UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Amendment No. 2
 to
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ________ to ________
 Commission file number 000-27848
 BIOFIELD CORP.
  Delaware
    
    13-3703450(State of Incorporation)
    
    (IRS Employer Identification No.)175 Strafford Avenue, Suite 1, Wayne, PA
    
    19087(Address of principal executive offices)
    
    (Zip Code)
 
     Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




---



##### 



EXPLANATORY NOTE
  Form 10-K/A should be read




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
  FIN 12
   ITEM 9A.
    
    CONTROLS AND PROCEDURES.




---



##### 



CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING




---



##### 



PART IV
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
   Reports
    of Independent Registered Public Accounting FirmsBalance SheetsStatements of OperationsStatement of Stockholders EquityNotes to Financial Statements
    3.1
    
    
    Fifth Amended and Restated Certificate of Incorporation of Biofield
Corp., as filed with the Secretary of State of the State of Delaware
on October 6, 2000. (1)
 3. (ii) By-laws. 3.2
    
    
    By-laws of Biofield Corp. (2)
  4.1
    
    
    Form of Promissory Note, due December 31, 2004, issued by Biofield Corp. in 2003 private placement. (8)
 4.2
    
    
    Form of Subscription Agreement between Biofield Corp. and investors
who participated in 2003 private placement. (8)
   10.01
    
    
    Registration Rights Agreement between Biofield Corp. and John D. Stephens dated as of April 22, 1993. (3)10.02
    
    
    Form of Stock Purchase Option Agreement between Biofield Corp. and
Abel Laboratories, Inc., dated as of June 1, 1992. (3)10.03
    
    
    Patent Royalty Agreement between Biofield Corp. and Abel Laboratories, Inc., dated as of June 1, 1992. (3)
  32




---



##### 



10.04
    
    
    Master Laboratory Services Agreement between Biofield Corp. and Abel
Laboratories, Inc., dated as of January 1, 1994. (3)10.05
    
    
    Biofield Corp. 1992 Stock Incentive Plan. (3)10.6
    
    
    Biofield Corp. 1996 Stock Option Plan, as amended. (4)10.7
    
    
    Biofield Corp. 1996 Stock Option Plan for Non-Employee Directors. (3)10.8
    
    
    Escrow Agreement among C. Leonard Gordon, Biofield Corp. and Warshaw
Burstein Cohen Schlesinger & Kuh, LLP, as escrow agent, dated
December 28, 1999. (1)10.9
    
    
    License Agreement between Biofield Corp. and Cardio Dynamics
International Corporation dated October 16, 2000. (1)10.10
    
    
    Share Option Agreement, dated as of March 16, 1995, between Biofield Corp. and David M. Long, Jr., M.D. (1)10.11
    
    
    Form of Share Option Agreement between Biofield Corp. and Raymond A.
Long, M.D., dated September 5, 2001. (5)10.12
    
    
    Share Option Agreement, dated as of November 29, 2001, with David M. Long, Jr., M.D. (5)10.13
    
    
    Share Option Agreement, dated as of November 29, 2001, with John D. Stephens. (5)10.14
    
    
    Form of Share Option Agreement, dated November 29, 2001, with Steven Preiss. (5)10.15
    
    
    Form of Share Option Agreement, dated November 29, 2001, with various Biofield Corp. employees. (5)10.16
    
    
    10% Convertible Promissory Note, dated November 8, 2002 by Biofield
Corp. in favor of David M. Long, Jr. (6)10.17
    
    
    Demand Promissory Note, dated January 3, 2003, by Biofield Corp. in
favor of David M. Long Separate Property Trust. (7)10.18
    
    
    Investment Banking Services Agreement, dated March 5, 2003, between
Biofield Corp. and iCapital Finance, Inc. (7)10.19
    
    
    Consulting Agreement, dated March 5, 2003, between Biofield Corp.
and Randall Letcavage and Rosemary Nguyen. (7)10.20
    
    
    Redesign Agreement, dated October 15, 2001, between Biofield Corp. and TriVirix International Limited. (7)10.21
    
    
    Form of Share Option Agreement, dated February 4, 2003, with various Biofield Corp. employees. (10)10.22
    
    
    Service Agreement, dated July 8, 2003, between Biofield Corp. and MRB Investor Relations, LLC. (10)10.23
    
    
    Agreement for Financial Advisor, Investment Banker & Placement
Agent, dated April 25, 2003 between Biofield Corp and Brooks
Houghton & Company, Inc. and Brooks, Houghton Securities, Inc. (10)10.24
    
    
    Agreement, dated February 9, 2004, between Biofield Corp. and ROI Group Associates, Inc. (10)
  33




---



##### 



10.25
    
    
    Agreement, dated October 16, 2003 between Biofield Corp, and CGF Securities, LLC. (10)10.26
    
    
    Change in Terms Agreement, dated December 11, 2003, between Biofield
Corp. and California Bank & Trust. (10)10.27
    
    
    Agreement, dated June 11, 2003, as amended December 11, 2003, by Biofield Corp. to John Stephens. (10)10.28
    
    
    Consulting agreement between The Mackay Group, Inc. and Dr. David Long dated March 30, 2006. (11)10.29
    
    
    Stock Acquisition and Voting Agreement between The Mackay Group, Inc. and Dr. David Long, Jr.,
Donna R Long, Dr. Raymond A Long, the Long Family Trust and the Long Family Partners II LP dated
March 30, 2006. (11)10.30
    
    
    Sale of Shares Agreement for the sale and purchase of shares in VALIBIO dated December 2008. (12)10.31
    
    
    Exclusive Distribution Agreement between The Company and ValiBio dated December 2008. (12)
   14.1
    
    
    Code of Ethics adopted on February 16, 2004. (10)
  16.1
    
    
    Letter from Deloitte & Touche, LLP, Certified Public Accountants to
the Commission, dated November 24, 2003. (9)
         *31.1 Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302*31.2 Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302  *32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350 *32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350




---



##### 



(*)
    
    Filed herewith. 1
    
    Filed with the Securities and Exchange Commission as an exhibit to Biofields Registration Statement on Form 10-SB
(Registration No. 0-27848) which became effective on October 18, 2000.2
    
    Incorporated by reference to Biofields Annual Report on Form 10-K for the fiscal year ended December 31, 1996.3
    
    Incorporated by reference to Biofields Registration Statement on Form S-1 (Registration No. 333-00796) declared
effective on March 19, 1996.4
    
    Incorporated by reference to Biofields Annual Report on Form 10-K for the fiscal year ended December 31, 1997.5
    
    Incorporated by reference to Biofields Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001.6
    
    Incorporated by reference to Biofields Quarterly Report on Form 10-QSB for the fiscal quarter ended September 30, 2002.7
    
    Incorporated by reference to Biofields Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002.8
    
    Incorporated by reference to Biofields Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004.9
    
    Incorporated by reference to Biofields Current Report on Form 8-K filed on April 6, 2006.b
    
    Reports on Form 8-K  None




---



##### 



BIOFIELD CORP.By:
    /s/  David Bruce HongDavid Bruce HongChief Executive OfficerBy:
    /s/  David Bruce HongDavid Bruce HongChief Financial Officer




---



##### 



Jewett, Schwartz, Wolfe & Associates/s/ Jewett, Schwartz, Wolfe & AssociatesHollywood, Florida




---



##### 



BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    
    
    
    $
    13,328Prepaids
    
    
    
    
    
    
    9,000Notes receivable
    
    
    
    
    
    
    11,004Total current assets
    
    
    
    
    
    
    33,332PROPERTY AND EQUIPMENT  Net
    
    
    5,211
    
    
    
    6,601TOTAL ASSETS
    
    $
    5,211
    
    
    $
    39,933LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Bank overdraft
    
    $
    9,912
    
    
    $
    Accounts payable
    
    
    1,402,514
    
    
    
    1,402,513Accrued interest
    
    
    991,849
    
    
    
    720,334Accrued expenses
    
    
    2,058,823
    
    
    
    430,489Due to affiliate
    
    
    329,686
    
    
    
    329,686Advances from stockholder
    
    
    2,378,973
    
    
    
    2,162,703Notes payable
    
    
    2,410,951
    
    
    
    2,223,893Line of credit
    
    
    418,920
    
    
    
    342,180Total current liabilities
    
    
    10,001,628
    
    
    
    7,611,798Commitments and contigenciesSTOCKHOLDERS DEFICIT:Preferred stock, $.001 par value, 12,300,000 shares authorized,
12,300,000 shares issued and outstanding at December 31, 2008
and, 2007, respectively
    
    
    12,300
    
    
    
    12,300Common stock, $.01 par value, 50,000,000 shares authorized,
24,793,500 shares issued at December 31, 2008 and 4,514,294 shares
issued and 999,455 shares issuable at December 31, 2007, respectively
    
    
    247,935
    
    
    
    55,138Treasury stock - 2,306,131 shares
    
    
    (3,100
    )
    
    
    (3,100
    )Stock subscriptions
    
    
    3,849
    
    
    
    3,849Additional paid-in capital
    
    
    74,935,552
    
    
    
    66,461,340Accumulated deficit during development stage
    
    
    (85,192,953
    )
    
    
    (74,101,392
    )Total stockholders deficit
    
    
    (9,996,417
    )
    
    
    (7,571,865
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    5,211
    
    
    $
    39,933
   F-1




---



##### 



BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
 Period October 16,1987 (Date ofInception)Year Ended
    
    
    ThroughDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008REVENUE
    
    $
    
    
    
    $
    109,390
    
    
    $
    244,522COST OF SALESCost of goods sold
    
    
    
    
    
    
    19,664
    
    
    
    95,111Loss on write down of inventory
    
    
    
    
    
    
    
    
    
    
    693,500GROSS PROFIT
    
    
    
    
    
    
    89,726
    
    
    
    (544,089
    )OPERATING EXPENSES:Research and development
    
    
    
    
    
    
    
    
    
    
    40,481,889Selling, general, and administrative
    
    
    10,530,286
    
    
    
    821,375
    
    
    
    42,641,985Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    194,268Gain on disposition of fixed assets
    
    
    
    
    
    
    
    
    
    
    (8,084
    )Total operating expenses
    
    
    10,530,286
    
    
    
    821,375
    
    
    
    83,310,058OTHER INCOME (EXPENSE):Interest income
    
    
    
    
    
    
    
    
    
    
    2,476,722Interest expense
    
    
    (561,275
    )
    
    
    (545,224
    )
    
    
    (3,605,123
    )Amortization of shares issued to lenders
and other finance costs
    
    
    
    
    
    
    
    
    
    
    (405,523
    )Royalty income and other
    
    
    
    
    
    
    
    
    
    
    214,867Net other expense
    
    
    (561,275
    )
    
    
    (545,224
    )
    
    
    (1,319,057
    )LOSS BEFORE INCOME TAXES
    
    
    (11,091,561
    )
    
    
    (1,276,873
    )
    
    
    (85,173,204
    )PROVISION FOR INCOME TAXES
    
    
    
    
    
    
    
    
    
    
    (19,749
    )NET LOSS
    
    $
    (11,091,561
    )
    
    $
    (1,276,872
    )
    
    $
    (85,192,953
    )NET LOSS PER SHARE:Basic and Diluted
    
    $
    (0.46
    )
    
    $
    (0.02
    )WEIGHTED-AVERAGE SHARESBasic and Diluted
    
    
    23,897,943
    
    
    
    53,704,609
   F-2




---



##### 



BIOFIELD CORP.
 (A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
 DefferedAccumulated
    
    
    ForeignSeries A
    
    
    
    
    
    
    Series B
    
    
    
    
    
    
    Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Deficit
    
    
    Currency
    
    
    
    
    
    
    TotalPreffered
    
    
    
    
    
    
    Preffered
    
    
    
    
    
    
    Preffered
    
    
    
    
    
    
    Common
    
    
    
    
    
    
    Treasury
    
    
    Stock
    
    
    Paid In
    
    
    Development
    
    
    Translation
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Subscriptions
    
    
    Capital
    
    
    Stage
    
    
    Adjustment
    
    
    Total
    
    
    LossSale of Common Stock, October 16, 1987
(date of inception) (.16 per share, net)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    54,902
    
    
    $
    55
    
    
    $
    
    
    
    $
    
    
    
    $
    91,898
    
    
    $
    
    
    
    $
    
    
    
    $
    91,953Issuance of Common Stock in connection with
patent acquisition (.001 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,529
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    300Net loss, October 16, 1987 to March 31, 1988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (159,359
    )
    
    
    
    
    
    
    (159,359
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (159,359
    )BALANCE AT MARCH 31, 1988
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    78,431
    
    
    $
    79
    
    
    $
    
    
    
    $
    
    
    
    $
    92,174
    
    
    $
    (159,359
    )
    
    $
    
    
    
    $
    (67,106
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (495,520
    )
    
    
    
    
    
    
    (495,520
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (495,520
    )BALANCE AT MARCH 31, 1989
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    78,431
    
    
    $
    79
    
    
    $
    
    
    
    $
    
    
    
    $
    92,174
    
    
    $
    (654,879
    )
    
    $
    
    
    
    $
    (562,626
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (233,347
    )
    
    
    
    
    
    
    (233,347
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (233,347
    )BALANCE AT MARCH 31, 1990
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    78,431
    
    
    $
    79
    
    
    $
    
    
    
    $
    
    
    
    $
    92,174
    
    
    $
    (888,226
    )
    
    $
    
    
    
    $
    (795,973
    )Acquisition of 235,294 shares of Common Stock
(.001 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (300
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (300
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (285,179
    )
    
    
    
    
    
    
    (285,179
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (285,179
    )BALANCE AT MARCH 31, 1991
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    78,431
    
    
    $
    79
    
    
    $
    (300
    )
    
    $
    
    
    
    $
    92,174
    
    
    $
    (1,173,405
    )
    
    $
    
    
    
    $
    (1,081,452
    )Retirement of Common Stock held in treasury
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,529
    )
    
    
    (24
    )
    
    
    300
    
    
    
    
    
    
    
    (276
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of Common Stock in exchange for notes
and debt with accrued interest (2.90 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,137
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    1,248,638
    
    
    
    
    
    
    
    
    
    
    
    1,248,681Sale of Common Stock (.82 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,451
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    19,998
    
    
    
    
    
    
    
    
    
    
    
    20,000Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136,880
    
    
    
    
    
    
    
    
    
    
    
    136,880Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (461,061
    )
    
    
    
    
    
    
    (461,061
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (461,061
    )BALANCE AT MARCH 31, 1992
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    100,490
    
    
    $
    100
    
    
    $
    
    
    
    $
    
    
    
    $
    1,497,414
    
    
    $
    (1,634,466
    )
    
    $
    
    
    
    $
    (136,952
    )Sale of Common Stock (7.67 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,748
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    4,275,223
    
    
    
    
    
    
    
    
    
    
    
    4,275,278Exercise of Common Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    245
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    
    
    
    
    
    
    
    
    625Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    477,453
    
    
    
    
    
    
    
    
    
    
    
    477,453Change in par value of common stock
from .0001 to .001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,408
    
    
    
    
    
    
    
    
    
    
    
    (1,408
    )
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,099,637
    )
    
    
    
    
    
    
    (3,099,637
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (3,099,637
    )BALANCE AT MARCH 31, 1993
(brought forward)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    156,483
    
    
    $
    1,564
    
    
    $
    
    
    
    $
    
    
    
    $
    6,249,306
    
    
    $
    (4,734,103
    )
    
    $
    
    
    
    $
    1,516,767Exercise of Common Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    187
    
    
    
    
    
    
    
    
    
    
    
    188Sale of Series A Preferred Stock
(3.97 per share, net)
    
    
    2,119,896
    
    
    
    2,120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,411,370
    
    
    
    
    
    
    
    
    
    
    
    8,413,490Issuance of Series A Preferred Stock in
exchange for notes (4.50 per share)
    
    
    222,222
    
    
    
    222
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999,778
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Issuance of Common Stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,119
    
    
    
    
    
    
    
    
    
    
    
    2,119Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,580,320
    
    
    
    
    
    
    
    
    
    
    
    1,580,320Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,899,515
    )
    
    
    
    
    
    
    (6,899,515
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (6,899,515
    )BALANCE AT MARCH 31, 1994
    
    
    2,342,118
    
    
    $
    2,342
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    156,556
    
    
    $
    1,565
    
    
    $
    
    
    
    $
    
    
    
    $
    17,243,080
    
    
    $
    (11,633,618
    )
    
    $
    
    
    
    $
    5,613,369Sale of Series B Preferred Stock
(4.04 per share, net)
    
    
    
    
    
    
    
    
    
    
    481,644
    
    
    
    482
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,947,149
    
    
    
    
    
    
    
    
    
    
    
    1,947,631Issuance of Common Stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,859
    
    
    
    
    
    
    
    
    
    
    
    14,859Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,959,312
    )
    
    
    
    
    
    
    (4,959,312
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,959,312
    )BALANCE AT DECEMBER 31, 1994
    
    
    2,342,118
    
    
    $
    2,342
    
    
    
    481,644
    
    
    $
    482
    
    
    
    
    
    
    $
    
    
    
    
    156,556
    
    
    $
    1,565
    
    
    $
    
    
    
    $
    
    
    
    $
    19,205,094
    
    
    $
    (16,592,930
    )
    
    $
    
    
    
    $
    2,616,553
  F-3




---



##### 



DefferedAccumulated
    
    
    ForeignSeries A
    
    
    
    
    
    
    Series B
    
    
    
    
    
    
    Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Deficit
    
    
    Currency
    
    
    
    
    
    
    TotalPreffered
    
    
    
    
    
    
    Preffered
    
    
    
    
    
    
    Preffered
    
    
    
    
    
    
    Common
    
    
    
    
    
    
    Treasury
    
    
    Stock
    
    
    Paid In
    
    
    Development
    
    
    Translation
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Subscriptions
    
    
    Capital
    
    
    Stage
    
    
    Adjustment
    
    
    Total
    
    
    LossSale of Series C Preferred Stock
(4.11 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,914,771
    
    
    
    2,915
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,977,856
    
    
    
    
    
    
    
    
    
    
    
    11,980,771Issuance of Common Stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    161Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,874
    
    
    
    
    
    
    
    
    
    
    
    195,874Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,739,858
    )
    
    
    
    
    
    
    (8,739,858
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,739,858
    )BALANCE AT DECEMBER 31, 1995
    
    
    2,342,118
    
    
    $
    2,342
    
    
    
    481,644
    
    
    $
    482
    
    
    
    2,914,771
    
    
    $
    2,915
    
    
    
    156,556
    
    
    $
    1,565
    
    
    $
    
    
    
    $
    
    
    
    $
    31,378,985
    
    
    $
    (25,332,788
    )
    
    $
    
    
    
    $
    6,053,501Sale of Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,900
    
    
    
    1,819
    
    
    
    
    
    
    
    
    
    
    
    18,026,419
    
    
    
    
    
    
    
    
    
    
    
    18,028,238Conversion of Series A, B, and CPreferred Stock to Common Stock
    
    
    (2,342,118
    )
    
    
    (2,342
    )
    
    
    (481,644
    )
    
    
    (482
    )
    
    
    (2,914,771
    )
    
    
    (2,915
    )
    
    
    304,647
    
    
    
    3,047
    
    
    
    
    
    
    
    
    
    
    
    2,692
    
    
    
    
    
    
    
    
    
    
    
    Exercise of Common Stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    20,145
    
    
    
    
    
    
    
    
    
    
    
    20,147Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,093
    
    
    
    
    
    
    
    
    
    
    
    26,093Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,036,090
    )
    
    
    
    
    
    
    (10,036,090
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (10,036,090
    )BALANCE AT DECEMBER 31, 1996
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    643,310
    
    
    $
    6,433
    
    
    $
    
    
    
    $
    
    
    
    $
    49,454,334
    
    
    $
    (35,368,878
    )
    
    $
    
    
    
    $
    14,091,889Sale of Common Stock (2.92 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286,767
    
    
    
    2,868
    
    
    
    
    
    
    
    
    
    
    
    8,377,583
    
    
    
    
    
    
    
    
    
    
    
    8,380,451Warrants exchanged for Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,364
    
    
    
    644
    
    
    
    
    
    
    
    
    
    
    
    (644
    )
    
    
    
    
    
    
    
    
    
    
    Exercise of Common Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,067
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    168,541
    
    
    
    
    
    
    
    
    
    
    
    168,591Exercise of Common Stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    953
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    93,299
    
    
    
    
    
    
    
    
    
    
    
    93,309Issuance of
Common Stock for consulting services (4.00 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    99,975
    
    
    
    
    
    
    
    
    
    
    
    100,000Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,579
    
    
    
    
    
    
    
    
    
    
    
    62,579Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,151,041
    )
    
    
    
    
    
    
    (10,151,041
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,333
    
    
    
    1,333Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (10,149,708
    )BALANCE AT DECEMBER 31, 1997
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    1,002,961
    
    
    $
    10,030
    
    
    $
    
    
    
    $
    
    
    
    $
    58,255,667
    
    
    $
    (45,519,919
    )
    
    $
    1,333
    
    
    $
    12,747,111Repurchase of Common Stock
for treasury (2,246,131 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,654,597
    )
    
    
    
    
    
    
    (10,654,597
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,891
    
    
    
    55,891Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (10,598,706
    )BALANCE AT DECEMBER 31, 1998
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    1,002,961
    
    
    $
    10,030
    
    
    $
    (100
    )
    
    $
    
    
    
    $
    58,255,667
    
    
    $
    (56,174,516
    )
    
    $
    57,224
    
    
    $
    2,148,305Sale of Common Stock (.05 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,400,000
    
    
    
    14,000
    
    
    
    
    
    
    
    
    
    
    
    686,000
    
    
    
    
    
    
    
    
    
    
    
    700,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,253,696
    )
    
    
    
    
    
    
    (1,253,696
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,020
    )
    
    
    (43,020
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,296,716
    )BALANCE AT DECEMBER 31, 1999
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    2,402,961
    
    
    $
    24,030
    
    
    $
    (100
    )
    
    $
    
    
    
    $
    58,941,667
    
    
    $
    (57,428,212
    )
    
    $
    14,204
    
    
    $
    1,551,589Issuance of right to purchase Common Stock
in lieu of compensation (0.45 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198,000
    
    
    
    
    
    
    
    
    
    
    
    198,000Sale of common stock (0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    24,500
    
    
    
    
    
    
    
    
    
    
    
    25,000Sale of common stock (0.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    1,497,000
    
    
    
    
    
    
    
    
    
    
    
    1,500,000Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Repurchase of Common Stock
for treasury (60,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,522,233
    )
    
    
    
    
    
    
    (1,522,233
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,204
    )
    
    
    (14,204
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,522,233
    )BALANCE AT DECEMBER 31, 2000
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    2,752,961
    
    
    $
    27,530
    
    
    $
    (3,100
    )
    
    $
    
    
    
    $
    60,761,167
    
    
    $
    (58,950,445
    )
    
    
    
    
    
    $
    1,835,152Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,238,687
    )
    
    
    
    
    
    
    (2,238,687
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,238,687
    )BALANCE AT DECEMBER 31, 2001
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    2,752,961
    
    
    $
    27,530
    
    
    $
    (3,100
    )
    
    $
    
    
    
    $
    60,861,167
    
    
    $
    (61,189,132
    )
    
    $
    
    
    
    $
    (303,535
    )Exercise of Common Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,275
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    15,623
    
    
    
    
    
    
    
    
    
    
    
    15,686Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,888,789
    )
    
    
    
    
    
    
    (2,888,789
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,888,789
    )BALANCE AT DECEMBER 31, 2002
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    2,759,235
    
    
    $
    27,593
    
    
    $
    (3,100
    )
    
    $
    
    
    
    $
    60,976,790
    
    
    $
    (64,077,921
    )
    
    $
    
    
    
    $
    (3,076,638
    )
  F-4




---



##### 



DefferedAccumulated
    
    
    ForeignSeries A
    
    
    
    
    
    
    Series B
    
    
    
    
    
    
    Series C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Deficit
    
    
    Currency
    
    
    
    
    
    
    TotalPreffered
    
    
    
    
    
    
    Preffered
    
    
    
    
    
    
    Preffered
    
    
    
    
    
    
    Common
    
    
    
    
    
    
    Treasury
    
    
    Stock
    
    
    Paid In
    
    
    Development
    
    
    Translation
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Amount
    
    
    Stock
    
    
    Subscriptions
    
    
    Capital
    
    
    Stage
    
    
    Adjustment
    
    
    Total
    
    
    LossIssuance of Common Stock for consulting
services (0.30 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    14,950
    
    
    
    
    
    
    
    
    
    
    
    15,000Issuance of Common Stock for consulting
services (0.32 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,875
    
    
    
    468
    
    
    
    
    
    
    
    
    
    
    
    149,532
    
    
    
    
    
    
    
    
    
    
    
    150,000Issuance of Common Stock for consulting
services (0.11 per share, net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,500
    
    
    
    275
    
    
    
    
    
    
    
    
    
    
    
    29,975
    
    
    
    
    
    
    
    
    
    
    
    30,250Issuance of Common Stock as incentive for
funding by issue of notes (0.25 per share net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318,750
    
    
    
    3,188
    
    
    
    
    
    
    
    
    
    
    
    793,687
    
    
    
    
    
    
    
    
    
    
    
    796,875Common Stock (410,358 shares) to be issued
for interest accrued on stockholders advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    410
    
    
    
    101,976
    
    
    
    
    
    
    
    
    
    
    
    102,386Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,164,698
    )
    
    
    
    
    
    
    (2,164,698
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,164,698
    )BALANCE AT DECEMBER 31, 2003
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    3,157,360
    
    
    $
    31,574
    
    
    $
    (3,100
    )
    
    $
    410
    
    
    $
    62,166,910
    
    
    $
    (66,242,619
    )
    
    $
    
    
    
    $
    (4,046,825
    )Issuance of Common Stock as incentive for
funding by issue of notes (0.25 per share net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,250
    
    
    
    1,813
    
    
    
    
    
    
    
    
    
    
    
    451,312
    
    
    
    
    
    
    
    
    
    
    
    453,125Issuance of Common Stock as incentive for
funding by issue of notes (0.31 per share net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,500
    
    
    
    1,895
    
    
    
    
    
    
    
    
    
    
    
    585,555
    
    
    
    
    
    
    
    
    
    
    
    587,450Sale of Common Stock (0.10 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,400
    
    
    
    1,224
    
    
    
    
    
    
    
    
    
    
    
    160,601
    
    
    
    
    
    
    
    
    
    
    
    161,825Common Stock (286,421 shares) to be issued
for interest accrued on stockholders advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287
    
    
    
    64,456
    
    
    
    
    
    
    
    
    
    
    
    64,743Common Stock (2,500,000 shares) to be issued
for payment penalty on notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    347,500
    
    
    
    
    
    
    
    
    
    
    
    350,000Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,846,517
    )
    
    
    
    
    
    
    (3,846,517
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (3,846,517
    )BALANCE AT DECEMBER 31, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    3,650,510
    
    
    $
    36,506
    
    
    $
    (3,100
    )
    
    $
    3,197
    
    
    $
    63,876,334
    
    
    $
    (70,089,136
    )
    
    $
    
    
    
    $
    (6,176,199
    )Sale of Common Stock ( for not less than $0.10 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    324,033
    
    
    
    3,240
    
    
    
    
    
    
    
    
    
    
    
    382,178
    
    
    
    
    
    
    
    
    
    
    
    385,418Common Stock (2,310,300 shares) to be issued
for interest accrued on stockholders advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,310
    
    
    
    83,430
    
    
    
    
    
    
    
    
    
    
    
    85,740Issue of shares of Common Stock for payment
penalty on notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,750
    
    
    
    897
    
    
    
    
    
    
    
    
    
    
    
    17,052
    
    
    
    
    
    
    
    
    
    
    
    17,949Issue of shares of Common Stock for payment
penalty on notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    2,500
    
    
    
    
    
    
    
    (2,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,926,292
    )
    
    
    
    
    
    
    (1,926,292
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,926,292
    )BALANCE AT DECEMBER 31, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    4,314,294
    
    
    $
    43,143
    
    
    $
    (3,100
    )
    
    $
    3,007
    
    
    $
    64,458,994
    
    
    $
    (72,015,428
    )
    
    $
    
    
    
    $
    (7,513,384
    )Common Stock (841,438 shares) to be issued
for interest accrued on stockholders advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    842
    
    
    
    24,401
    
    
    
    
    
    
    
    
    
    
    
    25,243Options issued for consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,512
    
    
    
    
    
    
    
    
    
    
    
    47,512Memorandum entry to record as expense for
honorary services rendered by a shareholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    25,000Debt converted to stock
    
    
    12,300,000
    
    
    
    12,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999,455
    
    
    
    9,995
    
    
    
    
    
    
    
    
    
    
    
    1,707,433
    
    
    
    
    
    
    
    
    
    
    
    1,729,728Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (809,091
    )
    
    
    
    
    
    
    (809,091
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (809,091
    )BALANCE AT DECEMBER 31, 2006
    
    
    12,300,000
    
    
    
    12,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,313,749
    
    
    
    53,138
    
    
    
    (3,100
    )
    
    
    3,849
    
    
    
    66,263,340
    
    
    
    (72,824,519
    )
    
    
    
    
    
    
    (6,494,992
    )Issuance of Common Stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Issuance of Common Stock issued for conversion of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,276,873
    )
    
    
    
    
    
    
    (1,276,873
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,276,873
    )BALANCE AT DECEMBER 31, 2007
    
    
    12,300,000
    
    
    $
    12,300
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    5,513,749
    
    
    $
    55,138
    
    
    $
    (3,100
    )
    
    $
    3,849
    
    
    $
    66,461,340
    
    
    $
    (74,101,392
    )
    
    $
    
    
    
    $
    (7,571,865
    )10 for 1 Reverse split of Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10 for 1 Reverse split of Common Stock  Rounding differences
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51Issuance of Common Stock for consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,179,700
    
    
    
    191,797
    
    
    
    
    
    
    
    
    
    
    
    8,375,212
    
    
    
    
    
    
    
    
    
    
    
    8,567,009Issuance of Common Stock for subscriptions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,091,561
    )
    
    
    
    
    
    
    (11,091,561
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (11,091,561
    )BALANCE AT DECEMBER 31, 2008
    
    
    12,300,000
    
    
    $
    12,300
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    24,793,500
    
    
    $
    247,935
    
    
    $
    (3,100
    )
    
    $
    3,849
    
    
    $
    74,935,552
    
    
    $
    (85,192,953
    )
    
    $
    
    
    
    $
    (9,996,417
    )
   F-5




---



##### 



BIOFIELD CORP. (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Period October 16,1987 (Date ofInception)Year Ended
    
    
    ThroughDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (11,091,561
    )
    
    $
    (1,276,873
    )
    
    $
    (85,192,953
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    1,390
    
    
    
    816
    
    
    
    2,762,596Amortization of premiums on short-term investments
    
    
    
    
    
    
    
    
    
    
    156,692Amortization of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    2,129,643Loss on disposal of property and equipment
    
    
    
    
    
    
    
    
    
    
    194,102Loss on license and settlement agreements
    
    
    
    
    
    
    
    
    
    
    49,026Loss on abandonment of patent applications
    
    
    
    
    
    
    
    
    
    
    303,234Loss on inventory write-down
    
    
    
    
    
    
    
    
    
    
    693,500Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    194,268Vendor settlements
    
    
    
    
    
    
    
    
    
    
    (77,257
    )Noncash compensation
    
    
    
    
    
    
    
    
    
    
    3,533,451Gain from disposition of fixed assets
    
    
    
    
    
    
    
    
    
    
    (159,473
    )Interest paid in common stock
    
    
    
    
    
    
    
    
    
    
    575,260Commisions and discounts on sale of common stock
    
    
    
    
    
    
    
    
    
    
    96,919Loan repayment default payable in shares of common stock
    
    
    
    
    
    
    
    
    
    
    350,000Consultancy fees paid in options
    
    
    
    
    
    
    
    
    
    
    242,762Issuances of common stock for outstanding stock obligations
    
    
    8,667,010
    
    
    
    
    
    
    
    8,667,010Changes in assets and liabilities:Notes receivable
    
    
    11,004
    
    
    
    (11,004
    )
    
    
    11,004Inventories
    
    
    
    
    
    
    
    
    
    
    (693,500
    )Prepaids
    
    
    9,000
    
    
    
    (766
    )
    
    
    (131,816
    )Due to affiliate
    
    
    
    
    
    
    (8,234
    )
    
    
    337,921Accounts payable and accrued liabilities
    
    
    1,899,849
    
    
    
    326,574
    
    
    
    5,278,761Net cash used in operating activities
    
    
    (503,308
    )
    
    
    (969,487
    )
    
    
    (60,678,850
    )CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of property and equipment
    
    
    
    
    
    
    (6,948
    )
    
    
    (2,610,691
    )Costs incurred for patents and patent applications
    
    
    
    
    
    
    
    
    
    
    (782,527
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    
    
    
    
    294,748Purchases of short-term investments
    
    
    
    
    
    
    
    
    
    
    (26,476,638
    )Proceeds from sale and maturity of short-term investments
    
    
    
    
    
    
    
    
    
    
    26,406,378Net cash used in investing activities
    
    
    
    
    
    
    (6,948
    )
    
    
    (3,168,730
    )CASH FLOWS FROM FINANCING ACTIVITIES:Bank overdraft
    
    
    9,912
    
    
    
    
    
    
    
    9,912Repayments of capitalized lease obligations
    
    
    
    
    
    
    
    
    
    
    (82,234
    )Proceeds from issuance of preferred stock  net
    
    
    
    
    
    
    
    
    
    
    22,341,892Proceeds from issuance of common stock and common stock warrants  net
    
    
    
    
    
    
    
    
    
    
    35,203,258Proceeds from exercise of common stock
    
    
    
    
    
    
    100,000
    
    
    
    298,546Proceeds from issuance of notes payable
    
    
    187,058
    
    
    
    66,808
    
    
    
    1,676,058Proceeds from borrowings on line of credit
    
    
    76,740
    
    
    
    342,180
    
    
    
    76,740Notes financing costs
    
    
    
    
    
    
    281,805
    
    
    
    262,077Advances from stockholder and related party
    
    
    216,270
    
    
    
    196,609
    
    
    
    3,493,156Repayments of advances from stockholder
    
    
    
    
    
    
    
    
    
    
    (1,874,728
    )Repurchases of common stock held in treasury
    
    
    
    
    
    
    
    
    
    
    (3,100
    )Proceeds from notes payable issued to stockholder and related party
    
    
    
    
    
    
    
    
    
    
    2,546,533Net cash provided by financing activities
    
    
    489,980
    
    
    
    987,402
    
    
    
    63,948,110NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (13,328
    )
    
    
    10,967
    
    
    
    100,530EFFECT OF EXCHANGE RATE CHANGES
    
    
    
    
    
    
    
    
    
    
    (111,497
    )BEGINNING OF PERIOD
    
    
    13,328
    
    
    
    2,361
    
    
    
    END OF PERIOD
    
    $
    
    
    
    $
    13,328
    
    
    $
    (10,967
    )Supplementary disclosure of cash flow information:Cash paid for interest
    
    $
    
    
    
    $
    
    
    
    $
    Cash paid for taxes
    
    $
    
    
    
    $
    
    
    
    $
    
   F-6




---



##### 



BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
 Period October 16,1987 (Date ofInception)ThroughDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:Cash paid for interest
    
    $
    
    
    
    $
    
    
    
    $
    857,003Cash paid for taxes
    
    $
    
    
    
    $
    
    
    
    $
    SUPPLEMENTAL SCHEDULE FOR NONCASH
INVESTING AND FINANCING ACTIVITIES:During the fiscal year ended December 31, 2005, 897,500 shares of Common Stock
due as penalty for non-payment of notes payable on maturity issued:
    
    $
    
    
    
    $
    
    
    
    $
    17,949During the fiscal year ended December 31, 2005, a principal shareholder and his associates repaid
the Companys line of credit and the debt is reflected in the financial statements as
advances from stockholder:
    
    $
    
    
    
    $
    
    
    
    $
    1,200,000During the fiscal year ended December 31, 2007, 1,000,000 shares of Common Stock
issued to former employee, in liue of accrued liabilities
    
    $
    
    
    
    $
    
    
    
    $
    100,000
   F-7




---



##### 



BIOFIELD CORP.
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  ORGANIZATION
 Organization
       F-8




---



##### 




    
    Move from a development stage entity to an operating entity;
    
    Settling legacy outstanding obligations;
    
    Continued review of all expenditures in order to minimize costs;
    
    Raise additional working capital as necessary; and
    
    Generate revenue from foreign markets such as China and India
where MKG has significant government and industrial relationships.
   NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principals of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
  Inventory and Inventory Valuation Reserve
  Fair Value of Financial Instruments
   F-9




---



##### 



Property and Equipment
  Patents and Other Intangible Assets
  Revenue Recognition
  Income Taxes
  Derivative Financial Instruments
      F-10




---



##### 



Warrants
  Net Loss Per Share
  Reclassification
  Impairment of Long-Lived Assets
   F-11




---



##### 



Research and Development
  Comprehensive Income
  RECENT ACCOUNTING PRONOUNCEMENTS
        F-12




---



##### 



F-13




---



##### 



F-14




---



##### 



F-15




---



##### 



a.
    
    Recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree.b.
    
    Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.c.
    
    Determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of
the business combination.
       F-16




---



##### 



NOTE 3  MATERIAL DEVELOPMENTS
     The Debt Conversion
   F-17




---



##### 



The MKG Master License
    F-18




---



##### 



NOTE 4  INVENTORIES
  2008
    
    
    2007Components and supplies
    
    $
    
    
    
    $
    37,749Finished goods
    
    
    
    
    
    
    437,669
    
    
    
    475,418Less: Reserve for potential losses
    
    
    
    
    
    
    (475,418
    )$
    
    
    
    $
    
  NOTE 5  PROPERTY, PLANT AND EQUIPMENT
  2008
    
    
    2007Furniture and Office equipment
    
    $
    61,686
    
    
    $
    61,686Plant and production equipment
    
    
    144,308
    
    
    
    141,308205,994
    
    
    
    205,994Less: Accumulated depreciation
    
    
    200,783
    
    
    
    199,393$
    5,211
    
    
    $
    6,601
  NOTE 6  PATENT AND PATENT APPLICATION COSTS
   NOTE 7  ACCRUED EXPENSES
  2008
    
    
    2007Professional fees
    
    $
    848,704
    
    
    $
    132,573Due to officers
    
    
    985,833
    
    
    
    Due to ex-employees
    
    
    117,245
    
    
    
    117,245Other
    
    
    107,041
    
    
    
    180,672$
    2,058,823
    
    
    $
    430,489
  F-19




---



##### 



NOTE 8  DUE TO AFFILIATE
   NOTE 9  ADVANCES FROM STOCKHOLDER
     NOTE 10  NOTES PAYABLE
      F-20




---



##### 



NOTE 11  LINE OF CREDIT
  NOTE 12  STOCKHOLDERS EQUITY
        F-21




---



##### 



NOTE 13  INCOME TAXES
  December 31,2008
    
    
    2007Current:Federal and State
    
    $
    
    
    
    $
    Deferred:Federal and State
    
    
    4,286,709
    
    
    
    497,9804,286,709
    
    
    
    497,980Increase in valuation allowance
    
    
    (4,286,709
    )
    
    
    (497,980
    )Benefit for income taxes, net
    
    $
    
    
    
    $
    
  December 31,2008
    
    
    2007Statutory federal and State income tax rate
    
    
    39.00
    %
    
    
    34.00
    %Valuation allowance
    
    
    (39.00
    )%
    
    
    (34.00
    )%Effective tax rate
    
    
    0.00
    %
    
    
    0.00
    %
  2008
    
    
    2007Deferred tax assets:Current
    
    $
    
    
    
    $
    Net operating loss carry forward
    
    
    30,717,241
    
    
    
    25,919,923Research and development credits
    
    
    
    
    
    
    510,609Total deferred tax assets
    
    
    30,717,241
    
    
    
    26,430,532Less valuation allowance
    
    
    (30,717,241
    )
    
    
    (26,430,532
    )Net deferred income tax asset
    
    $
    
    
    
    $
    
  NOTE 14  COMMITMENTS
  Rent2009
    
    $
    42,5722010
    
    
    17,920Total
    
    $
    102,015
  F-22




---



##### 



NOTE 15  ROYALTY AGREEMENT
    NOTE 16  THE COMPANY COMPLETES ITS 1 FOR 10 REVERSE STOCK SPLIT OF ITS COMMON STOCK
   F-23




---



##### 



NOTE 17  SUBSEQUENT EVENTS
  Number
    
    Purchaser
    
    Consideration
    
    Price Per Share880,000
    
    Capital Growth Equity Fund I, LLC
    
    $110,000 in cash
    
    $
    0.1252,480,000
    
    Capital Growth Equity Fund I, LLC
    
    conversion of $372,000 of debt
    
    $
    0.15333,333
    
    Capital Growth Financial, LLC
    
    conversion of $50,000 of debt
    
    $
    0.15
       
   F-24