ||||||
Deficit
accumulated during the development stage
|
(14,711,637 | ) | (13,547,060 | ) | ||||
Total
stockholders' deficit
|
(1,018,090 | ) | (759,644 | ) | ||||
Total
liabilities and stockholders' deficit
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$ | 340,667 | $ | 246,500 |
January 29, 2007,
|
||||||||||||
Inception,
|
||||||||||||
For the Three Months Ended
|
Through
|
|||||||||||
September 30,
|
September 30,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
General
and administrative expenses
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$ | 909,131 | $ | 3,077,874 | $ | 9,171,501 | ||||||
Research
and development expenses
|
241,253 | 62,965 | 4,864,653 | |||||||||
Total
operating expenses
|
1,150,384 | 3,140,839 | 14,036,154 | |||||||||
Loss
from operations
|
(1,150,384 | ) | (3,140,839 | ) | (14,036,154 | ) | ||||||
Interest
expense
|
(12,693 | ) | (83,582 | ) | (501,158 | ) | ||||||
Loss
before income taxes
|
(1,163,077 | ) | (3,224,421 | ) | (14,537,312 | ) | ||||||
Income
tax expense
|
- | - | - | |||||||||
Net
loss
|
$ | (1,163,077 | ) | $ | (3,224,421 | ) | $ | (14,537,312 | ) | |||
Deemed
dividends to preferred stockholders
|
(1,500 | ) | - | (174,325 | ) | |||||||
Net
loss available to common stockholders
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$ | (1,164,577 | ) | $ | (3,224,421 | ) | $ | (14,711,637 | ) | |||
Net
loss available to common shareholders per share:
|
||||||||||||
Basic
and Diluted
|
$ | (0.01 | ) | $ | (0.03 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and Diluted
|
132,525,540 | 103,111,510 |
Deficit
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
During the
|
||||||||||||||||||||||||||||
Series A Preferred
|
Common Stock
|
Additional Paid-in
|
Development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stage
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Total
|
||||||||||||||||||||||
Balance
at inception, January 29, 2007
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- | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Issuance
of common stock for services on January 29, 2007
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42,993,630 | 42,994 | (21,994 | ) | 21,000 | |||||||||||||||||||||||
Common
stock issued as payment for services on March 31, 2008
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6,428,904 | 6,429 | 1,123,971 | 1,130,400 | ||||||||||||||||||||||||
Common
stock issued as payment for services on April 16, 2008
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51,180 | 51 | 8,949 | 9,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on April 22, 2008
|
102,360 | 102 | 17,898 | 18,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on June 18, 2008
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3,787,320 | 3,788 | 662,212 | 666,000 | ||||||||||||||||||||||||
Common
stock sold for cash on June 30, 2008
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2,047,200 | 2,047 | 497,953 | 500,000 | ||||||||||||||||||||||||
Amortization
of discount on convertible preferred stock
|
47,879 | (47,879 | ) | - | ||||||||||||||||||||||||
Net
loss
|
(2,681,782 | ) | (2,681,782 | ) | ||||||||||||||||||||||||
Balance
at June 30, 2008
|
- | $ | - | 55,410,594 | $ | 55,411 | $ | 2,336,868 | $ | (2,729,661 | ) | $ | (337,382 | ) | ||||||||||||||
Common
stock sold in connection with reverse merger for cash on October 3,
2008
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2,149,560 | 2,150 | 122,850 | 125,000 | ||||||||||||||||||||||||
Preferred
stock sold for cash on March 17, 2009
|
111,111 | 111 | 99,889 | 100,000 | ||||||||||||||||||||||||
Preferred
stock - beneficial conversion feature
|
11,111 | (11,111 | ) | - | ||||||||||||||||||||||||
Common
stock sold for cash on April 22, 2009
|
499,998 | 500 | 99,500 | 100,000 | ||||||||||||||||||||||||
Common
stock sold for cash on June 4, 2009
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499,998 | 500 | 99,500 | 100,000 | ||||||||||||||||||||||||
Common
stock sold for cash on June 22, 2009
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300,000 | 300 | 49,700 | 50,000 | ||||||||||||||||||||||||
Common
stock sold for cash on June 30, 2009
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300,000 | 300 | 49,700 | 50,000 | ||||||||||||||||||||||||
Bio
common stock outstanding before reverse merger on October 3,
2008
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27,840,534 | 27,840 | (27,840 | ) | - | |||||||||||||||||||||||
Common
stock issued as payment for services on September 22, 2008
|
150,000 | 150 | 17,850 | 18,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on December 3, 2008
|
450,000 | 450 | 187,150 | 187,600 | ||||||||||||||||||||||||
Common
stock issued as payment for services on December 17, 2008
|
300,000 | 300 | 131,800 | 132,100 | ||||||||||||||||||||||||
Common
stock issued as payment for services on February 27, 2009
|
590,565 | 591 | 156,893 | 157,484 | ||||||||||||||||||||||||
Common
stock issued as payment for services on March 11, 2009
|
86,550 | 86 | 26,853 | 26,939 | ||||||||||||||||||||||||
Common
stock issued as payment for services on March 22, 2009
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150,000 | 150 | 50,350 | 50,500 | ||||||||||||||||||||||||
Common
stock issued as payment for services on April 23, 2009
|
29,415 | 29 | 9,285 | 9,314 | ||||||||||||||||||||||||
Common
stock issued as payment for services on May 28, 2009
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152,379 | 152 | 38,959 | 39,111 | ||||||||||||||||||||||||
Common
stock issued as payment for services on June 4, 2009
|
37,500 | 38 | 9,837 | 9,875 | ||||||||||||||||||||||||
Common
stock issued as payment for services on June 30, 2009
|
37,500 | 38 | 8,712 | 8,750 | ||||||||||||||||||||||||
Warrants
issued with convertible debt in December 2008, January 2009 and February
2009
|
49,245 | 49,245 | ||||||||||||||||||||||||||
Amortization
of discount on convertible preferred stock
|
107,835 | (107,835 | ) | - | ||||||||||||||||||||||||
Warrants
issued as payment for services on May 27, 2009
|
56,146 | 56,146 | ||||||||||||||||||||||||||
Warrants
issued as payment for services on June 3, 2009
|
84,219 | 84,219 | ||||||||||||||||||||||||||
Warrants
issued as payment for services on June 30, 2009
|
5,678 | 5,678 | ||||||||||||||||||||||||||
Issuance
of stock options as payment for services on August 8, 2008
|
229,493 | 229,493 | ||||||||||||||||||||||||||
Issuance
of stock options as payment for services on October 1,
2008
|
4,598 | 4,598 | ||||||||||||||||||||||||||
Issuance
of stock options as payment for services on October 7,
2008
|
22,770 | 22,770 | ||||||||||||||||||||||||||
Issuance
of stock options as payment for services on October 21,
2008
|
47 | 47 | ||||||||||||||||||||||||||
Issuance
of stock options as payment for services on October 28,
2008
|
33 | 33 | ||||||||||||||||||||||||||
Issuance
of stock options as payment for services on January 19,
2009
|
50,571 | 50,571 | ||||||||||||||||||||||||||
Net
loss
|
(2,495,991 | ) | (2,495,991 | ) | ||||||||||||||||||||||||
Balance
at June 30, 2009
|
111,111 | $ | 111 | 88,984,593 | $ | 88,985 | $ | 4,089,602 | $ | (5,344,598 | ) | $ | (1,165,900 | ) |
Deficit
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
During
the
|
||||||||||||||||||||||||||||
Series
A Preferred
|
Common
Stock
|
Additional
Paid-in
|
Development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stage
|
Total
|
||||||||||||||||||||||
Balance
at June 30, 2009
|
111,111 | $ | 111 | 88,984,593 | $ | 88,985 | $ | 4,089,602 | $ | (5,344,598 | ) | $ | (1,165,900 | ) | ||||||||||||||
Common
stock issued as payment for services on July 27, 2009
|
17,358,000 | 17,358 | 3,886,279 | 3,903,637 | ||||||||||||||||||||||||
Common
stock issued as payment for services on August 5, 2009
|
165,000 | 165 | 44,935 | 45,100 | ||||||||||||||||||||||||
Common
stock issued as payment for services on September 16, 2009
|
190,011 | 190 | 42,209 | 42,399 | ||||||||||||||||||||||||
Common
stock issued as payment for services on October 7, 2009
|
130,500 | 131 | 42,500 | 42,631 | ||||||||||||||||||||||||
Common
stock issued as payment for services on October 16, 2009
|
100,911 | 101 | 34,209 | 34,310 | ||||||||||||||||||||||||
Common
stock issued as payment for services on October 23, 2009
|
30,000 | 30 | 9,270 | 9,300 | ||||||||||||||||||||||||
Common
stock issued as payment for services on October 29, 2009
|
37,500 | 38 | 13,463 | 13,501 | ||||||||||||||||||||||||
Common
stock issued as payment for services on November 3, 2009
|
37,500 | 37 | 13,464 | 13,501 | ||||||||||||||||||||||||
Common
stock issued as payment for services on November 10, 2009
|
35,102 | 35 | 12,251 | 12,286 | ||||||||||||||||||||||||
Common
stock issued as payment for services on November 16, 2009
|
1,505,000 | 1,505 | 405,944 | 407,449 | ||||||||||||||||||||||||
Common
stock issued as payment for services on November 30, 2009
|
60,000 | 60 | 17,340 | 17,400 | ||||||||||||||||||||||||
Common
stock issued as payment for services on December 4, 2009
|
49,157 | 49 | 12,240 | 12,289 | ||||||||||||||||||||||||
Common
stock issued as payment for services on January 11, 2010
|
121,286 | 121 | 30,200 | 30,321 | ||||||||||||||||||||||||
Common
stock issued as payment for services on February 1, 2010
|
5,125,102 | 5,125 | 1,071,146 | 1,076,271 | ||||||||||||||||||||||||
Common
stock issued as payment for services on February 11, 2010
|
500,000 | 500 | 109,500 | 110,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on February 15, 2010
|
127,500 | 128 | 26,648 | 26,776 | ||||||||||||||||||||||||
Common
stock issued as payment for services on February 23, 2010
|
135,000 | 135 | 26,865 | 27,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on March 5, 2010
|
346,098 | 346 | 82,897 | 83,243 | ||||||||||||||||||||||||
Common
stock issued as payment for services on March 12, 2010
|
70,000 | 70 | 13,455 | 13,525 | ||||||||||||||||||||||||
Common
stock issued as payment for services on March 22, 2010
|
50,000 | 50 | 8,450 | 8,500 | ||||||||||||||||||||||||
Common
stock issued as payment for services on April 12, 2010
|
127,282 | 127 | 16,420 | 16,547 | ||||||||||||||||||||||||
Common
stock issued as payment for services on April 19, 2010
|
100,000 | 100 | 16,900 | 17,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on April 29, 2010
|
1,700,000 | 1,700 | 253,300 | 255,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on May 10, 2010
|
773,750 | 774 | 115,288 | 116,062 | ||||||||||||||||||||||||
Common
stock issued as payment for services on May 24, 2010
|
219,092 | 219 | 43,599 | 43,818 | ||||||||||||||||||||||||
Common
stock issued as payment for services on June 1, 2010
|
163,794 | 164 | 29,319 | 29,483 | ||||||||||||||||||||||||
Common
stock issued as payment for services on June 9, 2010
|
333,333 | 333 | 59,667 | 60,000 | ||||||||||||||||||||||||
Common
stock issued as payment for services on June 14, 2010
|
46,544 | 47 | 8,331 | 8,378 | ||||||||||||||||||||||||
Common
stock issued for debt and accrued interest conversion on August 7,
2009
|
1,122,375 | 1,122 | 189,681 | 190,803 | ||||||||||||||||||||||||
Conversion
feature on convertible notes payable
|
63,601 | 63,601 | ||||||||||||||||||||||||||
Common
stock sold for cash on October 13, 2009
|
208,104 | 208 | 34,156 | 34,364 | ||||||||||||||||||||||||
Common
stock sold for cash on October 16, 2009
|
2,980,734 | 2,981 | 493,808 | 496,789 | ||||||||||||||||||||||||
Common
stock sold for cash on November 4, 2009
|
217,117 | 217 | 36,183 | 36,400 | ||||||||||||||||||||||||
Common
stock sold for cash on November 17, 2009
|
421,529 | 422 | 71,748 | 72,170 | ||||||||||||||||||||||||
Common
stock sold for cash on December 4, 2009
|
352,451 | 352 | 59,565 | 59,917 | ||||||||||||||||||||||||
Common
stock sold for cash on January 6, 2010
|
58,058 | 58 | 9,812 | 9,870 | ||||||||||||||||||||||||
Common
stock sold for cash on February 4, 2010
|
888,235 | 888 | 150,112 | 151,000 | ||||||||||||||||||||||||
Common
stock sold for cash on March 2, 2010
|
743,746 | 744 | 125,693 | 126,437 | ||||||||||||||||||||||||
Common
stock sold for cash on March 12, 2010
|
352,941 | 353 | 59,647 | 60,000 | ||||||||||||||||||||||||
Common
stock sold for cash on April 19, 2010
|
125,000 | 125 | 14,875 | 15,000 | ||||||||||||||||||||||||
Common
stock sold for cash on June 1, 2010
|
700,000 | 700 | 69,300 | 70,000 | ||||||||||||||||||||||||
Common
stock issued for conversion of note payable on June 1,
2010
|
2,789,217 | 2,789 | 276,133 | 278,922 | ||||||||||||||||||||||||
Common
stock sold for cash on June 24, 2010
|
1,000,000 | 1,000 | 99,000 | 100,000 | ||||||||||||||||||||||||
Warrants
issued as payment for services on July 15, 2009
|
13,205 | 13,205 | ||||||||||||||||||||||||||
Warrants
issued as payment for services on February 11, 2010
|
131,376 | 131,376 | ||||||||||||||||||||||||||
Conversion
feature of note payable on June 1, 2010
|
223,137 | 223,137 | ||||||||||||||||||||||||||
Dividends
on preferred stock
|
(6,000 | ) | (6,000 | ) | ||||||||||||||||||||||||
Net
loss
|
(8,196,462 | ) | (8,196,462 | ) | ||||||||||||||||||||||||
Balance
at June 30, 2010
|
111,111 | $ | 111 | 130,581,562 | $ | 130,582 | $ | 12,656,723 | $ | (13,547,060 | ) | $ | (759,644 | ) | ||||||||||||||
Common
stock issued as payment for services on July 8, 2010
|
349,571 | 350 | 52,086 | 52,436 | ||||||||||||||||||||||||
Common
stock issued as payment for services on August 3, 2010
|
1,854,009 | 1,854 | 350,406 | 352,260 | ||||||||||||||||||||||||
Common
stock issued as payment for services on August 30, 2010
|
75,000 | 75 | 11,175 | 11,250 | ||||||||||||||||||||||||
Common
stock issued as payment for services on September 8, 2010
|
237,192 | 237 | 35,342 | 35,579 | ||||||||||||||||||||||||
Common
stock sold for cash on August 3, 2010
|
593,211 | 593 | 58,728 | 59,321 | ||||||||||||||||||||||||
Amortization
of restricted stock issued for services
|
395,285 | 395,285 | ||||||||||||||||||||||||||
Dividends
on preferred stock
|
(1,500 | ) | (1,500 | ) | ||||||||||||||||||||||||
Net
loss
|
(1,163,077 | ) | (1,163,077 | ) | ||||||||||||||||||||||||
Balance
at September 30, 2010 (unaudited)
|
111,111 | $ | 111 | 133,690,545 | $ | 133,691 | $ | 13,559,745 | $ | (14,711,637 | ) | $ | (1,018,090 | ) |
January 29, 2007,
|
||||||||||||
Inception,
|
||||||||||||
For the Three Months Ended
|
Through
|
|||||||||||
September 30,
|
September 30,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
Operating
activities:
|
||||||||||||
Net
loss
|
$ | (1,163,077 | ) | $ | (3,224,421 | ) | $ | (14,537,312 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Depreciation
and amortization
|
5,110 | 3,539 | 34,697 | |||||||||
Warrants
issued in connection with convertible notes payable
|
- | - | 49,245 | |||||||||
Beneficial
conversion feature on convertible notes payable
|
- | 63,601 | 286,738 | |||||||||
Common
stock issued for services
|
846,810 | 2,805,282 | 9,806,954 | |||||||||
Stock
option compensation
|
- | - | 307,512 | |||||||||
Warrants
issued for services
|
- | 5,173 | 290,624 | |||||||||
Effect
of changes in:
|
||||||||||||
Prepaid
expenses and other current assets
|
423 | 466 | (2,735 | ) | ||||||||
Deposits
|
- | - | (9,500 | ) | ||||||||
Bank
overdraft
|
(2,747 | ) | - | - | ||||||||
Accounts
payable and accrued expenses
|
52,745 | 101,248 | 293,039 | |||||||||
Accrued
payroll
|
(9,898 | ) | - | 352,075 | ||||||||
Deferred
revenue
|
53,723 | 7,480 | 104,484 | |||||||||
Net
cash used in operating activities
|
(216,911 | ) | (237,632 | ) | (3,024,179 | ) | ||||||
Investing
activities:
|
||||||||||||
Purchase
of property and equipment
|
- | (21,020 | ) | (99,192 | ) | |||||||
Payments
for systems
|
(89,441 | ) | - | (161,124 | ) | |||||||
Payments
for patents
|
- | - | (92,284 | ) | ||||||||
Net
cash used in investing activities
|
(89,441 | ) | (21,020 | ) | (352,600 | ) | ||||||
Financing
activities:
|
||||||||||||
Proceeds
from (payments on) bank loan borrowings
|
(12,875 | ) | (9,041 | ) | 511,875 | |||||||
Proceeds
from sales of preferred stock
|
- | - | 725,000 | |||||||||
Proceeds
from convertible notes payable
|
- | - | 235,000 | |||||||||
Payments
on convertible notes payable
|
- | (20,000 | ) | (55,000 | ) | |||||||
Proceeds
from sale of common stock
|
59,321 | 289,684 | 1,591,268 | |||||||||
Proceeds
from short-term loans
|
279,165 | - | 388,165 | |||||||||
Payments
of short-term loans
|
(9,000 | ) | - | (9,000 | ) | |||||||
Net
cash provided by financing activities
|
316,611 | 260,643 | 3,387,308 | |||||||||
Net
increase in cash
|
10,259 | 1,991 | 10,529 | |||||||||
Cash,
beginning of period
|
270 | 5,038 | - | |||||||||
Cash,
end of period
|
$ | 10,529 | $ | 7,029 | $ | 10,529 | ||||||
Supplemental
disclosures of cash flow information:
|
||||||||||||
Cash
paid for interest
|
$ | 12,693 | $ | 20,201 | $ | 163,675 | ||||||
Cash
paid for income taxes
|
$ | 1,600 | $ | - | $ | 6,728 | ||||||
Supplemental
disclosure of non-cash investing and financing activities:
|
||||||||||||
Warrants
issued in connection with preferred stock
|
$ | - | $ | - | $ | 155,714 | ||||||
Beneficial
conversion feature on preferred stock
|
$ | - | $ | - | $ | 11,111 | ||||||
Conversion
of preferred to common shares in reverse merger
|
$ | - | $ | - | $ | 625,000 | ||||||
Proceeds
from sales of preferred shares used to purchase shares of
Bio
|
$ | - | $ | - | $ | 400,000 | ||||||
Conversion
of note payable to common stock
|
$ | - | $ | - | $ | 278,922 | ||||||
Accrued
dividends issued to preferred stockholders
|
$ | 1,500 | $ | - | $ | 7,500 | ||||||
Conversion
of convertible notes payable and accrued interest to common
stock
|
$ | - | $ | 190,803 | $ | 190,803 |
Three
|
||||
Months Ended
|
||||
September 30,
|
||||
2009
|
||||
Expected
life in years
|
3.0 | |||
Stock
price volatility
|
64 | % | ||
Risk
free interest rate
|
1.6 | % | ||
Expected
dividends
|
None
|
|||
Forfeiture
rate
|
0 | % |
September 30,
|
June 30,
|
|||||||
2010
|
2010
|
|||||||
(Unaudited)
|
||||||||
Leasehold improvement
|
$ | 2,475 | $ | 2,475 | ||||
Furniture
|
26,837 | 26,837 | ||||||
Office
equipment
|
1,500 | 1,500 | ||||||
Equipment
|
68,380 | 68,380 | ||||||
99,192 | 99,192 | |||||||
Less:
accumulated depreciation and amortization
|
(34,128 | ) | (29,587 | ) | ||||
$ | 65,064 | $ | 69,605 |
Weighted-
|
||||||||||||
Average
|
||||||||||||
Weighted-
|
Remaining
|
|||||||||||
Average
|
Contractual
|
|||||||||||
Exercise
|
Life
|
|||||||||||
Options
|
Price
|
(Years)
|
||||||||||
Outstanding
at June 30, 2010
|
1,987,612 | $ | 0.56 | 6.16 | ||||||||
Granted
|
- | - | ||||||||||
Forfeited
|
(71,655 | ) | 0.67 | |||||||||
Outstanding
at September 30, 2010 (unaudited)
|
1,915,957 | 0.56 | 6.13 | |||||||||
Vested
and expected to vest at September 30, 2010 (unaudited)
|
1,915,957 | 0.56 | 6.13 | |||||||||
Exercisable
at September 30, 2010 (unaudited)
|
1,915,957 | 0.56 | 6.13 |
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||
Exercise
|
Number
|
Remaining
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||||
Price
|
of Shares
|
Life (Years)
|
Price
|
of Shares
|
Price
|
|||||||||||||||||
$ | 0.33 | 637,297 | 6.06 | $ | 0.33 | 637,297 | $ | 0.33 | ||||||||||||||
0.67 | 1,278,660 | 6.16 | 0.67 | 1,278,660 | 0.67 | |||||||||||||||||
1,915,957 | 1,915,957 |
Weighted-
|
||||||||||||
Average
|
||||||||||||
Weighted-
|
Remaining
|
|||||||||||
Average
|
Contractual
|
|||||||||||
Exercise
|
Life
|
|||||||||||
Warrants
|
Price
|
(Years)
|
||||||||||
Outstanding
at June 30, 2010
|
12,545,618 | $ | 0.42 | 2.66 | ||||||||
Granted
|
- | - | ||||||||||
Exercised
|
- | - | - | |||||||||
Outstanding
at September 30, 2010 (unaudited)
|
12,545,618 | 0.42 | 2.41 | |||||||||
Vested
and expected to vest
at September 30, 2010
(unaudited)
|
12,545,618 | 0.42 | 2.41 | |||||||||
Exercisable
at September 30, 2010 (unaudited)
|
12,545,618 | 0.42 | 2.41 |
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||
Exercise
|
Number
|
Remaining
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||||
Price
|
of
Shares
|
Life
(Years)
|
Price
|
of
Shares
|
Price
|
|||||||||||||||||
$ | 0.20 - 0.37 | 2,339,374 | 2.36 | $ | 0.30 | 2,339,374 | $ | 0.30 | ||||||||||||||
0.42 - 0.58 | 10,206,244 | 2.42 | 0.45 | 10,206,244 | 0.45 | |||||||||||||||||
12,545,618 | 12,545,618 |
Year Ended
|
||||
June 30,
|
||||
2011
(remainder of)
|
38,250 | |||
2012
|
29,750 | |||
Total
|
$ | 68,000 |
For the Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2010
|
2009
|
$ Change
|
% Change
|
|||||||||||||
General
and administrative expenses
|
$ | 909,131 | $ | 3,077,874 | $ | (2,168,743 | ) | -70.5 | % | |||||||
Research
and development expenses
|
241,253 | 62,965 | 178,288 | 283.2 | % | |||||||||||
Total
operating expenses
|
1,150,384 | 3,140,839 | (1,990,455 | ) | -63.4 | % | ||||||||||
Loss
from operations
|
(1,150,384 | ) | (3,140,839 | ) | 1,990,455 | -63.4 | % | |||||||||
Interest
expense
|
(12,693 | ) | (83,582 | ) | 70,889 | -84.8 | % | |||||||||
Loss
before income taxes
|
(1,163,077 | ) | (3,224,421 | ) | 2,061,344 | -63.9 | % | |||||||||
Income
tax expense
|
- | - | - | 0.0 | % | |||||||||||
Net
loss
|
$ | (1,163,077 | ) | $ | (3,224,421 | ) | 2,061,344 | -63.9 | % |
Year Ended
|
||||
June
30,
|
||||
2011
(remainder of)
|
38,250 | |||
2012
|
29,750 | |||
Total
|
$ | 68,000 |
a.
|
With
the assistance of an outside consultant, we were able to design,
implement, and test processes and procedures for Internal Controls over
Financial Reporting.
|
b.
|
With
the help of an outside consultant, we were able to raise our knowledge and
expertise of GAAP to a level that is consistent with our conclusion that
our internal controls are
effective.
|
c.
|
We
updated and implemented new internal control procedures which address our
risk assessment process, entity level control evaluations, and testing of
key controls over financial
reporting.
|
d.
|
We
continue to monitor our internal control processes and procedures on a
regular basis.
|
SIGNATURE
|
TITLE
|
DATE
|
||
/s/ Roman Gordon
|
Chief
Executive Officer and Director
|
November
12, 2010
|
||
Roman
Gordon
|
(Principal
Executive Officer)
Chairman
of the Board
|
|||
/s/ Igor
Gorodnitsky
|
President
|
November
12, 2010
|
||
Igor
Gorodnitsky
|
||||
/s/ R.L.
Hartshorn
|
Chief
Financial Officer
|
November
12, 2010
|
||
R.L.
Hartshorn
|
(Principal
Financial Officer and
Accounting
Officer)
|
Date:
November 12, 2010
|
/s/ Roman Gordon
|
Name:
Roman Gordon
|
|
Title:
Chief Executive Officer and
Director
|
Date:
November 12, 2010
|
/s/ RL Hartshorn
|
Name:
RL Hartshorn
|
|
Title:
Chief Financial Officer
|