----

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| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Nevada                                                        |   | 20-4907818                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or Other Jurisdiction ofIncorporation or Organization) |   | (I.R.S. EmployerIdentification No.) |

| Title of Each Class: |   | Name of Each Exchange on Which Registered: |
|----------------------|--------|--------------------------------------------|
|                 |   |                                       |
| None                 |   | Over the Counter (Bulletin Board)          |

| Large Accelerated Filer  ̈     |   | Accelerated Filer  ̈    |
|-------------------------------------------------------------|--------|--------------------------------------------|
| Non-Accelerated Filer  ̈       |   | Smaller Reporting Company þ           |

----

|                                                                                                                            |   | Page   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| PART I                                                                                                                          |   |   |
| Item 1.  Business                                                                                                     |   | 3      |
| Item 1A. Risk Factors                                                                                                           |   | 6      |
| Item 1B. Unresolved Staff Comments                                                                                              |   | 6      |
| Item 2.  Properties                                                                                                   |   | 6      |
| Item 3.  Legal Proceedings                                                                                            |   | 7      |
| Item 4.  (Removed and Reserved)                                                                                       |   | 7      |
|                                                                                                                            |   |   |
| PART II                                                                                                                         |   |   |
| Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |   | 7      |
| Item 6.  Selected Financial Data                                                                                      |   | 10     |
| Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations                        |   | 10     |
| Item 7A.  Quantitative and Qualitative Disclosures About Market Risk                                                  |   | 15     |
| Item 8.  Financial Statements and Supplementary Data                                                                  |   | 15     |
| Item 9  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure                          |   | 35     |
| Item 9A.  Controls and Procedures                                                                                     |   | 36     |
| Item 9B.  Other Information                                                                                           |   | 37     |
|                                                                                                                            |   |   |
| PART III                                                                                                                        |   |   |
| Item 10  Directors, Executive Officers and Corporate Governance                                                       |   | 37     |
| Item 11  Executive Compensation                                                                                       |   | 38     |
| Item 12  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |   | 41     |
| Item 13  Certain Relationships and Related Transactions, and Director Independence                                    |   | 41     |
| Item 14  Principal Accounting Fees and Services                                                                       |   | 42     |
|                                                                                                                            |   |   |
| PART IV                                                                                                                         |   |   |
| Item 15  Exhibits, Financial Statement Schedules                                                                      |   | 42     |
|                                                                                                                            |   |   |
| Signatures                                                                                                                      |   | 44     |

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|        |   |           |   | HIGH   |   |   | LOW    |   |
|-------------|--------|----------------|--------|--------|--------|--------|--------|--------|
|        |   |           |   |   |   |   |   |   |   |   |
| Fiscal 2010 |   | First Quarter  |   | $      | 0.31   |   |   |   | 0.21 |   |
|        |   | Second Quarter |   |   | 0.38   |   |   |   | 0.22 |   |
|        |   | Third Quarter  |   |   | 0.26   |   |   |   |  0.16 |   |
|        |   | Fourth Quarter |   |   | 0.21   |   |   |   | 0.13 |   |
|        |   |           |   |   |   |   |   |   |
|        |   |           |   | HIGH   |   |   | LOW    |   |
|        |   |           |   |   |   |   |   |   |   |   |
| Fiscal 2011 |   | First Quarter  |   | $      | 0.19   |   |   |   | 0.13 |   |
|        |   | Second Quarter |   |   | 0.15   |   |   |   | 0.10 |   |
|        |   | Third Quarter  |   |   | 0.15   |   |   |   |  0.09 |   |
|        |   | Fourth Quarter |   |   | 0.12   |   |   |   | 0.09 |   |

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|                                |   | For the Years Ended |       |   |   |   |       |     |   |
|-------------------------------------|--------|---------------------|------------|--------|--------|--------|------------|----------|--------|
|                                |   | June 30,            |       |   |   |   |       |     |   |
|                                |   | 2011                |       |   | 2010   |   |       | $ Change |   |   | % Change |   |
|                                |   |                |       |   |   |   |       |     |   |   |   |   |
| Revenue                             |   | $                   | 589,926    |   |   | $      | -          |     |   | $ | 589,926 |   |   |   | 100.0 | % |
| Cost of revenue                     |   |                | 91,144     |   |   |   | -          |     |   |   | 91,144 |   |   |   | 100.0 | % |
| Gross profit                        |   |                | 498,782    |   |   |   | -          |     |   |   | 498,782 |   |   |   | 100.0 | % |
| General and administrative expenses |   |                | 3,029,912  |   |   |   | 5,675,627  |     |   |   | (2,645,715 | ) |   |   | -46.6 | % |
| Research and development expenses   |   |                | 664,994    |   |   |   | 2,184,902  |     |   |   | (1,519,908 | ) |   |   | -69.6 | % |
| Total operating expenses            |   |                | 3,694,906  |   |   |   | 7,860,529  |     |   |   | (4,165,623 | ) |   |   | -53.0 | % |
| Loss from operations                |   |                | (3,196,124 | )      |   |   | (7,860,529 | )        |   |   | 4,664,405 |   |   |   | -59.3 | % |
| Interest expense and other          |   |                | (99,304    | )      |   |   | (335,933   | )        |   |   | 236,629 |   |   |   | -70.4 | % |
| Net loss                            |   | $                   | (3,295,428 | )      |   | $      | (8,196,462 | )        |   |   | 4,901,034 |   |   |   | -59.8 | % |
|                                |   |                |       |   |   |   |       |     |   |   |   |   |   |   |   |   |

----

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|                                                                                                                                                                                       |   | June 30, |        |   | June 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|--------|----------|--------|
|                                                                                                                                                                                       |   | 2011     |        |   | 2010     |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |
| ASSETS                                                                                                                                                                                     |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |
| Current assets:                                                                                                                                                                            |   |     |        |   |     |   |
| Cash and cash equivalents                                                                                                                                                                  |   | $        | 14,779      |   |     | $      | 270 |   |
| Inventory                                                                                                                                                                                  |   |     | 92,475      |   |     |   | - |   |
| Prepaid expenses and other current assets                                                                                                                                                  |   |     | 3,337       |   |     |   | 3,158 |   |
| Total current assets                                                                                                                                                                       |   |     | 110,591     |   |     |   | 3,428 |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |   |   |
| Property and equipment, net                                                                                                                                                                |   |     | 159,344     |   |     |   | 69,605 |   |
| Deferred costs                                                                                                                                                                             |   |     | -           |   |     |   | 71,683 |   |
| Patents, net                                                                                                                                                                               |   |     | 118,153     |   |     |   | 92,284 |   |
| Other assets                                                                                                                                                                               |   |     | 9,500       |   |     |   | 9,500 |   |
| Total assets                                                                                                                                                                               |   | $        | 397,588     |   |     | $      | 246,500 |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                      |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |   |   |
| Current liabilities:                                                                                                                                                                       |   |     |        |   |     |   |   |   |
| Bank overdraft                                                                                                                                                                             |   | $        | -           |   |     | $      | 2,747 |   |
| Accounts payable                                                                                                                                                                           |   |     | 143,949     |   |     |   | 160,179 |   |
| Accrued expenses                                                                                                                                                                           |   |     | 54,745      |   |     |   | 75,656 |   |
| Accrued payroll                                                                                                                                                                            |   |     | 149,316     |   |     |   | 83,051 |   |
| Advances                                                                                                                                                                                   |   |     | 36,533      |   |     |   | 17,262 |   |
| Deferred revenue                                                                                                                                                                           |   |     | 16,951      |   |     |   | 33,499 |   |
| Convertible notes payable, net of discounts                                                                                                                                                |   |     | 52,852      |   |     |   | - |   |
| Derivative liability                                                                                                                                                                       |   |     | 121,679     |   |     |   | - |   |
| Related party short-term loan                                                                                                                                                              |   |     | 15,750      |   |     |   | - |   |
| Short-term loan                                                                                                                                                                            |   |     | 60,000      |   |     |   | 109,000 |   |
| Bank loan                                                                                                                                                                                  |   |     | 486,110     |   |     |   | 524,750 |   |
| Total current liabilities                                                                                                                                                                  |   |     | 1,137,885   |   |     |   | 1,006,144 |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |   |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |   |   |
| Commitments and contingencies, Note 12                                                                                                                                                     |   |     |        |   |     |   |   |   |
|                                                                                                                                                                                       |   |     |        |   |     |   |   |   |
| Stockholders' deficit:                                                                                                                                                                     |   |     |        |   |     |   |   |   |
| Preferred stock, $0.001 par value, 10,000,000 shares authorized, 111,111 shares issued and outstanding as of June 30, 2011 and 2010, respectively                                          |   |     | 111         |   |     |   | 111 |   |
| Common stock, $0.001 par value, 1,000,000,000 shares authorized, 153,799,715, shares and 130,581,562 shares are issued and outstanding as of June 30, 2011 and June 30, 2010, respectively |   |     | 153,800     |   |     |   | 130,582 |   |
| Additional paid-in capital                                                                                                                                                                 |   |     | 15,954,280  |   |     |   | 12,656,723 |   |
| Deficit accumulated during the development stage                                                                                                                                           |   |     | (16,848,488 | )      |     |   | (13,547,060 | ) |
| Total stockholders' deficit                                                                                                                                                                |   |     | (740,297    | )      |     |   | (759,644 | ) |
| Total liabilities and stockholders' deficit                                                                                                                                                |   | $        | 397,588     |   |     | $      | 246,500 |   |

----

|                                                 |   |                |        |   |     |   |        | January 29, 2007, |   |
|------------------------------------------------------|--------|---------------------|-------------|--------|----------|--------|-------------|-------------------|--------|
|                                                 |   |                |        |   |     |   |        | Inception,        |   |
|                                                 |   | For the Years Ended |        |   | Through  |   |
|                                                 |   | June 30,            |        |   | June 30, |   |
|                                                 |   | 2011                |        |   | 2010     |   |        | 2011              |   |
|                                                 |   |                |        |   |     |   |        |              |   |
| Revenue                                              |   | $                   | 589,926     |   |     | $      | -           |              |   | $ | 589,926 |   |
| Cost of revenue                                      |   |                | 91,144      |   |     |   | -           |              |   |   | 91,144 |   |
| Gross profit                                         |   |                | 498,782     |   |     |   | -           |              |   |   | 498,782 |   |
| General and administrative expenses                  |   |                | 3,029,912   |   |     |   | 5,675,627   |              |   |   | 11,292,282 |   |
| Research and development expenses                    |   |                | 664,994     |   |     |   | 2,184,902   |              |   |   | 5,288,394 |   |
| Total operating expenses                             |   |                | 3,694,906   |   |     |   | 7,860,529   |              |   |   | 16,580,676 |   |
| Loss from operations                                 |   |                | (3,196,124  | )      |     |   | (7,860,529  | )                 |   |   | (16,081,894 | ) |
| Interest expense and other                           |   |                | (99,304     | )      |     |   | (335,933    | )                 |   |   | (587,769 | ) |
| Net loss                                             |   | $                   | (3,295,428  | )      |     | $      | (8,196,462  | )                 |   | $ | (16,669,663 | ) |
| Deemed dividends to preferred stockholders           |   |                | (6,000      | )      |     |   | (6,000      | )                 |   |   | (178,825 | ) |
| Net loss available to common stockholders            |   | $                   | (3,301,428  | )      |     | $      | (8,202,462  | )                 |   | $ | (16,848,488 | ) |
|                                                 |   |                |        |   |     |   |        |              |   |   |   |   |
| Net loss available to common shareholders per share: |   |                |        |   |     |   |        |              |   |   |   |   |
| Basic and Diluted                                    |   | $                   | (0.02       | )      |     | $      | (0.07       | )                 |   |   |   |   |
|                                                 |   |                |        |   |     |   |        |              |   |   |   |   |
| Weighted average shares outstanding:                 |   |                |        |   |     |   |        |              |   |   |   |   |
| Basic and Diluted                                    |   |                | 139,150,615 |   |     |   | 114,739,605 |              |   |   |   |   |

----

|                                                                              |   |               |    |   |         |   |   |               |   |   |        |   |   |    |   |   | Deficit     |   |      |   |   |
|----------------------------------------------------------------------------------------|--------|--------------------|---------|--------|--------------|--------|--------|--------------------|--------|--------|-------------|--------|--------|---------|--------|--------|-------------|--------|-----------|--------|--------|
|                                                                                   |   |               |    |   |         |   |   |               |   |   |        |   |   |    |   |   | Accumulated |   |      |   |   |
|                                                                                   |   |               |    |   |         |   |   |               |   |   |        |   |   |    |   |   | During the  |   |      |   |   |
|                                                                                   |   | Series A Preferred |    |   | Common Stock |   |   | Additional Paid-in |   |   | Development |   |   |    |   |
|                                                                                   |   | Shares             |    |   | Amount       |   |   | Shares             |   |   | Amount      |   |   | Capital |   |   | Stage       |   |      | Total  |   |
|                                                                                   |   |               |    |   |         |   |   |               |   |   |        |   |   |    |   |   |        |   |      |   |   |
| Balance at inception, January 29, 2007                                                 |   |               | -       |   |         | $      | -      |               |   |   | -           |   |   | $       | -      |   |        | $      | -         |   |   | $ | - |   |   | $ | - |   |
|                                                                                   |   |               |    |   |         |   |   |               |   |   |        |   |   |    |   |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Common stock issued as payment for services on January 29, 2007                        |   |               |    |   |         |   |   |               |   |   | 42,993,630  |   |   |    | 42,994 |   |        |   | (21,994   | )      |   |   |   |   |   |   | 21,000 |   |
| Common stock issued as payment for services on March 31, 2008                          |   |               |    |   |         |   |   |               |   |   | 6,428,904   |   |   |    | 6,429  |   |        |   | 1,123,971 |   |   |   |   |   |   |   | 1,130,400 |   |
| Common stock issued as payment for services on April 16, 2008                          |   |               |    |   |         |   |   |               |   |   | 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                           |   |               |    |   |         |   |   |               |   |   | 3,787,320   |   |   |    | 3,788  |   |        |   | 662,212   |   |   |   |   |   |   |   | 666,000 |   |
| Common stock sold for cash on June 30, 2008                                            |   |               |    |   |         |   |   |               |   |   | 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        |   |               |    |   |         |   |   |               |   |   | 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                                             |   |               |    |   |         |   |   |               |   |   | 499,998     |   |   |    | 500    |   |        |   | 99,500    |   |   |   |   |   |   |   | 100,000 |   |
| Common stock sold for cash on June 22, 2009                                            |   |               |    |   |         |   |   |               |   |   | 300,000     |   |   |    | 300    |   |        |   | 49,700    |   |   |   |   |   |   |   | 50,000 |   |
| Common stock sold for cash on June 30, 2009                                            |   |               |    |   |         |   |   |               |   |   | 300,000     |   |   |    | 300    |   |        |   | 49,700    |   |   |   |   |   |   |   | 50,000 |   |
| Bio common stock outstanding before reverse merger on October 3, 2008                  |   |               |    |   |         |   |   |               |   |   | 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                          |   |               |    |   |         |   |   |               |   |   | 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                            |   |               |    |   |         |   |   |               |   |   | 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 issued as payment for services on October 1, 2010                    |   |               |    |   |         |   |   |               |   |   | 473,517     |   |   |    | 474     |   |        |   | 70,554     |   |   |   |   |   |   |   | 71,028 |   |
| Common stock issued as payment for services on November 1, 2010                   |   |               |    |   |         |   |   |               |   |   | 1,020,482   |   |   |    | 1,020   |   |        |   | 131,643    |   |   |   |   |   |   |   | 132,663 |   |
| Common stock issued as payment for services on November 22, 2010                  |   |               |    |   |         |   |   |               |   |   | 100,000     |   |   |    | 100     |   |        |   | 11,900     |   |   |   |   |   |   |   | 12,000 |   |
| Common stock issued as payment for services on December 7, 2010                   |   |               |    |   |         |   |   |               |   |   | 459,056     |   |   |    | 459     |   |        |   | 50,037     |   |   |   |   |   |   |   | 50,496 |   |
| Common stock issued as payment for services on January 10, 2011                   |   |               |    |   |         |   |   |               |   |   | 116,916     |   |   |    | 117     |   |        |   | 13,913     |   |   |   |   |   |   |   | 14,030 |   |
| Common stock issued as payment for services on February 14, 2011                  |   |               |    |   |         |   |   |               |   |   | 1,264,883   |   |   |    | 1,265   |   |        |   | 137,872    |   |   |   |   |   |   |   | 139,137 |   |
| Common stock issued as payment for services on March 10, 2011                     |   |               |    |   |         |   |   |               |   |   | 219,767     |   |   |    | 220     |   |        |   | 21,757     |   |   |   |   |   |   |   | 21,977 |   |
| Common stock issued as payment for services on March 22, 2011                     |   |               |    |   |         |   |   |               |   |   | 510,000     |   |   |    | 510     |   |        |   | 50,490     |   |   |   |   |   |   |   | 51,000 |   |
| Common stock issued as payment for services on April 1, 2011                      |   |               |    |   |         |   |   |               |   |   | 816,145     |   |   |    | 816     |   |        |   | 80,799     |   |   |   |   |   |   |   | 81,615 |   |
| Common stock issued as payment for services on May 17, 2011                       |   |               |    |   |         |   |   |               |   |   | 276,203     |   |   |    | 276     |   |        |   | 27,343     |   |   |   |   |   |   |   | 27,619 |   |
| Common stock issued as payment for services on June 13, 2011                      |   |               |    |   |         |   |   |               |   |   | 333,924     |   |   |    | 334     |   |        |   | 33,058     |   |   |   |   |   |   |   | 33,392 |   |
| Common stock issued as payment for services on June 14, 2011                      |   |               |    |   |         |   |   |               |   |   | 8,096,990   |   |   |    | 8,097   |   |        |   | 689,603    |   |   |   |   |   |   |   | 697,700 |   |
| Common stock sold for cash on August 3, 2010                                      |   |               |    |   |         |   |   |               |   |   | 593,211     |   |   |    | 593     |   |        |   | 58,728     |   |   |   |   |   |   |   | 59,321 |   |
| Common stock sold for cash on October 1, 2010                                     |   |               |    |   |         |   |   |               |   |   | 661,000     |   |   |    | 661     |   |        |   | 78,659     |   |   |   |   |   |   |   | 79,320 |   |
| Common stock sold for cash on November 1, 2010                                    |   |               |    |   |         |   |   |               |   |   | 1,400,000   |   |   |    | 1,400   |   |        |   | 142,600    |   |   |   |   |   |   |   | 144,000 |   |
| Common stock sold for cash on November 22, 2010                                   |   |               |    |   |         |   |   |               |   |   | 350,000     |   |   |    | 350     |   |        |   | 41,650     |   |   |   |   |   |   |   | 42,000 |   |
| Common stock sold for cash on January 10, 2011                                    |   |               |    |   |         |   |   |               |   |   | 110,000     |   |   |    | 110     |   |        |   | 11,990     |   |   |   |   |   |   |   | 12,100 |   |
| Common stock sold for cash on February 14, 2011                                   |   |               |    |   |         |   |   |               |   |   | 1,920,000   |   |   |    | 1,920   |   |        |   | 190,080    |   |   |   |   |   |   |   | 192,000 |   |
| Common stock sold for cash on March 2, 2011                                       |   |               |    |   |         |   |   |               |   |   | 290,000     |   |   |    | 290     |   |        |   | 28,710     |   |   |   |   |   |   |   | 29,000 |   |
| Common stock sold for cash on March 10, 2011                                      |   |               |    |   |         |   |   |               |   |   | 176,923     |   |   |    | 177     |   |        |   | 14,823     |   |   |   |   |   |   |   | 15,000 |   |
| Common stock issued as payment of short-term loan into stock on February 14, 2011 |   |               |    |   |         |   |   |               |   |   | 1,000,000   |   |   |    | 1,000   |   |        |   | 99,000     |   |   |   |   |   |   |   | 100,000 |   |
| Warrants issued as payment for services on November 22, 2010                      |   |               |    |   |         |   |   |               |   |   |        |   |   |    |    |   |        |   | 46,735     |   |   |   |   |   |   |   | 46,735 |   |
| Common stock issued for conversion of note payable on February 8, 2011            |   |               |    |   |         |   |   |               |   |   | 30,769      |   |   |    | 31      |   |        |   | 1,967      |   |   |   |   |   |   |   | 1,998 |   |
| Common stock issued for conversion of note payable on February 11, 2011           |   |               |    |   |         |   |   |               |   |   | 15,385      |   |   |    | 15      |   |        |   | 985        |   |   |   |   |   |   |   | 1,000 |   |
| Common stock issued for conversion of note payable on February 16, 2011           |   |               |    |   |         |   |   |               |   |   | 26,154      |   |   |    | 26      |   |        |   | 1,674      |   |   |   |   |   |   |   | 1,700 |   |
| Common stock issued for conversion of note payable on February 17, 2011           |   |               |    |   |         |   |   |               |   |   | 15,385      |   |   |    | 15      |   |        |   | 985        |   |   |   |   |   |   |   | 1,000 |   |
| Common stock issued for conversion of note payable on February 22, 2011           |   |               |    |   |         |   |   |               |   |   | 21,927      |   |   |    | 22      |   |        |   | 1,475      |   |   |   |   |   |   |   | 1,497 |   |
| Common stock issued for conversion of note payable on February 28, 2011           |   |               |    |   |         |   |   |               |   |   | 55,749      |   |   |    | 56      |   |        |   | 3,568      |   |   |   |   |   |   |   | 3,624 |   |
| Common stock issued for conversion of note payable on March 7, 2011               |   |               |    |   |         |   |   |               |   |   | 24,796      |   |   |    | 25      |   |        |   | 1,506      |   |   |   |   |   |   |   | 1,531 |   |
| Common stock issued for conversion of note payable on March 8, 2011               |   |               |    |   |         |   |   |               |   |   | 18,100      |   |   |    | 18      |   |        |   | 982        |   |   |   |   |   |   |   | 1,000 |   |
| Common stock issued for conversion of note payable on March 14, 2011              |   |               |    |   |         |   |   |               |   |   | 109,783     |   |   |    | 110     |   |        |   | 5,956      |   |   |   |   |   |   |   | 6,066 |   |
| Common stock issued for conversion of note payable on March 28, 2011              |   |               |    |   |         |   |   |               |   |   | 51,282      |   |   |    | 51      |   |        |   | 2,949      |   |   |   |   |   |   |   | 3,000 |   |
| Common stock issued for conversion of note payable on March 30, 2011              |   |               |    |   |         |   |   |               |   |   | 59,829      |   |   |    | 60      |   |        |   | 3,440      |   |   |   |   |   |   |   | 3,500 |   |
| Common stock issued for conversion of note payable on April 4, 2011               |   |               |    |   |         |   |   |               |   |   | 59,829      |   |   |    | 60      |   |        |   | 3,440      |   |   |   |   |   |   |   | 3,500 |   |
| Common stock issued for conversion of note payable on April 5, 2011               |   |               |    |   |         |   |   |               |   |   | 24,376      |   |   |    | 24      |   |        |   | 1,402      |   |   |   |   |   |   |   | 1,426 |   |
| Amortization of restricted stock issued for services                              |   |               |    |   |         |   |   |               |   |   |        |   |   |    |    |   |        |   | 786,275    |   |   |   |   |   |   |   | 786,275 |   |
| Dividends on preferred stock                                                      |   |               |    |   |         |   |   |               |   |   |        |   |   |    |    |   |        |   |       |   |   |   | (6,000 | ) |   |   | (6,000 | ) |
| Net loss                                                                          |   |               |    |   |         |   |   |               |   |   |        |   |   |    |    |   |        |   |       |   |   |   | (3,295,428 | ) |   |   | (3,295,428 | ) |
|                                                                              |   |               |    |   |         |   |   |               |   |   |        |   |   |    |    |   |        |   |       |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011                                                          |   |               | 111,111 |   |         | $      | 111    |               |   |   | 153,799,715 |   |   | $       | 153,800 |   |        | $      | 15,954,280 |   |   | $ | (16,848,488 | ) |   | $ | (740,297 | ) |
|                                                                              |   |               |    |   |         |   |   |               |   |   |        |   |   |    |    |   |        |   |       |   |   |   |   |   |   |   |   |   |
| See accompanying notes, which are an integral part of these financial statements  |   |

----

|                                                                         |   |                                |       |   | January 29, 2007, |   |
|------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------|-----------------------------|--------|
|                                                                         |   |                                |       |   | Inception,                  |   |
|                                                                         |   |                                |       |   | Through                     |   |
|                                                                         |   | Years Ended June 30, |       |   | June 30,               |   |
|                                                                         |   | 2011                                |       |   | 2010                        |   |   | 2011 |   |
|                                                                         |   |                                |       |   |                        |   |   |   |   |
| Operating activities:                                                        |   |                                |       |   |                        |   |   |   |   |
| Net loss                                                                     |   | $                                   | (3,295,428 | )      |                        | $      | (8,196,462 | ) |   | $ | (16,669,663 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:  |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Depreciation and amortization                                                |   |                                | 21,123     |   |                        |   | 16,968 |   |   |   | 50,710 |   |
| Warrants issued in connection with convertible notes payable                 |   |                                | -          |   |                        |   | - |   |   |   | 49,245 |   |
| Beneficial conversion feature on convertible notes payable                   |   |                                | 34,724     |   |                        |   | 286,738 |   |   |   | 321,462 |   |
| Common stock issued for services                                             |   |                                | 2,570,457  |   |                        |   | 6,475,727 |   |   |   | 11,530,601 |   |
| Stock option compensation                                                    |   |                                | -          |   |                        |   | - |   |   |   | 307,512 |   |
| Warrants issued for services                                                 |   |                                | 46,735     |   |                        |   | 144,581 |   |   |   | 337,359 |   |
| Change in value of derivatives                                               |   |                                | 19,197     |   |                        |   | - |   |   |   | 19,197 |   |
| Equipment write-down                                                         |   |                                | 5,399      |   |                        |   | - |   |   |   | 5,399 |   |
| Patent write-down                                                            |   |                                | 13,500     |   |                        |   | - |   |   |   | 13,500 |   |
| Effect of changes in:                                                        |   |                                |       |   |                        |   |   |   |   |   | - |   |
| Inventory                                                                    |   |                                | (53,056    | )      |                        |   | - |   |   |   | (53,056 | ) |
| Prepaid expenses and other current assets                                    |   |                                | (179       | )      |                        |   | (817 | ) |   |   | (3,337 | ) |
| Deposits                                                                     |   |                                | -          |   |                        |   | - |   |   |   | (9,500 | ) |
| Bank overdraft                                                               |   |                                | (2,747     | )      |                        |   | 2,747 |   |   |   | - |   |
| Accounts payable and accrued expenses                                        |   |                                | (42,900    | )      |                        |   | 73,413 |   |   |   | 197,394 |   |
| Accrued payroll                                                              |   |                                | 66,264     |   |                        |   | 146,583 |   |   |   | 428,237 |   |
| Advances                                                                     |   |                                | 19,271     |   |                        |   | 17,262 |   |   |   | 36,533 |   |
| Deferred revenue                                                             |   |                                | (16,548    | )      |                        |   | 7,499 |   |   |   | 16,951 |   |
| Net cash used in operating activities                                        |   |                                | (614,188   | )      |                        |   | (1,025,761 | ) |   |   | (3,421,456 | ) |
|                                                                         |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Investing activities:                                                        |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Purchase of property and equipment                                           |   |                                | -          |   |                        |   | (23,820 | ) |   |   | (99,192 | ) |
| Payments for systems                                                         |   |                                | (81,038    | )      |                        |   | (71,683 | ) |   |   | (152,721 | ) |
| Payments for patents                                                         |   |                                | (42,328    | )      |                        |   | (92,284 | ) |   |   | (134,612 | ) |
| Net cash used in investing activities                                        |   |                                | (123,366   | )      |                        |   | (187,787 | ) |   |   | (386,525 | ) |
|                                                                         |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Financing activities:                                                        |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Proceeds from (payments on) bank loan borrowings                             |   |                                | (38,640    | )      |                        |   | (112,167 | ) |   |   | 486,110 |   |
| Proceeds from sales of preferred stock                                       |   |                                | -          |   |                        |   | - |   |   |   | 725,000 |   |
| Proceeds from convertible notes payable                                      |   |                                | 151,212    |   |                        |   | - |   |   |   | 386,212 |   |
| Payments on convertible notes payable                                        |   |                                | -          |   |                        |   | (20,000 | ) |   |   | (55,000 | ) |
| Proceeds from sale of common stock                                           |   |                                | 572,741    |   |                        |   | 1,231,947 |   |   |   | 2,104,688 |   |
| Proceeds from related party short-term loans                                 |   |                                | 15,750     |   |                        |   | - |   |   |   | 15,750 |   |
| Proceeds from short-term loans                                               |   |                                | 75,000     |   |                        |   | 109,000 |   |   |   | 184,000 |   |
| Payments on short-term loans                                                 |   |                                | (24,000    | )      |                        |   | - |   |   |   | (24,000 | ) |
| Net cash provided by financing activities                                    |   |                                | 752,063    |   |                        |   | 1,208,780 |   |   |   | 3,822,760 |   |
| Net increase (decrease) in cash                                              |   |                                | 14,509     |   |                        |   | (4,768 | ) |   |   | 14,779 |   |
| Cash, beginning of period                                                    |   |                                | 270        |   |                        |   | 5,038 |   |   |   | - |   |
| Cash, end of period                                                          |   | $                                   | 14,779     |   |                        | $      | 270 |   |   | $ | 14,779 |   |
|                                                                         |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                           |   |                                |       |   |                        |   |   |   |   |   |   |   |
| Cash paid for interest                                                       |   | $                                   | 42,610     |   |                        | $      | 47,695 |   |   | $ | 193,592 |   |
| Cash paid for income taxes                                                   |   | $                                   | 1,600      |   |                        | $      | 1,659 |   |   | $ | 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 |   |   | $ | 278,922 |   |
| Conversion of short-term loan to common stock                                |   | $                                   | 100,000    |   |                        | $      | - |   |   | $ | 100,000 |   |
| Accrued dividends issued to preferred stockholders                           |   | $                                   | 6,000      |   |                        | $      | 6,000 |   |   | $ | 13,733 |   |
| Conversion of convertible notes payable and accrued interest to common stock |   | $                                   | 30,843     |   |                        | $      | 190,803 |   |   | $ | 221,646 |   |

----

----

|   | · | Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2 – Valuations based on 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 data for substantially the full term of the assets or liabilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   | Fair Value         |    |   | Fair Value Measurements at June 30, 2011 |   |
|----------------------------|--------|-------------------------|---------|--------|------------------------------------------------------------------------|--------|
|                       |   | as of              |    |   | Using Fair Value Heirarchy                              |   |
| Financial Instruments |   | June 30, 2011 |    |   | Level 1                                                           |   |   | Level 2 |   |   | Level 3 |   |
|                       |   |                    |    |   |                                                                   |   |   |   |   |   |   |   |
| Liabilities:               |   |                    |    |   |                                                                   |   |   |   |   |   |   |   |
| Derivative liability       |   |                    | 121,679 |   |                                                                   |   | - |   |   |   | - |   |   |   | 121,679 |   |
| Total                      |   | $                       | 121,679 |   |                                                                   | $      | - |   |   | $ |  - |   |   | $ |  121,679 |   |

| Fair Value Measurements Using Significant                   |   |
|-------------------------------------------------------------|--------|
| Unobservable Inputs (Level 3)                               |   |
|                                                        |   |   |   |
|                                                        |   | Derivative Liability |   |
|                                                        |   |   |   |
| Balance at June 30, 2010                                    |   | $ | - |   |
| Total gains (losses) included in interest expense and other |   |   | (19,197 | ) |
| Issuances and settlements                                   |   |   | 140,876 |   |
| Balance at June 30, 2011                                    |   | $ | 121,679 |   |

----

| Leasehold improvements |   | Shorter of life of asset or lease |
|------------------------|--------|-----------------------------------|
| Furniture              |   | 5-7 Years                         |
| Office equipment       |   | 5-7 Years                         |
| Equipment              |   | 4-7 Years                         |

----

| 2012       |   | $      | 8,621   |   |
|------------|--------|--------|---------|--------|
| 2013       |   |   | 14,251  |   |
| 2014       |   |   | 20,611  |   |
| 2015       |   |   | 21,545  |   |
| 2016       |   |   | 15,883  |   |
| Thereafter |   |   | 37,242  |   |
| Total      |   | $      | 118,153 |   |

|                    |   | Year Ended |   |   | Year Ended |   |
|-------------------------|--------|-----------------|--------|--------|-----------------|--------|
|                    |   | June 30,   |   |   | June 30,   |   |
|                    |   | 2011            |   |   | 2010            |   |
|                    |   |            |   |   |            |   |
| Expected life in years  |   |            | 3.0    |   |            |   | 2 - 3 |   |
| Stock price volatility  |   |            | 132.1% |   |            |   | 132.1% |   |
| Risk free interest rate |   |            | 0.72%  |   |            |   | 0.91% - 1.60% |   |
| Expected dividends      |   | None            |   |   | None            |   |
| Forfeiture rate         |   |            | 0%     |   |            |   | 0% |   |

----

----

|                                            |   | June 30, |    |   | June 30, |   |
|-------------------------------------------------|--------|---------------|---------|--------|---------------|--------|
|                                            |   | 2011          |    |   | 2010          |   |
|                                            |   |          |    |   |          |   |
| Leasehold  improvement                |   | $             | 2,475   |   |          | $      | 2,475 |   |
| Furniture                                       |   |          | 26,837  |   |          |   | 26,837 |   |
| Office equipment                                |   |          | 1,500   |   |          |   | 1,500 |   |
| Equipment                                       |   |          | 68,380  |   |          |   | 68,380 |   |
| Systems                                         |   |          | 112,474 |   |          |   | - |   |
|                                            |   |          |    |   |          |   |   |   |
|                                            |   |          | 211,666 |   |          |   | 99,192 |   |
|                                            |   |          |    |   |          |   |   |   |
|                                            |   |          |    |   |          |   |   |   |
| Less: accumulated depreciation and amortization |   |          | (52,322 | )      |          |   | (29,587 | ) |
|                                            |   |          |    |   |          |   |   |   |
|                                            |   | $             | 159,344 |   |          | $      | 69,605 |   |

----

|                    |   | Year Ended |         |
|-------------------------|--------|-----------------|--------------|
|                    |   | June 30,   |         |
|                    |   | 2011            |         |
|                    |   |            |         |
| Expected life in years  |   |            | 0.4 - 1.0    |   |
| Stock price volatility  |   |            | 0.0%         |   |
| Risk free interest rate |   |            | 0.1% - 0.27% |   |
| Expected dividends      |   | None            |         |
| Forfeiture rate         |   |            | 0%           |   |

----

----

----

|                                                |   |    |      |   |      |   |   | Weighted-   |   |
|-----------------------------------------------------|--------|---------|-----------|--------|-----------|--------|--------|-------------|--------|
|                                                |   |    |      |   |      |   |   | Average     |   |
|                                                |   |    |      |   | Weighted- |   |   | Remaining   |   |
|                                                |   |    |      |   | Average   |   |   | Contractual |   |
|                                                |   |    |      |   | Exercise  |   |   | Life        |   |
|                                                |   | Options |      |   | Price     |   |   | (Years)     |   |
|                                                |   |    |      |   |      |   |   |        |   |
| Outstanding at January 29, 2007 (date of inception) |   |    | -         |   |      | $      | -      |        |   |   | - |   |
| Granted                                             |   |    | 2,137,612 |   |      |   | 0.57   |        |   |   |   |   |
| Exercised                                           |   |    | -         |   |      |   | -      |        |   |   |   |   |
| Outstanding at June 30, 2009                        |   |    | 2,137,612 |   |      |   | 0.57   |        |   |   | 6.68 |   |
| Granted                                             |   |    | -         |   |      |   | -      |        |   |   |   |   |
| Forfeited                                           |   |    | (150,000  | )      |      |   | 0.67   |        |   |   |   |   |
| Exercised                                           |   |    | -         |   |      |   | -      |        |   |   |   |   |
| Outstanding at June 30, 2010                        |   |    | 1,987,612 |   |      |   | 0.56   |        |   |   | 6.16 |   |
| Granted                                             |   |    | -         |   |      |   | -      |        |   |   |   |   |
| Forfeited                                           |   |    | (176,655  | )      |      |   | 0.67   |        |   |   |   |   |
| Exercised                                           |   |    | -         |   |      |   | -      |        |   |   |   |   |
| Outstanding at June 30, 2011                        |   |    | 1,810,957 |   |      |   | 0.55   |        |   |   | 5.73 |   |
|                                                |   |    |      |   |      |   |   |        |   |   |   |   |
| Vested and expected to vest at June 30, 2011        |   |    | 1,810,957 |   |      |   | 0.55   |        |   |   | 5.73 |   |
|                                                |   |    |      |   |      |   |   |        |   |   |   |   |
| Exercisable at June 30, 2011                        |   |    | 1,810,957 |   |      |   | 0.55   |        |   |   | 5.73 |   |

----

|     |   |   | 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   |                     |   |   | 5.31 |   |   | $ | 0.33 |   |   |   | 637,297 |   |   | $ | 0.33 |   |
|     | 0.67   |   |                     |   | 1,173,660 |                     |   |   | 5.96 |   |   |   | 0.67 |   |   |   | 1,173,660 |   |   |   | 0.67 |   |
|     |   |   |                     |   | 1,810,957 |                     |   |   |   |   |   |   |   |   |   |   | 1,810,957 |   |   |   |   |   |

|                                                |   |     |       |   |      |   |   | Weighted-   |   |
|-----------------------------------------------------|--------|----------|------------|--------|-----------|--------|--------|-------------|--------|
|                                                |   |     |       |   |      |   |   | Average     |   |
|                                                |   |     |       |   | Weighted- |   |   | Remaining   |   |
|                                                |   |     |       |   | Average   |   |   | Contractual |   |
|                                                |   |     |       |   | Exercise  |   |   | Life        |   |
|                                                |   | Warrants |       |   | Price     |   |   | (Years)     |   |
|                                                |   |     |       |   |      |   |   |        |   |
| Outstanding at January 29, 2007 (date of inception) |   |     | -          |   |      | $      | -      |        |   |   | - |   |
| Granted                                             |   |     | 409,440    |   |      |   | 0.37   |        |   |   |   |   |
| Exercised                                           |   |     | -          |   |      |   | -      |        |   |   | - |   |
| Outstanding at June 30, 2008                        |   |     | 409,440    |   |      |   | 0.37   |        |   |   | 2.75 |   |
| Granted                                             |   |     | 4,123,263  |   |      |   | 0.46   |        |   |   |   |   |
| Exercised                                           |   |     | -          |   |      |   | -      |        |   |   |   |   |
| Outstanding at June 30, 2009                        |   |     | 4,532,703  |   |      |   | 0.45   |        |   |   | 3.18 |   |
| Granted                                             |   |     | 8,012,915  |   |      |   | 0.40   |        |   |   |   |   |
| Exercised                                           |   |     | -          |   |      |   | -      |        |   |   |   |   |
| Outstanding at June 30, 2010                        |   |     | 12,545,618 |   |      |   | 0.42   |        |   |   | 2.66 |   |
| Granted                                             |   |     | 600,000    |   |      |   | 0.25   |        |   |   |   |   |
| Exercised                                           |   |     | -          |   |      |   | -      |        |   |   |   |   |
| Outstanding at June 30, 2011                        |   |     | 13,145,618 |   |      |   | 0.41   |        |   |   | 1.69 |   |
|                                                |   |     |       |   |      |   |   |        |   |   |   |   |
| Vested and expected to vest at June 30, 2011        |   |     | 13,145,618 |   |      |   | 0.41   |        |   |   | 1.69 |   |
|                                                |   |     |       |   |      |   |   |        |   |   |   |   |
| Exercisable at June 30, 2011                        |   |     | 13,145,618 |   |      |   | 0.41   |        |   |   | 1.69 |   |

----

|     |        |   |  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 |   |                       |   | 2,939,374  |                 |   |   | 1.77 |   |   | $ | 0.29 |   |   |   | 2,939,374 |   |   | $ | 0.29 |   |
|     | 0.42 - 0.58 |   |                       |   | 10,206,244 |                 |   |   | 1.67 |   |   |   | 0.45 |   |   |   | 10,206,244 |   |   |   | 0.45 |   |
|     |        |   |                       |   | 13,145,618 |                 |   |   |   |   |   |   |   |   |   |   | 13,145,618 |   |   |   |   |   |

|                                             |   |          |   |   |          |   |
|--------------------------------------------------|--------|---------------|--------|--------|---------------|--------|
|                                             |   | Year Ended    |   |   | Year Ended    |   |
|                                             |   | June 30, 2011 |   |   | June 30, 2010 |   |
|                                             |   |          |   |   |          |   |
| Computed tax provision at statutory Federal rate |   |          | 34.0   | %      |          |   | 34.0 | % |
| Increase (decrease) in taxes resulting from:     |   |          |   |   |          |   |   |   |
| State taxes, net of Federal income tax benefit   |   |          | 3.2    | %      |          |   | 5.8 | % |
| Restricted stock compensation                    |   |          | -15.5  | %      |          |   | 0.0 | % |
| Change in valuation allowance                    |   |          | -21.7  | %      |          |   | -39.8 | % |
|                                             |   |          |   |   |          |   |   |   |
| Effective income tax rate                        |   |          | 0.0    | %      |          |   | 0.0 | % |

|                          |   | Year Ended    |       |   | Year Ended    |   |
|-------------------------------|--------|---------------|------------|--------|---------------|--------|
|                          |   | June 30, 2011 |       |   | June 30, 2010 |   |
|                          |   |          |       |   |          |   |
| Net operating loss            |   | $             | 2,830,000  |   |          | $      | 2,146,000 |   |
| Restricted stock compensation |   |          | 3,290,000  |   |          |   | 2,369,000 |   |
| Other                         |   |          | 159,000    |   |          |   | 831,000 |   |
| Valualtion allowance          |   |          | (6,279,000 | )      |          |   | (5,346,000 | ) |
|                          |   |          |       |   |          |   |   |   |
| Net deferred tax asset        |   | $             | -          |   |          | $      | - |   |

----

----

| Year Ended      |   |   |         |
|---------------------------|--------|--------|--------------|
|  June 30,  |   |   |         |
|                      |   |   |         |
| 2012                      |   |   | 30,646       |   |
|  Total               |   | $      |  30,646 |   |

----

----

| Person               |    | Age    |    | Position                      |
|----------------------|--------------|--------|--------------|-------------------------------|
|                 |         |   |         |                          |
| Mr. Todd Zelek       |         | 54     |         | CEO, Secretary & Director |
| Mr. Igor Gorodnitsky |         | 51     |         | President & Director      |
| Mr. R.L. Hartshorn   |         | 63     |         | CFO and Director              |
|                 |         |   |         |                          |
| James Fuller         |         | 70     |         | Director                      |
| Varvara Grichko      |         | 54     |         | Director                      |

----

|                     |   |   |   |    |   |            |   |    |   |   |   | Non-Equity          |   |   | Non-Qualified |   |   | All          |   |   |   |   |
|--------------------------|--------|--------|--------|---------|--------|-----------------|--------|---------|--------|--------|--------|---------------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|
|                     |   |   |   |    |   | Stock           |   |    | Option |   |   | Incentive Plan |   |   | Deferred      |   |   | Other        |   |   |   |   |
|                     | Year   |   | Salary |    |   | Awards (1) |   |    | Awards |   |   | Compensation        |   |   | Compensation  |   |   | Compensation |   |   | Totals |   |
| Todd J. Zelek *          | 2011   |   | $      | -       |   |            | $      | -       |   |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | - |   |
| Chief Executive Officer  | 2010   |   | $      | -       |   |            | $      | -       |   |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | - |   |
|                     |   |   |   |    |   |            |   |    |   |   |   |                |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Roman Gordon *           | 2011   |   | $      | 195,000 | (2)    |            | $      | -       |   |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | 195,000 |   |
| Chief Technology Officer | 2010   |   | $      | 195,000 |   |            | $      | 800,000 | (4)    |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | 995,000 |   |
|                     |   |   |   |    |   |            |   |    |   |   |   |                |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Igor Gorodnitsky         | 2011   |   | $      | 195,000 | (3)    |            | $      | -       |   |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | 195,000 |   |
| President                | 2010   |   | $      | 195,000 | (3)    |            | $      | 800,000 | (5)    |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | 995,000 |   |
|                     |   |   |   |    |   |            |   |    |   |   |   |                |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| R.L. Hartshorn           | 2011   |   | $      | 56,250  | (6)    |            | $      | -       |   |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | 56,250 |   |
| Chief Financial Officer  | 2010   |   | $      | 63,750  | (6)    |            | $      | 200,000 | (7)    |   | $      | -                   |   |   | $             | -      |   |         | $      | -      |   |   | $ | - |   |   | $ | 263,750 |   |

|   | (1) | Stock awards are disclosed at the expense recorded based on their aggregate grant date fair values as calculated under ASC 718, Share-Based Payments.  All share amounts disclosed include the impact of a 3 for 1 forward stock split which was effective as of October 29, 2009. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | For the year ended June 30, 2011, Mr. Gordon earned a base salary of $195,000.  However, Mr. Gordon received only $157,500, and the unpaid $37,500 is recorded as accrued payroll as of June 30, 2011. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (3) | For the year ended June 30, 2010, Mr. Gorodnitsky earned a base salary of $195,000, of which a total of $44,048 remains unpaid and recorded as accrued payroll as of June 30, 2011. For the year ended June 30, 2011, Mr. Gorodnitsky earned a base salary of $195,000.  However, Mr. Gorodnitsky received only $157,500, and the unpaid $37,500 is recorded as accrued payroll as of June 30, 2011. As of June 30, 2011, accrued payroll for Mr. Gorodnitsky totals $81,548. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | In July 2009, the Company issued Mr. Gordon 3,000,000 shares of restricted common stock as payment for services.  On the date of grant, the shares had an aggregate fair value of $800,000.  The shares vest through January 2, 2011 and were expensed in the financial statements over that time.  During the years ended June 30, 2011 and June 30, 2010, the Company recorded a total of $278,327 and $521,673, respectively, of expense associated with this grant. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | In July 2009, the Company issued Mr. Gorodnitsky 3,000,000 shares of restricted common stock as payment for services.  On the date of grant, the shares had an aggregate fair value of $800,000.  The shares vest through January 2, 2011 and were expensed in the financial statements over that time.  During the years ended June 30, 2011 and June 30, 2010, the Company recorded a total of $278,327 and $521,673, respectively, of expense associated with this grant. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | As compensation during the year ended June 30, 2010, Mr. Hartshorn received an aggregate total of 350,000 shares of common stock with an aggregate grant date fair value of $63,750. For the year ended June 30, 2011, Mr. Hartshorn received an aggregate total of 375,000 shares of common stock with an aggregate grant date fair value of $56,250 as compensation. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | In July 2009, the Company issued Mr. Hartshorn 750,000 shares of restricted common stock as payment for services.  On the date of grant, the shares had an aggregate fair value of $200,000.  The shares vest through January 2, 2011 and were expensed in the financial statements over that time.  During the years ended June 30, 2011 and June 30, 2010, the Company recorded a total of $69,582 and $130,418, respectively of expense associated with this grant. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *  | On June 14, 2011 Roman Gordon resigned as a member of the Board of Directors, Chief Executive Officer and Secretary of the Company and was subsequently appointed as the Chief Technology Officer. Concurrently with Mr. Gordon’s resignation, the Company appointed Todd Zelek as Chairman of the Board of Directors and Chief Executive Officer. In addition, on June 17, 2011, Mr. Zelek was appointed as Secretary of the Company.  The aforementioned change to our key executives and Board of Directors is contained in our current report on Form 8-K filed with the SEC on June 20, 2011. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|           |   | Option Awards              |
|----------------|--------|---------------------------------|
|           |   |                            |   |   |   |   |   |   |   |   |   |   |
| Name           |   | Grant Datefor Options |   | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable (1) |   |   | Number of Securities Underlying Unexercised Options (#) Unexercisable |   |   | OptionExercisePrice ($) |   | OptionExpirationDate  |
| R.L. Hartshorn |   | 7/21/2008                       |   |   | 71,655 |   |   |   | - |   |   | $ | 0.33 |   | 8/31/2016 |
|           |   | 7/21/2008                       |   |   | 102,366 |   |   |   | - |   |   | $ | 0.67 |   | 8/31/2016 |

|   | (1) | All share amounts disclosed include the impact of a 3 for 1 forward stock split which was effective as of October 29, 2009. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------|

|            |   | StockAwards(1) |   |   | Totals |   |
|-----------------|--------|----------------|--------|--------|--------|--------|
| James Fuller    |   | $              | 19,875 | (2)    |   | $      | 19,875 |   |
|            |   |           |   |   |   |   |   |   |
| Varvara Grichko |   | $              | 3,100  | (3)    |   | $      | 3,100 |   |

|   | (1) | Stock awards above are disclosed at their aggregate grant date fair values as calculated under FASB ASC 718. |
|--------|-----|--------------------------------------------------------------------------------------------------------------|

|   | (2) | Mr. Fuller received an aggregate total of 150,000 shares of common stock with an aggregate grant date fair value of $19,875 as compensation for director services. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Ms. Grichko received an aggregate total of 30,000 shares of common stock with an aggregate grant date fair value of $3,100 as compensation for director services. As of June 30, 2011, Ms. Grichko has 174,021 stock option awards outstanding and exercisable. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                |   |                |   | Amount and |       |   |            |   |
|-----------------------------------------------------|--------|---------------------|--------|-----------------|------------|--------|-----------------|--------|
|                                                |   |                |   | Nature of  |       |   |            |   |
|                                                |   | Title of  |   | Beneficial      |       |   | Percent of |   |
| Name of Beneficial Owner             |   | Class               |   | Owner           |       |   | Class (1)  |   |
| Todd J. Zelek *                                     |   |  Common Stock  |   |            | -          |   |            |   | * |   |
| Chief Executive Officer and Chairman of the Board   |   |                |   |            |       |   |            |   |   |   |
|                                                |   |                |   |            |       |   |            |   |   |   |
| Roman Gordon                                        |   |  Common Stock  |   |            | 20,323,475 |   |            |   | 13.2 | % |
| Chief Technology Officer                            |   |                |   |            |       |   |            |   |   |   |
|                                                |   |                |   |            |       |   |            |   |   |   |
| Igor Gorodnitsky                                    |   |  Common Stock  |   |            | 20,323,475 |   |            |   | 13.2 | % |
| President                                           |   |                |   |            |       |   |            |   |   |   |
|                                                |   |                |   |            |       |   |            |   |   |   |
| R.L. Hartshorn                                      |   |  Common Stock  |   |            | 2,051,387  |   |            |   | 1.3 | % |
| Chief Financial Officer                             |   |                |   |            |       |   |            |   |   |   |
|                                                |   |                |   |            |       |   |            |   |   |   |
| James Fuller                                        |   |  Common Stock  |   |            | 410,183    |   |            |   | * |   |
| Director  and Chairman of Audit Committee |   |                |   |            |       |   |            |   |   |   |
|                                                |   |                |   |            |       |   |            |   |   |   |
| Varvara Grichko                                     |   |  Common Stock  |   |            | 399,021    |   |            |   | * |   |
| Director                                            |   |                |   |            |       |   |            |   |   |   |
|                                                |   |                |   |            |       |   |            |   |   |   |
| BioWorld Management LTD                             |   |  Common Stock  |   |            | 10,226,183 |   |            |   | 6.6 | % |
|                                                |   |                |   |            |       |   |            |   |   |   |
| Directors and Officers                              |   |  Common Stock  |   |            | 43,507,541 |   |            |   | 28.3 | % |
| (as a group, five individuals)                      |   |                |   |            |       |   |            |   |   |   |

|   | (1) | Based upon 153,799,715 issued and outstanding shares of common stock as of June 30, 2011, which includes the impact of 3 for 1 forward stock split which was effective as of October 29, 2009. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | * | Less than 1%. |
|--------|---|---------------|

----

----

|   | 1. | Financial Statements |
|--------|----|----------------------|

|   | 2. | Financial Statement Schedules |
|--------|----|-------------------------------|

|   | 3. | Exhibits |
|--------|----|----------|

|    |         |                                                                                                                          |         | Incorporated by Reference |
|--------------|--------------|-------------------------------------------------------------------------------------------------------------------------------|--------------|---------------------------|
| Exhibit      |         |                                                                                                                          |         | Filed                     |   |   |   |   |   |   |   |   |
| Number       |         | Exhibit Description                                                                                                           |         | Herewith                  |   | Form |   | Pd. Ending |   | Exhibit |   | Filing Date |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
| 3(i)(a)      |         | Articles of Incorporation - original name of Bioenergy, Inc.                                                                  |         |                      |   | SB-2 |   | N/A |   | 3.1 |   | October 19, 2006 |
| 3(i)(b)      |         | Articles of Incorporation - Amended and Restated                                                                              |         |                      |   | 10-Q |   | December 31, 2008 |   | 3.1 |   | February 17, 2009 |
| 3(i)( c )    |         | Articles of Incorporation - Amended and Restated                                                                              |         |                      |   | 10-Q |   | June 30, 2009 |   | 3.1 |   | May 14, 2009 |
| 3(i)(d)      |         | Articles of Incorporation - Amended; increase in authorized shares                                                            |         |                      |   | 8K |   | N/A |   | N/A |   | October 29, 2009 |
| 3(i)(e)      |         | Articles of Incorporation - Certificate of Amendment; forward split                                                           |         |                      |   | 10Q |   | September 30, 2009 |   | 3.1 |   | November 16, 2009 |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
| 3(ii)(a)     |         | By-laws - originally Bioenergy, Inc.                                                                                          |         |                      |   | SB-2 |   | N/A |   | 3.2 |   | October 19, 2006 |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
| 10.1         |         | Convertible Promissory Note Agreement by and between the Company and Tripod Group, LLC dated February 1, 2011                 |         | X                         |   |   |   |   |   |   |   |   |
| 10.2         |         | Convertible Promissory Note Agreement by and between the Company and Asher Enterprises,  Inc dated February 8, 2011 |         | X                         |   |   |   |   |   |   |   |   |
| 10.3         |         | Convertible Promissory Note Agreement by and between the Company and Asher Enterprises,  Inc dated June 6, 2011     |         | X                         |   |   |   |   |   |   |   |   |
| 10.4         |         | Warrant Agreement with Pinnacle Financial Group and Insurance Services, Inc. date November 22, 2010                           |         | X                         |   |   |   |   |   |   |   |   |
| 10.5         |         | Employment Agreement by and between the Company and Roman Gordon                                                              |         | X                         |   |   |   |   |   |   |   |   |
| 10.6         |         | Employment Agreement by and between the Company and Igor Gorodnitsky                                                          |         | X                         |   |   |   |   |   |   |   |   |
| 10.7         |         | Employment Agreement by and between the Company and R.L. Hartshorn                                                            |         |                      |   | 10-Q |   | December 31, 2010 |   | 10.2 |   | February 12, 2011 |
| 10.8         |         | Employment Agreement by and between the Company and Varvara Grichko                                                           |         |                      |   | 10-Q |   | December 31, 2010 |   | 10.3 |   | February 12, 2011 |
| 10.9         |         | Amendment #1 to the Confidentiality and Invention Assignment Agreement by and between the Company and Varvara Grichko         |         | X                         |   |   |   |   |   |   |   |   |
| 10.10        |         | Loan Renewal Agreement with National Bank of California dated August 1, 2010                                                  |         | X                         |   |   |   |   |   |   |   |   |
| 10.11        |         | Loan Extension and Change in Terms Agreement with National Bank of California dated November 1, 2010                          |         | X                         |   |   |   |   |   |   |   |   |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
| 14.1         |         | Code of Business Conduct and Ethics*                                                                                          |         | X                         |   |   |   |   |   |   |   |   |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
| 31.1         |         | Certificate of Principal Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002                              |         | X                         |   |   |   |   |   |   |   |   |
| 31.2         |         | Certificate of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002                              |         | X                         |   |   |   |   |   |   |   |   |
| 32.1         |         | Certification of Principal Executive Officer pursuant to 18 U.S.C Section 1350, as adopted                                    |         | X                         |   |   |   |   |   |   |   |   |
|         |         | pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                    |         |                      |   |   |   |   |   |   |   |   |
| 32.2         |         | Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted                                    |         | X                         |   |   |   |   |   |   |   |   |
|         |         | pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                    |         |                      |   |   |   |   |   |   |   |   |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
| 99.1         |         | Unregistered Sale of Equity Securities                                                                                        |         |                      |   | 8K |   | June 30, 2011 |   | N/A |   | July 15, 2011 |
| 99.2         |         | Departure/Appointment of Directors/Officers                                                                                   |         |                      |   | 8K |   | June 30, 2011 |   | N/A |   | June 20, 2011 |
|         |         |                                                                                                                          |         |                      |   |   |   |   |   |   |   |   |
|         |         | * In accordance with Regulation S-K 406 of the Securities Act of 1934, we undertake to provide to any person                  |         |                      |   |   |   |   |   |   |   |   |
|         |         | without charge, upon request, a copy of our “Code of Business Conduct and Ethics”. A copy may be requested        |         |                      |   |   |   |   |   |   |   |   |
|         |    | by sending an email to info@cavitationtechnologies.com.                                                                       |    |                      |    |   |    |   |    |   |    |   |

----

| SIGNATURE            |   | TITLE                                                        |   | DATE               |
|----------------------|--------|--------------------------------------------------------------|--------|--------------------|
|                 |   |                                                         |   |               |
| /s/ Todd J. Zelek    |   | Chairman of the Board, Chief Executive Officer and Secretary |   | September 28, 2011 |
| Todd J. Zelek        |   | (Principal Executive Officer)                                |   |               |
|                 |   |                                                         |   |               |
| /s/ R.L. Hartshorn   |   | Chief Financial Officer                                      |   | September 28, 2011 |
| R.L. Hartshorn       |   | (Principal Financial Officer)                                |   |               |
|                 |   |                                                         |   |               |
| /s/ Igor Gorodnitsky |   | Director                                                     |   | September 28, 2011 |
| Igor Gorodnitsky     |   |                                                         |   |               |

----