x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
|
87-0428526
|
|
(State
or other jurisdiction
|
(I.R.S.
Employer Identification No.)
|
|
of
incorporation or organization)
|
Title of each class
|
Name of each exchange on which each is
registered
|
|
N/A
|
Large
accelerated filer o
|
Accelerated
filer o
|
Smaller
reporting company x
|
Page
|
||||
PART
I
|
||||
ITEM
1.
|
BUSINESS
|
4
|
||
ITEM
1A.
|
RISK
FACTORS
|
11
|
||
ITEM
1B
|
UNRESOLVED
STAFF COMMENTS
|
15
|
||
ITEM
2.
|
PROPERTIES
|
15
|
||
ITEM
3.
|
LEGAL
PROCEEDINGS
|
15
|
||
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
15
|
||
PART
II
|
||||
ITEM
5.
|
MMARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
15
|
||
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
17
|
||
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
17
|
||
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
22
|
||
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
F-1
|
||
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
23
|
||
ITEM
9A(T).
|
CONTROLS
AND PROCEDURES
|
23
|
||
ITEM
9B.
|
OTHER
INFORMATION
|
25
|
||
PART
III
|
||||
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
25
|
||
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
28
|
||
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
30
|
||
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
31
|
||
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
35
|
||
ITEM
15.
|
EXHIBITS
|
35
|
|
The
current economic crisis in the United States, which may reduce the funds
available to businesses and government to purchase our
system;
|
|
whether
we will be able to raise capital as and when we need
it;
|
|
whether
our water purification system will generate significant
sales;
|
|
our
overall ability to successfully compete in our market and our industry;
and
|
|
unanticipated
increases in development, production or marketing expenses related to our
product and our business
activities,
|
ITEM
1.
|
DESCRIPTION
OF BUSINESS.
|
ITEM
1A.
|
RISK
FACTORS.
|
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS.
|
ITEM
2.
|
PROPERTIES.
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCHOLDERMATTERS
AND ISSUER PURCHASES OF EQUITY
SECURITIES.
|
High
|
Low
|
|||||||
Fiscal
Year Ended September 30, 2008:
|
||||||||
First
Quarter
|
0.300 | 0.220 | ||||||
Second
Quarter
|
0.245 | 0.120 | ||||||
Third
Quarter
|
0.355 | 0.100 | ||||||
Fourth
Quarter
|
0.220 | 0.130 | ||||||
Fiscal
Year Ended September 30, 2007:
|
||||||||
First
Quarter
|
0.145 | 0.035 | ||||||
Second
Quarter
|
0.480 | 0.095 | ||||||
Third
Quarter
|
0.400 | 0.200 | ||||||
Fourth
Quarter
|
0.380 | 0.260 |
Plan Category
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
|
Weighted average
exercise price of
outstanding
options, warrants
and rights
|
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column 2)
|
|||||||||
Equity
Compensation Plan Approved by Stockholders
|
||||||||||||
None
|
||||||||||||
Equity
Compensation Plan Not Approved by Stockholders
|
||||||||||||
2001
Executive Officers Stock Option Plan
|
7,034,140 | $ | 0.15 | 542,540 |
ITEM
6.
|
SELECTED
FINANCIAL DATA.
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND
RESULTS OF OPERATIONS.
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|||
Balance
Sheets as of September 30, 2008 and 2007
|
F-3
|
|||
Statements
of Operations for the years ended September 30, 2008 and September 30,
2007 and Cumulative from Inception (October 3, 1994) to September 30,
2008
|
F-4
|
|||
Statements
of Stockholders’ Equity (Deficit) from Inception (October 3, 1994) to
September 30, 2008
|
F-5
|
|||
Statements
of Cash Flows for the years ended September 30, 2008 and September 30,
2007 and Cumulative From Inception (October 3, 1994) to September 30,
2008
|
F-8
|
|||
Notes
to Financial Statements
|
F-9
|
September
30,
|
||||||||
|
2008
|
2007
(Restated)
|
||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 1,220,588 | $ | 372,511 | ||||
Other
current assets
|
138,895 | 1,350 | ||||||
TOTAL
CURRENT ASSETS
|
1,359,483 | 373,861 | ||||||
PROPERTY
AND EQUIPMENT, net
|
87,101 | 40,834 | ||||||
DEPOSITS
|
33,095 | 104,600 | ||||||
TOTAL
ASSETS
|
$ | 1,479,679 | $ | 519,295 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 259,355 | $ | 157,399 | ||||
Accrued
expenses
|
2,721,970 | 2,068,114 | ||||||
Customer
deposits
|
1,260,000 | - | ||||||
Liquidated
damages liability
|
153,750 | 15,375 | ||||||
Notes
payable to related parties
|
114,000 | 129,000 | ||||||
Notes
payable to officers
|
- | 19,260 | ||||||
Equity
line of credit
|
- | 27,336 | ||||||
Convertible
notes, net
|
2,041,443 | 776,472 | ||||||
10%
subordinated notes payable, net
|
400,796 | - | ||||||
Warrant
and option liability
|
3,446,823 | 2,426,846 | ||||||
Beneficial
conversion features liability
|
26,000 | 2,006,812 | ||||||
TOTAL
CURRENT LIABILITIES
|
10,424,137 | 7,626,614 | ||||||
STOCKHOLDERS'
DEFICIT
|
||||||||
Common
Stock (150,000,000 shares authorized; 134,756,213 and 107,117,101 shares
issued; 134,274,313 and 106,635,201 shares outstanding
respectively)
|
134,274 | 106,635 | ||||||
Additional
paid-in capital
|
12,688,495 | 10,762,982 | ||||||
Shares
to be issued
|
126,429 | 43,900 | ||||||
Deficit
accumulated during development stage
|
(21,893,656 | ) | (18,020,836 | ) | ||||
TOTAL
STOCKHOLDERS' DEFICIT
|
(8,944,458 | ) | (7,107,319 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$ | 1,479,679 | $ | 519,295 |
Cummulative
|
||||||||||||
from
|
||||||||||||
Inception
|
||||||||||||
For
the year ended September 30,
|
Years
Ended September 30,
|
(October
3, 1994) to
|
||||||||||
2008
|
2007
(Restated)
|
September
30, 2008
|
||||||||||
Net
revenue
|
$ | - | $ | - | $ | - | ||||||
Operating
expenses
|
||||||||||||
General
and administrative
|
7,445,775 | 1,045,725 | 20,775,280 | |||||||||
Research
and development
|
1,060,933 | 526,466 | 3,036,873 | |||||||||
Depreciation
and amortization
|
25,270 | 31,699 | 557,375 | |||||||||
Total
operating expenses
|
8,531,978 | 1,603,890 | 24,369,528 | |||||||||
Loss
from Operations
|
(8,531,978 | ) | (1,603,890 | ) | (24,369,528 | ) | ||||||
Other
income (expense)
|
||||||||||||
Interest
income
|
7,830 | 4,886 | 66,373 | |||||||||
Interest
expense
|
(1,502,629 | ) | (942,243 | ) | (2,299,117 | ) | ||||||
Decrease
in warrant liability
|
4,748,929 | 469,311 | 5,218,240 | |||||||||
Decrease
(increase) in beneficial conversion features liability
|
1,404,811 | (4,044 | ) | 1,400,767 | ||||||||
Impairment
of intangibles
|
- | - | (1,267,278 | ) | ||||||||
Inventory
obsolesence
|
- | - | (365,078 | ) | ||||||||
Legal
settlement
|
- | (89,654 | ) | 344,949 | ||||||||
Loss
on settlement of debt
|
(254,309 | ) | - | (484,577 | ) | |||||||
Loss
on lease termination
|
(125,015 | ) | - | (125,015 | ) | |||||||
Write-off
of beneficial conversion feature
|
380,441 | 380,441 | ||||||||||
Total
Other Income (Expense)
|
4,660,058 | (561,744 | ) | 2,489,264 | ||||||||
Loss
before income taxes
|
(3,871,920 | ) | (2,165,634 | ) | (21,880,264 | ) | ||||||
Income
Taxes
|
900 | 2,592 | 13,392 | |||||||||
Net
Loss
|
$ | (3,872,820 | ) | $ | (2,168,226 | ) | $ | (21,893,656 | ) | |||
Basic
an dilutive loss per share
|
$ | (0.03 | ) | $ | (0.02 | ) | ||||||
Basic
and diluted weighted average nubmer of shares of Common Stock
outstanding*
|
112,419,861 | 106,207,706 |
Deficit
|
Total
|
|||||||||||||||||||||||||||||||||||
Common
Stock
|
Additional
|
Stock
|
Stock
|
Shares
|
Unamortized
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||||||||||
Number
|
Paid-in
|
to
be
|
Subscription
|
to
be
|
Consulting
|
from
|
Equity
|
|||||||||||||||||||||||||||||
of
Shares
|
Amount
|
Capital
|
Issued
|
Receivable
|
Cancelled
|
Fees
|
Inception
|
(Deficit)
|
||||||||||||||||||||||||||||
Stock
issued for cash
|
||||||||||||||||||||||||||||||||||||
October
3, 1994
|
10,000 | $ | 10 | $ | 90 | $ | 100 | |||||||||||||||||||||||||||||
Net
loss from October 3,
|
||||||||||||||||||||||||||||||||||||
1994,
to December 31, 1994
|
(1,521 | ) | (1,521 | ) | ||||||||||||||||||||||||||||||||
Balance
at December 31, 1994
|
10,000 | 10 | 90 | - | - | - | - | (1,521 | ) | (1,421 | ) | |||||||||||||||||||||||||
Shares
issued for
|
||||||||||||||||||||||||||||||||||||
assignment
rights
|
1,990,000 | 1,990 | (1,990 | ) | - | |||||||||||||||||||||||||||||||
Shares
issued for services
|
572,473 | 572 | 135,046 | 135,618 | ||||||||||||||||||||||||||||||||
Shares
issued for debt
|
1,038,640 | 1,038 | 1,164,915 | 1,165,953 | ||||||||||||||||||||||||||||||||
Shares
issued for cash
|
232,557 | 233 | 1,119,027 | 1,119,260 | ||||||||||||||||||||||||||||||||
Shares
issued for
|
||||||||||||||||||||||||||||||||||||
subscription
receivable
|
414,200 | 414 | 1,652,658 | (1,656,800 | ) | (3,728 | ) | |||||||||||||||||||||||||||||
Shares
issued for
|
||||||||||||||||||||||||||||||||||||
productions
costs
|
112,500 | 113 | 674,887 | (675,000 | ) | - | ||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
December
31, 1995
|
(914,279 | ) | (914,279 | ) | ||||||||||||||||||||||||||||||||
Balance
at December 31, 1995
|
4,370,370 | 4,370 | 4,744,633 | - | (2,331,800 | ) | - | - | (915,800 | ) | 1,501,403 | |||||||||||||||||||||||||
Shares
issued for reorganization
|
18,632,612 | 18,633 | (58,033 | ) | (39,400 | ) | ||||||||||||||||||||||||||||||
Shares
issued for cash
|
572,407 | 573 | 571,834 | 572,407 | ||||||||||||||||||||||||||||||||
Shares
issued for services
|
24,307 | 24 | 24,283 | 24,307 | ||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 1996
|
(922,717 | ) | (922,717 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 1996
|
23,599,696 | 23,600 | 5,282,717 | - | (2,331,800 | ) | - | - | (1,838,517 | ) | 1,136,000 | |||||||||||||||||||||||||
Shares
issued for cash
|
722,733 | 723 | 365,857 | 366,580 | ||||||||||||||||||||||||||||||||
Shares
issued for services
|
274,299 | 274 | 54,586 | 54,860 | ||||||||||||||||||||||||||||||||
Cancellation
of shares
|
(542,138 | ) | (542 | ) | (674,458 | ) | 675,000 | - | ||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 1997
|
(858,915 | ) | (858,915 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 1997
|
24,054,590 | 24,055 | 5,028,702 | - | (1,656,800 | ) | - | - | (2,697,432 | ) | 698,525 | |||||||||||||||||||||||||
Shares
issued for cash
|
2,810,000 | 2,810 | 278,190 | 281,000 | ||||||||||||||||||||||||||||||||
Shares
issued for services
|
895,455 | 895 | 88,651 | 89,546 | ||||||||||||||||||||||||||||||||
Shares
issued for compensation
|
2,200,000 | 2,200 | 217,800 | 220,000 | ||||||||||||||||||||||||||||||||
Cancellation
of shares
|
(2,538,170 | ) | (2,538 | ) | (1,534,262 | ) | 1,656,800 | 120,000 | ||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 1998
|
(1,898,376 | ) | (1,898,376 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 1998
|
27,421,875 | 27,422 | 4,079,081 | - | - | - | - | (4,595,808 | ) | (489,305 | ) | |||||||||||||||||||||||||
Shares
issued for compensation
|
3,847,742 | 3,847 | 389,078 | 392,925 | ||||||||||||||||||||||||||||||||
Shares
issued for services
|
705,746 | 706 | 215,329 | 216,035 | ||||||||||||||||||||||||||||||||
Shares
issued for cash
|
9,383,000 | 9,383 | 928,917 | 938,300 | ||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 1999
|
(1,158,755 | ) | (1,158,755 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 1999
|
41,358,363 | 41,358 | 5,612,405 | - | - | - | - | (5,754,563 | ) | (100,800 | ) | |||||||||||||||||||||||||
Shares
issued for cash
|
10,303,500 | 10,304 | 1,020,046 | 1,030,350 | ||||||||||||||||||||||||||||||||
Shares
issued for compensation
|
1,517,615 | 1,518 | 1,218,598 | 1,220,116 | ||||||||||||||||||||||||||||||||
Shares
issued for services
|
986,844 | 986 | 253,301 | 254,287 | ||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2000
|
(2,414,188 | ) | (2,414,188 | ) |
Deficit
|
Total
|
|||||||||||||||||||||||||||||||||||
Common
Stock
|
Additional
|
Stock
|
Stock
|
Shares
|
Unamortized
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||||||||||
Number
|
Paid-in
|
to
be
|
Subscription
|
to
be
|
Consulting
|
from
|
Equity
|
|||||||||||||||||||||||||||||
of
Shares
|
Amount
|
Capital
|
Issued
|
Receivable
|
Cancelled
|
Fees
|
Inception
|
(Deficit)
|
||||||||||||||||||||||||||||
Balance
at September 30, 2000
|
54,166,322 | 54,166 | 8,104,350 | - | - | - | - | (8,168,751 | ) | (10,235 | ) | |||||||||||||||||||||||||
Shares
issued for services
|
||||||||||||||||||||||||||||||||||||
and
prepaid expenses
|
2,517,376 | 2,517 | 530,368 | (141,318 | ) | 391,567 | ||||||||||||||||||||||||||||||
Shares
issued for cash
|
6,005,000 | 6,005 | 594,495 | 600,500 | ||||||||||||||||||||||||||||||||
Shares
to be issued for cash
|
||||||||||||||||||||||||||||||||||||
(100,000
shares)
|
10,000 | 10,000 | ||||||||||||||||||||||||||||||||||
Shares
to be issued for
|
||||||||||||||||||||||||||||||||||||
debt
(639,509 shares)
|
103,295 | 103,295 | ||||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2001
|
(1,353,429 | ) | (1,353,429 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2001
|
62,688,698 | 62,688 | 9,229,213 | 113,295 | - | - | (141,318 | ) | (9,522,180 | ) | (258,302 | ) | ||||||||||||||||||||||||
Shares
issued for services
|
||||||||||||||||||||||||||||||||||||
and
prepaid expenses
|
1,111,710 | 1,112 | 361,603 | 54,400 | 417,115 | |||||||||||||||||||||||||||||||
Shares
issued as a contribution
|
100,000 | 100 | 11,200 | 11,300 | ||||||||||||||||||||||||||||||||
Shares
issued for compensation
|
18,838 | 19 | 2,897 | 2,916 | ||||||||||||||||||||||||||||||||
Shares
issued for cash
|
16,815,357 | 16,815 | 1,560,782 | (10,000 | ) | 1,567,597 | ||||||||||||||||||||||||||||||
Shares
issued for debt
|
1,339,509 | 1,340 | 208,639 | (103,295 | ) | 106,684 | ||||||||||||||||||||||||||||||
Shares
to be issued for
|
||||||||||||||||||||||||||||||||||||
services
related to raising
|
||||||||||||||||||||||||||||||||||||
equity
(967,742 shares)
|
(300,000 | ) | 300,000 | - | ||||||||||||||||||||||||||||||||
Cancellation
of shares
|
(7,533,701 | ) | (7,534 | ) | (7,534 | ) | ||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2002
|
(1,243,309 | ) | (1,243,309 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2002
|
74,540,411 | 74,540 | 11,074,334 | 300,000 | - | - | (86,918 | ) | (10,765,489 | ) | 596,467 | |||||||||||||||||||||||||
Shares
issued for services
|
||||||||||||||||||||||||||||||||||||
and
prepaid expenses
|
2,467,742 | 2,468 | 651,757 | (300,000 | ) | 354,225 | ||||||||||||||||||||||||||||||
Shares
issued for capital
|
||||||||||||||||||||||||||||||||||||
equity
line
|
8,154,317 | 8,154 | 891,846 | 900,000 | ||||||||||||||||||||||||||||||||
Amortization
of consulting fees
|
86,918 | 86,918 | ||||||||||||||||||||||||||||||||||
Cancellation
of shares
|
(50,000 | ) | (50 | ) | 50 | - | ||||||||||||||||||||||||||||||
Shares
to be cancelled
|
||||||||||||||||||||||||||||||||||||
(7,349,204
shares)
|
7,349 | (7,349 | ) | - | ||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2003
|
(1,721,991 | ) | (1,721,991 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2003
|
85,112,470 | 85,112 | 12,625,336 | - | - | (7,349 | ) | - | (12,487,480 | ) | 215,619 | |||||||||||||||||||||||||
Shares
issued for capital
|
||||||||||||||||||||||||||||||||||||
equity
line
|
19,179,016 | 19,179 | 447,706 | 466,885 | ||||||||||||||||||||||||||||||||
Shares
issued for services
|
5,100,004 | 5,100 | 196,997 | (13,075 | ) | 189,022 | ||||||||||||||||||||||||||||||
Share
to be issued for cash
|
||||||||||||||||||||||||||||||||||||
(963,336
shares)
|
28,900 | 28,900 | ||||||||||||||||||||||||||||||||||
Shares
to be issued for debt
|
||||||||||||||||||||||||||||||||||||
(500,000
shares)
|
15,000 | 15,000 | ||||||||||||||||||||||||||||||||||
Cancellation
of shares
|
(7,349,204 | ) | (7,349 | ) | 7,349 | - | ||||||||||||||||||||||||||||||
Issuance
of warrants related
|
||||||||||||||||||||||||||||||||||||
to
2004 stock purchase
|
24,366 | 24,366 | ||||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2004
|
(1,593,136 | ) | (1,593,136 | ) |
Deficit
|
Total
|
|||||||||||||||||||||||||||||||||||
Common
Stock
|
Additional
|
Stock
|
Stock
|
Shares
|
Unamortized
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||||||||||
Number
|
Paid-in
|
to
be
|
Subscription
|
to
be
|
Consulting
|
from
|
Equity
|
|||||||||||||||||||||||||||||
of
Shares
|
Amount
|
Capital
|
Issued
|
Receivable
|
Cancelled
|
Fees
|
Inception
|
(Deficit)
|
||||||||||||||||||||||||||||
Balance
at September 30, 2004,
|
||||||||||||||||||||||||||||||||||||
Restated
|
102,042,286 | 102,042 | 13,294,405 | 43,900 | - | - | (13,075 | ) | (14,080,615 | ) | (653,343 | ) | ||||||||||||||||||||||||
Amortization
of consulting fees
|
13,075 | 13,075 | ||||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2005
|
(722,676 | ) | (722,676 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2005 (Restated),
|
102,042,286 | 102,042 | 13,294,405 | 43,900 | - | - | - | (14,803,291 | ) | (1,362,944 | ) | |||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2006
|
(1,049,319 | ) | (1,049,319 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2006 (Restated),
|
102,042,286 | 102,042 | 13,294,405 | 43,900 | - | - | - | (15,852,610 | ) | (2,412,263 | ) | |||||||||||||||||||||||||
Shares
issued for services
|
4,592,915 | 4,593 | 80,336 | 84,929 | ||||||||||||||||||||||||||||||||
Reclassification
of 2001
|
||||||||||||||||||||||||||||||||||||
Executive
Option Plan
|
||||||||||||||||||||||||||||||||||||
as
of July 17, 2007
|
(2,271,879 | ) | (2,271,879 | ) | ||||||||||||||||||||||||||||||||
Reclassification
of
|
||||||||||||||||||||||||||||||||||||
beneficial
conversion
|
||||||||||||||||||||||||||||||||||||
features
liability related to
|
||||||||||||||||||||||||||||||||||||
advisory
board
|
||||||||||||||||||||||||||||||||||||
compensation
as of July 17, 2007
|
(269,851 | ) | (269,851 | ) | ||||||||||||||||||||||||||||||||
Reclassification
of warrants
|
||||||||||||||||||||||||||||||||||||
related
to 2004 stock
|
||||||||||||||||||||||||||||||||||||
purchase
agreement
|
||||||||||||||||||||||||||||||||||||
as
of July 17, 2007
|
(70,029 | ) | (70,029 | ) | ||||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2007
|
(2,168,226 | ) | (2,168,226 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2007 (Restated),
|
106,635,201 | 106,635 | 10,762,982 | 43,900 | - | - | - | (18,020,836 | ) | (7,107,319 | ) | |||||||||||||||||||||||||
Shares
issued for services
|
1,539,750 | 1,540 | 254,330 | 255,870 | ||||||||||||||||||||||||||||||||
Shares
to be issued for services
|
126,029 | 126,029 | ||||||||||||||||||||||||||||||||||
Shares
converted from debt
|
17,149,359 | 17,149 | 886,633 | 903,782 | ||||||||||||||||||||||||||||||||
Shares
issued for cash
|
8,950,003 | 8,950 | 784,550 | (43,500 | ) | 750,000 | ||||||||||||||||||||||||||||||
Net
loss for the year ended
|
||||||||||||||||||||||||||||||||||||
September
30, 2008
|
(3,872,820 | ) | (3,872,820 | ) | ||||||||||||||||||||||||||||||||
Balance
at September 30, 2008
|
134,274,313 | $ | 134,274 | $ | 12,688,495 | $ | 126,429 | $ | - | $ | - | $ | - | $ | (21,893,656 | ) | $ | (8,944,458 | ) |
Cummulative
|
||||||||||||
from
|
||||||||||||
Inception
|
||||||||||||
Years
Ended September 30,
|
(October
3, 1994) to
|
|||||||||||
2008
|
2007
(Restated)
|
September
30,2008
|
||||||||||
Operating
activities:
|
||||||||||||
Net
loss
|
$ | (3,872,820 | ) | $ | (2,168,226 | ) | $ | (21,893,656 | ) | |||
Adjustments
to reconcile net loss to net cash used in
|
||||||||||||
operating
activities:
|
||||||||||||
Depreciation
|
25,270 | 31,699 | 644,292 | |||||||||
Amortization
of beneficial conversion features discount and
|
||||||||||||
warrant
discount
|
1,164,321 | 833,826 | 2,047,339 | |||||||||
Stock
based compensation expense - employee
|
1,842,945 | - | 3,678,902 | |||||||||
Stock
based compensation expense - nonemployee
|
3,685,722 | 208,989 | 6,650,591 | |||||||||
Impairment
of assets
|
- | - | 514,755 | |||||||||
Write-down
of obsolete assets
|
- | - | 38,862 | |||||||||
Impairment
of intangible assets
|
- | - | 1,117,601 | |||||||||
Loss
on settlement of debt
|
254,309 | - | 384,577 | |||||||||
Loss
on lease termination
|
125,015 | 125,015 | ||||||||||
Write-off
of beneficial conversion feature
|
(576,000 | ) | (576,000 | ) | ||||||||
Stock
issued for services and rent
|
114,850 | 114,850 | ||||||||||
Accrual
of liquidating damages
|
138,375 | 15,375 | 153,750 | |||||||||
Other
|
- | (799,044 | ) | (799,044 | ) | |||||||
(Increase)
decrease in assets:
|
||||||||||||
Other
current assets
|
(137,545 | ) | (1,350 | ) | (138,895 | ) | ||||||
Other
assets
|
(28,495 | ) | (104,600 | ) | (133,095 | ) | ||||||
Increase
(decrease) in liabilities:
|
||||||||||||
Accounts
payable
|
258,119 | (115,209 | ) | 415,519 | ||||||||
Accrued
expenses
|
730,900 | 1,445,946 | 2,960,040 | |||||||||
Customer
deposits
|
1,260,000 | - | 1,260,000 | |||||||||
Warrant
liability
|
(4,748,929 | ) | (469,311 | ) | (5,218,240 | ) | ||||||
Beneficial
conversion features liability
|
(1,404,812 | ) | 4,044 | (1,400,768 | ) | |||||||
Net
cash used in operating activities
|
(1,168,775 | ) | (1,117,861 | ) | (10,429,683 | ) | ||||||
Investing
activities:
|
||||||||||||
Acquisition
of property and equipment
|
(96,552 | ) | (27,772 | ) | (468,007 | ) | ||||||
Acquisition
of patents
|
- | - | (154,061 | ) | ||||||||
Net
cash used in investing activities
|
(96,552 | ) | (27,772 | ) | (622,068 | ) | ||||||
Financing
activities:
|
||||||||||||
Payment
on notes payable to officer
|
(19,260 | ) | (47,400 | ) | (218,502 | ) | ||||||
(Payments
on ) proceeds from notes payable, related party
|
(15,000 | ) | - | 442,433 | ||||||||
Receipt
from (payments to) equity line of credit
|
(27,336 | ) | (300,000 | ) | 428,664 | |||||||
Proceeds
from notes payable
|
1,425,000 | 1,861,000 | 3,286,000 | |||||||||
Issuance
of common stock for cash
|
750,000 | - | 8,179,594 | |||||||||
Receipt
of cash for stock to be issued
|
- | - | 400 | |||||||||
Net
cash provided by financing activities
|
2,113,404 | 1,513,600 | 12,272,339 | |||||||||
Increase
in cash and cash equivalents
|
848,077 | 367,967 | 1,220,588 | |||||||||
Cash
and cash equivalents:
|
||||||||||||
Beginning
of period
|
372,511 | 4,544 | ||||||||||
End
of period
|
$ | 1,220,588 | $ | 372,511 | $ | 1,220,588 | ||||||
Cash
paid for:
|
||||||||||||
Interest
|
$ | - | $ | - | ||||||||
Income
taxes
|
$ | - | $ | - |
Year
Ended September 30,
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Net
Loss
|
Shares
|
Per
Share
|
Net
Loss
|
Shares
|
Per
Share
|
|||||||||||||||||||
Basic Earnings Per Share | ||||||||||||||||||||||||
Net
Loss Available to Stockholders
|
$ | (3,872,820 | ) | 112,419,861 | $ | (0.03 | ) | $ | (2,168,226 | ) | 106,207,706 | $ | (0.02 | ) | ||||||||||
Effect
of Dilutive Securities
|
- | - | - | - | - | - | ||||||||||||||||||
Diluted
Earnings Per Share
|
$ | (3,872,820 | ) | 112,419,861 | $ | (0.03 | ) | $ | (2,168,226 | ) | 106,207,706 | $ | (0.02 | ) |
2008
|
2007
|
|||||||
Machinery
and equipment
|
$ | 243,712 | $ | 213,166 | ||||
Furniture
and fixtures
|
41,176 | 24,594 | ||||||
Leasehold
improvement
|
24,408 | |||||||
TOTAL
PROPERTY AND EQUIPMENT
|
309,296 | 237,760 | ||||||
Less
accumulated depreciation
|
(222,195 | ) | (196,926 | ) | ||||
NET
PROPERTY AND EQUIPMENT
|
$ | 87,101 | $ | 40,834 |
Years
|
||||
Machinery
and equipment
|
5 | |||
Furniture
and fixtures
|
3-5 | |||
Leasehold
improvements
|
3 |
2008
|
2007
|
|||||||
Accrued
salaries
|
$ | 1,493,444 | $ | 1,381,981 | ||||
Advisory
board compensation
|
576,000 | 380,441 | ||||||
Auto
allowance accruals
|
94,408 | 71,768 | ||||||
Interest
payable
|
272,016 | 165,770 | ||||||
Other
accruals
|
286,102 | 68,154 | ||||||
TOTAL
ACCRUED EXPENSES
|
$ | 2,721,970 | $ | 2,068,114 |
2008
|
2007
|
|||||||
Deferred
tax asset
|
$ | 8,347,000 | $ | 4,740,000 | ||||
Less
valuation allowance
|
(8,347,000 | ) | (4,740,000 | ) | ||||
$ | - | $ | - |
2008
|
2007
|
||||||||||||||
Amount
|
Rate
|
Amount
|
Rate
|
||||||||||||
Income
tax expense (benefit) at statutory federal rate
|
$ | (3,093,000 | ) |
-34
|
% | $ | (819,000 | ) | -34 | % | |||||
State
income tax expense (benefit), net of federal income tax
|
(514,000
|
) |
-4
|
% | (136,000 | ) | -6 | % | |||||||
Valuation
allowance
|
3,607,000
|
40
|
% | 955,000 | 40 | % | |||||||||
$ |
-
|
0
|
% | $ | - | 0 | % |
2008
|
2007
|
||||||
Warrant
amortization expense
|
$ |
155,000
|
$ | 45,000 | |||
Beneficial
conversion feature expense
|
311,000
|
134,000 | |||||
Increase
in fair market value of warrants
|
(1,480,000
|
) | (85,000 | ) | |||
Decrease
in fair market value of beneficial conversion feature
|
(562,000
|
) | 2,000 | ||||
Increase
in fair market value of stock options
|
(419,000
|
) | (138,000 | ) | |||
Net
operating loss carryforward
|
10,342,000
|
4,698,000 | |||||
Valuation
allowance
|
(8,347,000
|
) | (4,740,000 | ) | |||
$ |
-
|
$ | - |
Weighted
|
||||||||||||
Average
|
Aggregate
|
|||||||||||
Exercise
|
Number
|
Intrinsic
|
||||||||||
Price
|
of Options
|
Value
|
||||||||||
Outstanding
at October 1, 2006
|
$ | 0.15 | 7,034,140 | $ | - | |||||||
Granted
|
- | - | - | |||||||||
Expired
|
- | - | - | |||||||||
Forfeited
|
- | - | - | |||||||||
Exercised
|
- | - | - | |||||||||
Outstanding
at September 30, 2007
|
0.15 | 7,034,140 | - | |||||||||
Granted
|
0.25 | 10,539,312 | - | |||||||||
Expired
|
- | - | - | |||||||||
Forfeited
|
(0.25 | ) | (5,605,786 | ) | - | |||||||
Exercised
|
- | - | - | |||||||||
Outstanding
at September 30, 2008
|
$ | 0.19 | 11,967,666 | $ | - |
Exercise
|
Options
|
Options
|
Weighted
Average
Remaining
Contractual
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||
Price
|
Outstanding
|
Exercisable
|
Life
|
Outstanding
|
Exercisable
|
||||||||||||||||
$0.15
- $0.25
|
11,967,666 | 11,967,666 | 3.19 | $ | 0.19 | $ | 0.19 |
Outstanding
|
Exercisable |
Weighted
Average
Remaining
|
||||||||||||||||||
Option
Holder
|
Amount
|
Exercise
Price
|
Amount
|
Exercise
Price
|
Contractual
Life
|
|||||||||||||||
2001
Executive Officers Stock Option Plan
|
7,034,140 | $ | 0.15 | 7,034,140 | $ | 0.15 | 2.50 | |||||||||||||
Director
|
1,000,000 | 0.25 | 1,000,000 | 0.25 | 4.17 | |||||||||||||||
Former
Chief Financial Officer
|
1,000,000 | 0.25 | 1,000,000 | 0.25 | 4.17 | |||||||||||||||
Former
Chief Executive Officer
|
2,933,526 | 0.25 | 2,933,526 | 0.25 | 4.17 |
Weighted
Average
Exercise
Price
|
Number
of Options
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
at October 1, 2006
|
$ | 0.03 | 1,463,336 | $ | - | |||||||
Granted
|
0.50 | 2,795,454 | - | |||||||||
Expired
|
(0.03 | ) | (1,463,336 | ) | - | |||||||
Forfeited
|
- | - | - | |||||||||
Exercised
|
- | - | - | |||||||||
Outstanding
at September 30, 2007
|
0.50 | 2,795,454 | - | |||||||||
Granted
|
0.20 | 36,570,312 | 600,000 | |||||||||
Expired
|
- | - | - | |||||||||
Forfeited
|
- | - | - | |||||||||
Exercised
|
- | - | - | |||||||||
Outstanding
at September 30, 2008
|
$ | 0.70 | 39,365,766 | $ | 600,000 |
Weighted
Average
Remaining
|
Weighted
Average
Exercise
Price
|
||||||||||||||||||||
Exercise
Price
|
Warrants
Outstanding
|
Options
Exercisable
|
Contractual
Life
|
Outstanding
|
Exercisable
|
||||||||||||||||
$0.10
- $0.40
|
39,365,766 | 39,365,766 | 3.62 | $ | 0.20 | $ | 0.20 |
Weighted
|
||||||||||||||||||||
Average
|
||||||||||||||||||||
Outstanding
|
Exercisable
|
Remaining
|
||||||||||||||||||
Warrant
|
Exercise
|
Exercise
|
Contractual
|
|||||||||||||||||
Holder
|
Amount
|
Price
|
Amount
|
Price
|
Life
|
|||||||||||||||
Convertible
Notes 3
|
2,795,454 | $ | 0.30 | 2,795,454 | $ | 0.30 | 3.70 | |||||||||||||
Advisory
Board Members
|
8,640,000 | 0.25 | 8,640,000 | 0.25 | 4.17 | |||||||||||||||
Consultant
|
8,539,312 | 0.25 | 8,539,312 | 0.25 | 4.17 | |||||||||||||||
10%
Subordinated Notes Payable
|
850,000 | 0.40 | 850,000 | 0.40 | 5.33 | |||||||||||||||
Stockholders
|
15,000,000 | 0.10 | 15,000,000 | 0.10 | 2.52 | |||||||||||||||
Richarson
& Patel, LLC
|
400,000 | 0.15 | 400,000 | 0.15 | 5.67 | |||||||||||||||
Director
|
500,000 | 0.25 | 500,000 | 0.25 | 4.75 | |||||||||||||||
Director
|
500,000 | 0.25 | 500,000 | 0.25 | 4.75 | |||||||||||||||
Richarson
& Patel, LLC
|
641,000 | 0.15 | 641,000 | 0.15 | 5.75 | |||||||||||||||
Advisory
Board Member
|
1,500,000 | 0.25 | 1,500,000 | 0.25 | 4.92 |
For the Year Ended September 30,
|
||||
2009
|
$ | 23,000 |
For the Year Ended September 30,
|
||||
2009
|
$ | 104,490 | ||
2010
|
108,660 | |||
2011
|
93,550 |
As
|
||||||||
Originally
|
As
|
|||||||
Calculated
|
Recalculated
|
|||||||
Authorized
shares per Articles of Incorportion
|
150,000,000 | 150,000,000 | ||||||
Outstanding
shares
|
(106,635,201 | ) | (106,635,201 | ) | ||||
Available
shares
|
43,364,799 | 43,364,799 | ||||||
Securities
convertible or exercisable into common stock shares:
|
||||||||
2001
Executive Officers Stock Option Plan
|
7,343,032 | 7,034,140 | ||||||
Advisory
Board Compensation
|
11,520,000 | |||||||
2004
Stock Purchase Agreement
|
1,463,336 | |||||||
Warrants
Related to 2004 Stock Purchase Agreement
|
1,463,336 | |||||||
Warrants
Issued for Services
|
1,010,000 | |||||||
Beneficial
Conversion Features
|
32,009,087 | 36,606,318 | ||||||
Warrants
Related to $1,025,000 of Subordinated Convertible
Debentures
|
2,159,088 | 2,795,454 | ||||||
41,511,207 | 61,892,584 |
|
1.
|
In
2001, the Company adopted the 2001 Executive Officers Stock Option Plan.
The plan has issued options to purchase 7,034,140 shares of Common Stock.
The original calculation included options to purchase 7,343,032 shares of
Common Stock, an overstatement of 308,892 shares of Common
Stock.
|
|
2.
|
On
October 1, 2004, the Company formed an advisory board consisting of four
members. In exchange for his services, each member was to receive $5,000
monthly from October 1, 2004 to February 22, 2007 (for a total of $576,000
to be paid to all members). Each member, in his sole
discretion, was entitled to convert some or all of the cash amount owed to
him into shares of Common Stock at the rate of $0.05 per
share. If all of the members of the advisory board converted
the total amount of cash compensation due to them into shares of Common
Stock, the Company would be required to issue 11,520,000 shares. The
accrued expense convertible into shares of Common Stock was not included
in the original calculation.
|
|
3.
|
Under
the terms of a 2004 Stock Purchase Agreement, the Company was to issue
1,463,336 shares of Common Stock to certain investors that had previously
remitted funds to the Company from February 9, 2004 to August 25, 2004.
The shares were not included in the original
calculation.
|
|
4.
|
Under
the terms of the 2004 Stock Purchase Agreement, the Company issued
warrants to purchase 1,463,336 shares of Common Stock to these investors
at an exercise price of $0.03 per share. The warrants were not included in
the original calculation.
|
|
5.
|
As
of September 30, 2007, the Company had Convertible Notes outstanding
totaling $1,861,000 that included embedded beneficial conversion features
that allowed for the conversion of the notes into shares of Common Stock
at rates between $0.01 and $0.22, and matured between June 2008 and
December 2008. The Convertible Notes accrue interest at rates between 8%
and 10%, and any accrued but unpaid interest is also convertible into
shares of Common Stock. The original calculation of the beneficial
conversion feature did not include accrued interest of $209,843 that could
be converted into 4,597,231 shares of Common Stock at
maturity.
|
|
6.
|
On
July 18, 2007 the Company completed an offering of $1,025,000 in principal
amount of Subordinated Convertible Debentures (the “Convertible
Debentures”) to a group of institutional and accredited investors. As part
of this offering the Company issued warrants to purchase 2,795,454 shares
of Common Stock at a price of $0.50 per share. The number of
warrant shares in the original calculation was
2,159,088.
|
As
Previously
Stated
|
2001
Executive
Officers
Option
Plan
|
Advisory
Board
Compensation
|
Warrants
Related to
2004
Stock
Purchase
Agreement
|
Beneficial
Conversion
Features
and
Beneficial
Conversion
Features
Discount
|
Warrants
Related to
$
1,025,000 of
Convertible
Bridge Notes
and
Warrant
Discount
|
Reclassifications
|
As
Restated
|
|||||||||||||||||||||||||
Balance
Sheet
|
||||||||||||||||||||||||||||||||
Accrued
expenses
|
$ | 1,687,673 | $ | 380,441 | $ | 2,068,114 | ||||||||||||||||||||||||||
Convertible
Notes, net
|
920,337 | (73,114 | ) | (70,751 | ) | 776,472 | ||||||||||||||||||||||||||
Warrant
liability
|
1,926,914 | 499,932 | 2,426,846 | |||||||||||||||||||||||||||||
Beneficial
conversion feature liability
|
576,000 | 1,430,812 | 2,006,812 | |||||||||||||||||||||||||||||
Additional
paid-in capital
|
14,712,527 | (2,271,879 | ) | (269,851 | ) | (45,663 | ) | (1,021,569 | ) | (340,583 | ) | 10,762,982 | ||||||||||||||||||||
Deficit
accumulated during
development stage
|
(17,300,147 | ) | 344,965 | (686,590 | ) | 45,663 | (336,129 | ) | (88,598 | ) | (18,020,836 | ) | ||||||||||||||||||||
Statement
of Operations for the year ended September 30, 2007
|
||||||||||||||||||||||||||||||||
General
and administrative
|
$ | 1,423,347 | $ | 153,354 | $ | 87,736 | $ | (618,712 | ) | $ | 1,045,725 | |||||||||||||||||||||
Research
and development
|
- | 526,466 | 526,466 | |||||||||||||||||||||||||||||
Interest
expense
|
(550,935 | ) | (336,129 | ) | (55,179 | ) | (942,243 | ) | ||||||||||||||||||||||||
Decrease
in warrant liability
|
- | 344,965 | 70,029 | 54,317 | 469,311 | |||||||||||||||||||||||||||
Increase
in beneficial conversion feature
|
(4,044 | ) | (4,044 | ) | ||||||||||||||||||||||||||||
Legal
settlement
|
- | (89,654 | ) | (89,654 | ) | |||||||||||||||||||||||||||
Income
tax expense
|
2,592 | 2,592 | ||||||||||||||||||||||||||||||
Basic
and diluted loss per share
|
0.02 | 0.02 | ||||||||||||||||||||||||||||||
Statement
of Cash Flows for the year ended September 30, 2007
|
||||||||||||||||||||||||||||||||
Net
loss
|
$ | (2,001,095 | ) | $ | 344,965 | $ | (157,398 | ) | $ | 70,029 | $ | (336,129 | ) | $ | (88,598 | ) | $ | (2,168,226 | ) | |||||||||||||
Other
|
(799,044 | ) | (799,044 | ) | ||||||||||||||||||||||||||||
Stock
based compensation expense-consultant
|
84,292 | 124,697 | 208,989 | |||||||||||||||||||||||||||||
Decrease
in warrant liability
|
- | (344,965 | ) | (70,029 | ) | (54,317 | ) | (469,311 | ) | |||||||||||||||||||||||
Increase
in beneficial conversion feature liaiblity
|
4,044 | 4,044 | ||||||||||||||||||||||||||||||
Accrued
expenses
|
566,278 | 895,044 | (15,376 | ) | 1,445,946 | |||||||||||||||||||||||||||
Accrual
of liquidating damages
|
- | 15,375 | 15,375 |
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING
AND FINANCIAL DISCLOSURE.
|
ITEM
9A(T).
|
CONTROLS
AND PROCEDURES.
|
|
·
|
Timely
filing of reporting information.
|
|
·
|
Review
of financial reporting information by personnel with sufficient
experience.
|
|
·
|
Proper
application of generally accepted accounting
principles.
|
ITEM
9B.
|
OTHER
INFORMATION.
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
|
Name
|
Age
|
Position
|
Director Since
|
James
J. Houtz
|
69
|
President
Chief Executive Officer and Director
|
1998
|
Rodney
Anderson
|
81
|
Interim
Chief Financial Officer and Director
|
2001
|
Marcus
Woods
|
61
|
Director
|
2008
|
John
Pavia
|
Director
|
2007
|
|
·
|
had
any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer, either at the time of
the bankruptcy or within two years prior to that
time,
|
|
·
|
been
convicted in a criminal proceeding and none of our directors or executive
officers is subject to a pending criminal
proceeding,
|
|
·
|
been
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities, futures, commodities or
banking activities, or
|
|
·
|
been
found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or
vacated.
|
Name
|
Fees Earned
or Paid in
Cash
|
Stock
Awards
|
Warrant/
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Non-Qualified
Deferred
Compensation
|
Other
|
Total
|
|||||||||||||||||||||
James
J. Houtz
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
Rodney
Anderson
|
- | - | 171,520 | - | - | - | 171,520 | (1) | ||||||||||||||||||||
Marcus
Woods
|
- | - | 51,582 | - | - | - | 51,582 | (2) | ||||||||||||||||||||
John
Pavia
|
- | - | 51,582 | - | - | - | 51,582 | (3) |
Name
and Title
|
Form
|
Transactions
|
||
John
Pavia, director
|
3/4
|
Mr.
Pavia was appointed to the board of directors on July 7,
2008. Mr. Pavia has not filed a form 3 disclosing his
securities holdings on the date of his appointment. Mr. Pavia
also failed to file a form 4 disclosing the grant of an option to purchase
500,000 shares of our common stock that was made on July 11,
2008.
|
Rodney
Anderson, Chief Financial Officer and director
|
4
|
Mr.
Anderson failed to file a form 4 disclosing the grant of an option to
purchase 1,000,000 shares of common stock that was made on December 13,
2007.
|
||
Marc
Woods, director
|
3/4
|
Mr.
Woods was appointed as a director on May 5, 2008. Mr. Woods has
not filed a form 3 disclosing his securities holdings on the date of his
appointment. Mr. Woods also failed to file a form 4 to disclose the grant
of an option to purchase 500,000 shares of common stock that
was made on July 11, 2008.
|
||
Dr.
John H. Foster, former director
|
4
|
Dr.
Foster failed to file a form 4 disclosing an option we granted to him on
February 21, 2008 for the purchase of 2,880,000 shares of our common
stock.
|
||
Dr.
Richard Laton, former director
|
4
|
Dr.
Laton failed to file a form 4 disclosing an option we granted to him on
February 21, 2008 for the purchase of 2,880,000 shares of our common
stock.
|
ITEM 11.
|
EXECUTIVE
COMPENSATION.
|
Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Incentive Plan
Compensation
|
Deferred
Compensation
|
Other
|
Total
|
|||||||||||||||||||||||||
James
J. Houtz
|
2008
|
$ | 186,242 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 22,641 | $ | 208,883 | |||||||||||||||||
Chief
Executive Officer
|
2007
|
172,446 | - | - | - | - | - | 20,582 | 193,028 | (1)(2) | ||||||||||||||||||||||||
President
|
||||||||||||||||||||||||||||||||||
Robert
McCray
|
2008
|
26,400 | - | - | 171,520 | - | - | - | 197,920 | (3)(4) | ||||||||||||||||||||||||
former
Chief Financial Officer
|
2007
|
151,200 | - | - | - | - | - | 151,200 | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||
Richard
Papalian
|
2008
|
- | - | - | 1,448,321 | - | - | - | 1,448,321 | (5) | ||||||||||||||||||||||||
former
Chief Executive Officer
|
2007
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Marcus
Woods
|
2008
|
35,000 | - | - | 51,582 | - | - | - | 86,582 | (6)(7) | ||||||||||||||||||||||||
former
Chief Financial Officer
|
2007
|
- | - | - | - | - | - | - | - |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
OPTION
AWARDS
|
STOCK
AWARDS
|
||||||||||||||||||||||||||||||||
Number of securities
underlying unexercised
options
|
Equity
Incentive
Plan
Awards:
Number of
Securities
underlying
unexercised
unearned
|
Option
exercise
|
Option
expiration
|
Number of
shares or
units of
stock that
have not
|
Market
value of
shares or
units of
stock that
have not
|
Equity
incentive
plan awards:
number of
unearned
shares, units
or other
rights that
have not
|
Equity
incentive
plan awards:
Market or
payout
value of
unearned
shares, units
or other
rights that
have not
|
||||||||||||||||||||||||||
Name
|
Exercisable
|
Unexercisable
|
options
|
price
|
date
|
vested
|
vested
|
vested
|
vested
|
||||||||||||||||||||||||
James
Houtz
|
6,171,000 | - | - | $ | 0.15 |
04/19/11
|
- | - | - | - | |||||||||||||||||||||||
Richard
Papalian
|
2,933,526 | 5,605,786 | (1) | - | 0.25 |
12/18/12
|
- | - | - | - | |||||||||||||||||||||||
Robert
McCray
|
1,000,000 | - | - | 0.25 |
12/12/12
|
- | - | - | - | ||||||||||||||||||||||||
Marcus
Woods
|
500,000 | - | - | 0.25 |
07/10/13
|
- | - | - | - |
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICAL OWNERS ANDMANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
|
Title
of Class of
Security
|
Name and Address
(1)
|
Number of
Shares of
Common
Stock
Beneficially
Owned
|
Percentage
of
Common
Stock
|
|||||||
Common
Stock
|
James
J. Houtz, Chief Executive Officer, President, director
|
6,250,167 | (2) | 3.26 | % | |||||
Common
Stock
|
Rodney
Anderson, Chief Financial Officer, director
|
1,300,000 | (3) | 0.68 | % | |||||
Common
Stock
|
John
Pavia, director
|
500,000 | (4) | 0.26 | % | |||||
Common
Stock
|
Marcus
Woods, director
|
500,000 | (4) | 0.26 | % |
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
|
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES.
|
2008
|
2007
|
|||||||
Fee
Category:
|
||||||||
Audit
fees
|
$ | 53,000 | $ | 72,250 | ||||
Tax
fees
|
- | - | ||||||
All
other fees
|
- | - | ||||||
$ | 53,000 | $ | 72,250 |
ITEM
15.
|
EXHIBITS.
|
No.
|
Description
|
|
3.1
|
Amended
and Restated Articles of Incorporation (1)
|
|
3.2
|
Amended
and Restated Bylaws (1)
|
10.1
|
Lease
between the Company and J. C. Brown Enterprises, dated February 19, 2007
(2)
|
|
10.2
|
Employment
Agreement, dated September 30, 2003, between the registrant and James J.
Houtz (2)*
|
|
10.3
|
Employment
Agreement, dated October 1, 2005 between the registrant and Robert E.
McCray (2)*
|
|
10.4
|
Form
of Securities Purchase Agreement, dated as of June 18, 2007, between the
registrant and certain investors (3)
|
|
10.5
|
Form
of Convertible Debenture, dated as of June 18, 2007, issued by the
registrant to certain investors. (3)
|
|
10.6
|
Form
of Registration Rights Agreement, dated as of June 18, 2007, between the
registrant and certain investors (3).
|
|
10.7
|
Form
of Warrant, dated as of June 18, 2007, issued by the registrant to certain
investors. (3)
|
|
10.8
|
Lease
between the registrant and Klein Investments Family
Limited Partnership, dated August 30, 2007 (4)
|
|
10.9
|
Share
Exchange Agreement, dated November 7, 2007, between the registrant and the
shareholders of RJ Metals, Inc. (4)
|
|
10.10
|
Termination
Agreement dated March 14, 2008 between the registrant and the shareholders
of RJ Metals, Inc. (6)*
|
|
10.11
|
Employment
Agreement, dated December 19, 2007 between the registrant and Richard H.
Papalian (5)*
|
|
10.12
|
Notice
of Grant of Stock Option to Richard H. Papalian (5)*
|
|
10.13
|
Stock
Option Agreement between the registrant and Richard H. Papalian
(5)*
|
|
10.14
|
Indemnification
Agreement between the registration and Richard H. Papalian
(5)*
|
|
10.15
|
Notice
of Grant of Stock Option to David Ross (7)*
|
|
10.16
|
Stock
Option Agreement between the registrant and David Ross
(7)*
|
|
10.17
|
Notice
of Grant of Stock Option to Rodney Anderson (7)*
|
|
10.18
|
Stock
Option Agreement between the registrant and Rodney Anderson
(7)*
|
|
10.19
|
Form
of Securities Purchase Agreement for 12% Convertible Debentures
(8)
|
|
10.20
|
Sionix
Corporation 12% Convertible Debenture due July 29, 2009
(8)
|
|
10.21
|
Form
of Common Stock Purchase Warrant dated July 29, 2008
(8)
|
|
10.23
|
Form
of Unit Offering Securities Purchase Agreement (9)
|
|
10.24
|
Form
of Common Stock Purchase Warrant (9)
|
|
10.25
|
Amended
and Restated Promissory Notes with Calico Capital Management LLC, BRAX
Capital LLC and Gene Salkin (10)
|
|
10.26
|
Second
Amended and Restated Convertible Promissory Notes dated March 17, 2008
with Calico Capital Management LLC, BRAX Capital LLC and Gene Salkin
(11)
|
|
10.27
|
Form
of Securities Purchase Agreement for 10% Debentures
(12)
|
|
10.28
|
Form
of Subordinated 10% Debenture (12)
|
|
10.29
|
Form
of Common Stock Purchase Warrant (12)
|
|
10.30
|
Consulting
Agreement dated February 21, 2008 between the registrant and John H.
Foster, Ph.D. (13)*
|
|
10.31
|
Notice
of Grant of Stock Option to John H. Foster (13)*
|
|
10.32
|
Stock
Option Agreement between the registrant and Dr. John H. Foster
(13)*
|
|
10.33
|
Consulting
Agreement dated February 21, 2008 between the registrant and Dr. W.
Richard Laton (13)*
|
|
10.34
|
Notice
of Grant of Stock Option (13)
|
|
10.35
|
Stock
Option Agreement between the registrant and Dr. W. Richard Laton
(13)*
|
|
10.36
|
Letter
Agreement dated October 14, 2008 between the registrant and RJ Metals Inc.
(7)
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of
2002.
|
SIONIX,
INC.
|
|
By:
|
/s/ James J. Houtz |
James
J. Houtz, Chief Executive Officer
|
|
By:
|
/s/ Rodney Anderson |
Rodney
Anderson, Chief Financial
Officer
|
Signature
|
Title
|
Date
|
||
/s/
James J. Houtz
|
Chief
Executive Officer,
|
January
13, 2009
|
||
James
J. Houtz
|
President
and director
|
|||
/s/ Rodney Anderson |
Interim
Chief Financial Officer
|
January
13, 2009
|
||
Rodney
Anderson
|
and
director
|
|||
/s/
John Pavia
|
Director
|
January
13, 2009
|
||
John
Pavia
|