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| x      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-----------------------------------------------------------------------------------------|
|   | For the quarterly period ended June 30, 2010                                            |

| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------|
|   | For the transition period from _________to _________                                     |

| Delaware                                                       |   | 26-3128407                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

|                                           |   |       |
|------------------------------------------------|--------|------------|
| 4600 Post Oak Place, Suite 352, Houston, Texas |   | 77027      |
| (Address of principal executive offices)       |   | (Zip Code) |

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x |
|------------------------------------------|--------------------------|------------------------------|---------------------------------------|

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Table of Contents 

TABLE OF CONTENTS

|                                  |                                                                                                    | Page     |
|---------------------------------------|---------------------------------------------------------------------------------------------------------|----------|
|                                  |                                                                                                    |     |
|   PART I - FINANCIAL INFORMATION |
|                                  |                                                                                                    |     |
| Item 1.                               | Financial Statements                                                                                    | 4        |
|                                  | Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                                   | 4        |
|                                  | Consolidated Statements of Operations for the three and six months ended June 30, 2010 and June 30,2009 | 5        |
|                                  | Consolidated Statements of Changes in Stockholders’ Deficiency as of June 30, 2010                | 6        |
|                                  | Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and June 30, 2009          | 24       |
|                                  | Notes to Consolidated Financial Statements                                                              | 26       |
| Item 2.                               | Management’s Discussion and Analysis of Financial Condition and Results of Operations             | 45       |
| Item 3.                               | Quantitative and Qualitative Disclosures About Market Risk                                              | 52       |
| Item 4.                               | Controls and Procedures                                                                                 | 52       |
|                                  |                                                                                                    |     |
|   PART II - OTHER INFORMATION    |
|                                  |                                                                                                    |     |
| Item 1.                               | Legal Proceedings                                                                                       | 53       |
| Item 1A.                              | Risk Factors                                                                                            | 53       |
| Item 2.                               | Unregistered Sales of Equity Securities and Use of Proceeds                                             | 55       |
| Item 3.                               | Defaults Upon Senior Securities                                                                         | 55       |
| Item 4.                               | Submission of Matters to a Vote of Security Holders                                                     | 55       |
| Item 5.                               | Other Information                                                                                       | 55       |
| Item 6.                               | Exhibits                                                                                                | 56       |
|                                  |                                                                                                    |     |
| Signature                        |                                                                                                    |  57 |

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Table of Contents 

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Table of Contents 

| ITEM 1. | FINANCIAL STATEMENTS |
|--------------|----------------------|

OMNIMMUNE 

|                                                                             |   | June 30,    |        |   | December 31, |   |
|----------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
|                                                                             |   | 2010        |        |   | 2009         |   |
| Assets                                                                           |   | (Unaudited) |        |   |         |   |
| Current assets                                                                   |   |        |        |   |         |   |
|                                                                             |   |        |        |   |         |   |
| Cash and cash equivalents                                                        |   | $           | 87,784      |   |         | $      | 5,627 |   |
| Prepaid insurance                                                                |   |        | 6,674       |   |         |   | 25,805 |   |
|                                                                             |   |        |        |   |         |   |   |   |
|       Total current assets                         |   | $           | 94,458      |   |         | $      | 31,432 |   |
|                                                                             |   |        |        |   |         |   |   |   |
| Liabilities and stockholders' deficiency                                         |   |        |        |   |         |   |   |   |
| Current liabilities                                                              |   |        |        |   |         |   |   |   |
| Accounts payable and accrued liabilities                                         |   | $           | 694,257     |   |         | $      | 906,893 |   |
| Accounts payable and accrued liabilities-related party                           |   |        | 1,447,624   |   |         |   | 1,156,038 |   |
| Lines of credit                                                                  |   |        | 249,649     |   |         |   | 253,059 |   |
| Accrued interest, net                                                            |   |        | 317,570     |   |         |   | 327,078 |   |
| Accrued interest- related party                                                  |   |        | 487,929     |   |         |   | 483,836 |   |
| Cash advance                                                                     |   |        | 301,400     |   |         |   | 310,400 |   |
| Notes payable, net                                                               |   |        | 987,046     |   |         |   | 987,046 |   |
|                                                                             |   |        |        |   |         |   |   |   |
|       Total current liabilities                    |   |        | 4,485,475   |   |         |   | 4,424,350 |   |
|                                                                             |   |        |        |   |         |   |   |   |
| Long term portion of notes payable                                               |   |        | 29,757      |   |         |   | 29,374 |   |
| Long term portion of notes payable - due to related parties                      |   |        | 1,006,246   |   |         |   | 1,003,563 |   |
|                                                                             |   |        |        |   |         |   |   |   |
|   Total liabilities                                                    |   |        | 5,521,478   |   |         |   | 5,457,287 |   |
|                                                                             |   |        |        |   |         |   |   |   |
| Commitments and contingencies                                                    |   |        | -           |   |         |   | - |   |
|                                                                             |   |        |        |   |         |   |   |   |
| Stockholders' deficiency                                                         |   |        |        |   |         |   |   |   |
|    Common stock, $0.0001 par value; 50,000,000 shares authorized; |   |        |        |   |         |   |   |   |
|  8,914,921 shares issued and outstanding                                    |   |        |        |   |         |   |   |   |
| at June 30, 2010 and December 31, 2009                                           |   |        | 890         |   |         |   | 890 |   |
|    Additional paid-in capital                                     |   |        | 16,699,128  |   |         |   | 15,671,385 |   |
| Common stock subscribed                                                          |   |        | 1,137       |   |         |   | 1,137 |   |
|    Deficit Accumulated during the Development Stage                    |   |        | (22,128,175 | )      |         |   | (21,099,267 | ) |
|       Total stockholder's deficiency               |   |        | (5,427,020  | )      |         |   | (5,425,855 | ) |
|                                                                             |   | $           | 94,458      |   |         | $      | 31,432 |   |

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Table of Contents 

OMNIMMUNE 

|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   | Cumulative from    |      |
|----------------------------------------------------------------------------------|--------|---------------|-----------|--------|---------------|--------|-----------|--------------|--------|--------|--------------|--------|--------|--------------------|-----------|
|                                                                             |   | For the Three |      |   | For the Three |   |      | For the Six  |   |   | For the Six  |   |   | Inception          |      |
|                                                                             |   | Months Ended  |      |   | Months Ended  |   |      | Months Ended |   |   | Months Ended |   |   | (January 12, 2005) |      |
|                                                                             |   | June 30,      |      |   | June 30,      |   |      | June 30,     |   |   | June 30,     |   |   | to June 30,        |      |
|                                                                             |   | 2010          |      |   | 2009          |   |      | 2010         |   |   | 2009         |   |   | 2010               |      |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |
|    Revenue                                                        |   | $             | -         |   |          | $      | -         |         |   | $      | -            |   |   | $                  | -         |   |   | $ | - |   |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
| Operating expenses:                                                              |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
|    Sales, general and administrative expenses                     |   |          | 449,607   |   |          |   | 400,166   |         |   |   | 713,218      |   |   |               | 721,907   |   |   |   | 14,752,287 |   |
|    Impairment of license agreement                                |   |          | -         |   |          |   | -         |         |   |   | -            |   |   |               | -         |   |   |   | 1,701,936 |   |
|       Total operating expenses                     |   |          | 449,607   |   |          |   | 400,166   |         |   |   | 713,218      |   |   |               | 721,907   |   |   |   | 16,454,223 |   |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
| Operating loss                                                                   |   |          | (449,607  | )      |          |   | (400,166  | )            |   |   | (713,218     | )      |   |               | (721,907  | ) |   |   | (16,454,223 | ) |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
| Other (income) and expense:                                                      |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
|    Interest expense, net                                          |   |          | 75,073    |   |          |   | 58,818    |         |   |   | 307,007      |   |   |               | 115,506   |   |   |   | 12,082,418 |   |
|    Cancellation of shares previously issued for license agreement |   |          | -         |   |          |   | -         |         |   |   | -            |   |   |               | -         |   |   |   | (842,514 | ) |
|    (Gain) on termination of license agreement                     |   |          | (497,072  | )      |          |   |      |         |   |   | (497,072     | )      |   |               |      |   |   |   | (497,072 | ) |
|    (Gain) loss on restructuring of debt                           |   |          | -         |   |          |   | -         |         |   |   | 505,755      |   |   |               | -         |   |   |   | (5,068,880 | ) |
| Total other (income) expense                                                     |   |          | (421,999  | )      |          |   | 58,818    |         |   |   | (315,690     | )      |   |               | (115,506  | ) |   |   | (5,673,952 | ) |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
|   Loss before income taxes                                        |   |          | (27,608   | )      |          |   | (458,984  | )            |   |   | (1,028,908   | )      |   |               | (837,413  | ) |   |   | (22,128,175 | ) |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
|    Provision for income taxes                                |   |          | -         |   |          |   | -         |         |   |   | -            |   |   |               | -         |   |   |   | - |   |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
| Net loss                                                                         |   | $             | (27,608   | )      |          | $      | (458,984  | )            |   | $      | (1,028,908   | )      |   | $                  | (837,413  | ) |   | $ | (22,128,175 | ) |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
| Net loss per share – basic and diluted                                     |   | $             | (0.00     | )      |          | $      | (0.05     | )            |   | $      | (0.12        | )      |   | $                  | (0.09     | ) |   |   |   |   |
|                                                                             |   |          |      |   |          |   |      |         |   |   |         |   |   |               |      |   |   |   |   |   |
| Weighted average shares outstanding – basic and diluted                    |   |          | 8,914,926 |   |          |   | 8,814,926 |         |   |   | 8,914,926    |   |   |               | 8,814,926 |   |   |   |   |   |

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Table of Contents 

OMNIMMUNE 

|                                                                          |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |      |
|------------------------------------------------------------------------------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|-----------|
|                                                                               |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |      |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |
| Balance at January 15, 1997 (date of inception)                                    |   |            | -      |   |         | $      | -      |                       |   | $      | -      |   |   |   | -         |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contribution of assets and liabilities by founder                                  |   |            | 11,229 |   |         |   | 112    |                       |   |   | 49,888 |   |   |   | 1,055,507 |   |   |   | 106 |   |   |   | 43,466 |   |   |   | - |   |   |   | - |   |   |   | 93,572 |   |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beneficial conversion feature of note payable for the year ended December 31, 1997 |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -         |   |   |   | - |   |   |   | 327,700 |   |   |   | - |   |   |   | - |   |   |   | 327,700 |   |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year ended December 31, 1997                                          |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,366,300 | ) |   |   | (1,366,300 | ) |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 1997                                                    |   |            | 11,229 |   |         | $      | 112    |                       |   | $      | 49,888 |   |   |   | 1,055,507 |   |   | $ | 106 |   |   | $ | 371,166 |   |   | $ | - |   |   | $ | (1,366,300 | ) |   | $ | (945,028 | ) |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beneficial conversion feature of note payable for the year ended December 31, 1998 |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -         |   |   |   | - |   |   |   | 43,000 |   |   |   | - |   |   |   | - |   |   |   | 43,000 |   |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year ended December 31, 1998                                          |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (328,534 | ) |   |   | (328,534 | ) |
|                                                                               |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 1998                                                    |   |            | 11,229 |   |         | $      | 112    |                       |   | $      | 49,888 |   |   |   | 1,055,507 |   |   | $ | 106 |   |   | $ | 414,166 |   |   | $ | - |   |   | $ | (1,694,834 | ) |   | $ | (1,230,562 | ) |

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Table of Contents 

|                                                                               |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                    |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |
| Issuance of 55,553 shares of common stock for technology license at $1.10 per share     |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 55,553 |   |   |   | 5 |   |   |   | 61,837 |   |   |   | - |   |   |   | - |   |   |   | 61,842 |   |
|                                                                                    |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors |   |            | 5,614  |   |         |   | 56     |                       |   |   | 24,944 |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                    |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors |   |            | 5,614  |   |         |   | 56     |                       |   |   | 24,944 |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                    |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors |   |            | 5,614  |   |         |   | 56     |                       |   |   | 24,944 |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                    |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors |   |            | 5,614  |   |         |   | 56     |                       |   |   | 24,944 |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                    |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beneficial conversion feature of note payable for the year ended December 31, 1999      |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | 12,000 |   |   |   | - |   |   |   | - |   |   |   | 12,000 |   |

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Table of Contents 

|                                                                                        |   | Preferred Stock |    |   | Common Stock |   |    |                       |   |   |    |   |   |   |      |
|--------------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|---------|----------------------------|--------|--------|---------|--------|--------|--------|-----------|
|                                                                                             |   | Shares          |    |   | Value        |   |    | Additional Paid-in Capital |   |   | Shares  |   |   | Value  |      |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |
| Loss for the year ended December 31, 1999                                                        |   | -               |    |   | -            |   |    | -                          |   |   |    | -      |   |   |      | - |   |   |   | - |   |   |   | - |   |   |   | (429,692 | ) |   |   | (429,692 | ) |
|                                                                                             |   |            |    |   |         |   |    |                       |   |   |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 1999                                                                  |   |            | 33,685  |   |         | $      | 336     |                       |   | $      | 149,664 |   |   |   | 1,111,060 |   |   | $ | 111 |   |   | $ | 488,003 |   |   | $ | - |   |   | $ | (2,124,526 | ) |   | $ | (1,486,412 | ) |
|                                                                                             |   |            |    |   |         |   |    |                       |   |   |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors          |   |            | 5,614   |   |         |   | 56      |                       |   |   | 24,944  |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                             |   |            |    |   |         |   |    |                       |   |   |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 11,229 shares of convertible preferred stock at $4.45 per share to investors         |   |            | 11,229  |   |         |   | 112     |                       |   |   | 49,888  |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,000 |   |
|                                                                                             |   |            |    |   |         |   |    |                       |   |   |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors          |   |            | 5,614   |   |         |   | 56      |                       |   |   | 24,944  |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                             |   |            |    |   |         |   |    |                       |   |   |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant forservices rendered |   |            | -       |   |         |   | -       |                       |   |   | -       |   |   |   | 2,807     |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                             |   |            |    |   |         |   |    |                       |   |   |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beneficial conversion feature of note payable for the year ended December 31, 2000               |   |            |  - |   |         |   |  - |                       |   |   |  - |   |   |   |  -   |   |   |   |  - |   |   |   | 30,302 |   |   |   |  - |   |   |   |  - |   |   |   | 30,302 |   |

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Table of Contents 

|                                                                                                                   |   | Preferred Stock |    |   | Common Stock |    |    |                       |   |    |    |   |   |   |      |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|---------|---------|----------------------------|--------|---------|---------|--------|--------|--------|-----------|
|                                                                                                                        |   | Shares          |    |   | Value        |    |    | Additional Paid-in Capital |   |    | Shares  |   |   | Value  |      |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |
| Loss for the year ended December 31, 2000                                                                                   |   |            |  - |   |         |    |  - |                       |   |    |  - |   |   |   |  -   |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | (422,306 | )  |   |   | (422,306 | )  |
|                                                                                                                        |   |            |    |   |         |    |    |                       |   |    |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2000                                                                                             |   |            | 56,142  |   |         | $  | 560     |                       |   | $  | 249,440 |   |   |   | 1,113,867 |   |   | $  | 111 |   |   | $  | 524,555 |   |   | $  |  - |   |   | $  | (2,546,832 | )  |   | $  | (1,772,166 | )  |
|                                                                                                                        |   |            |    |   |         |    |    |                       |   |    |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 1,055,507 shares of common stock at $2.24 per share in exchange for 2,500,000 shares in InVitro technology |   |            | -       |   |         |    | -       |                       |   |    | -       |   |   |   | 1,055,507 |   |   |   | 107 |   |   |   | 59,894 |   |   |   | - |   |   |   | - |   |   |   | 60,001 |   |
|                                                                                                                        |   |            |    |   |         |    |    |                       |   |    |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered                           |   |            | -       |   |         |    | -       |                       |   |    | -       |   |   |   | 2,807     |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                                                        |   |            |    |   |         |    |    |                       |   |    |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered                           |   |            | -       |   |         |    | -       |                       |   |    | -       |   |   |   | 2,807     |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                                                        |   |            |    |   |         |    |    |                       |   |    |    |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered                           |   |            | -       |   |         |    | -       |                       |   |    | -       |   |   |   | 2,807     |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |

----

Table of Contents 

|    |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|         |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |

| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 2,807  |   |   |   | -      |   |   |   | 6,250  |   |   |   | -      |   |   |   | -      |   |   |   | 6,250  |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 2,807  |   |   |   | -      |   |   |   | 6,250  |   |   |   | -      |   |   |   | -      |   |   |   | 6,250  |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 2,807  |   |   |   | -      |   |   |   | 6,250  |   |   |   | -      |   |   |   | -      |   |   |   | 6,250  |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 2,807  |   |   |   | -      |   |   |   | 6,250  |   |   |   | -      |   |   |   | -      |   |   |   | 6,250  |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 2,807  |   |   |   | -      |   |   |   | 6,250  |   |   |   | -      |   |   |   | -      |   |   |   | 6,250  |   |

----

Table of Contents 

|                                                                                              |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                              |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 2,807  |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 2,807  |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 2,807  |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 2,807 shares of common stock at $2.24 per share to a consultant for services rendered |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 2,807  |   |   |   | - |   |   |   | 6,250 |   |   |   | - |   |   |   | - |   |   |   | 6,250 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 60,665 shares of common stock at $2.24 per share for a technology license             |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 60,665 |   |   |   | 7 |   |   |   | 135,060 |   |   |   | - |   |   |   | - |   |   |   | 135,067 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors           |   |            | 5,614  |   |         |   | 56     |                       |   |   | 24,944 |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 5,614 shares of convertible preferred stock at $4.45 per share to investors      |   |            | 5,614  |   |         |   | 56     |                       |   |   | 24,944 |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
|                                                                                              |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 7,018 shares of common stock at $2.24 per share to a consultant for services rendered |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 7,018  |   |   |   | 2 |   |   |   | 15,624 |   |   |   | - |   |   |   | - |   |   |   | 15,626 |   |

----

Table of Contents 

|   |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |
|--------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|
|   |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value |   |   | Additional Paid-in Capital |   | CommonStockSubscribed |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |

| Value of 14,036 warrants issued to consultants                                     |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  -   |   |   |   |  - |   |   |   | 15,500  |   |   |   |  - |   |   |   |  -    |   |   |   | 15,500     |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
|                                                                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |       |   |   |   |       |   |
| Beneficial conversion feature of note payable for the year ended December 31, 2001 |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -         |   |   |   | -       |   |   |   | 25,000  |   |   |   | -       |   |   |   | -          |   |   |   | 25,000     |   |
|                                                                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |       |   |   |   |       |   |
| Loss for the year ended December 31, 2001                                          |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -         |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | (959,531   | )      |   |   | (959,531   | )      |
|                                                                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |       |   |   |   |       |   |
| Balance as of December 31, 2001                                                    |   |   | 67,370  |   |   | $      | 672     |   |   | $      | 299,328 |   |   |   | 2,270,741 |   |   | $      | 227     |   |   | $      | 850,633 |   |   | $      | -       |   |   | $      | (3,506,363 | )      |   | $      | (2,355,503 | )      |
|                                                                               |   |   |    |   |   |   |    |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |       |   |   |   |       |   |

| Issuance of 1,123 shares of convertible preferred stock at $4.45 per share to investors                       |   |   | 1,123   |   |   |   | 11     |   |   |   | 4,989   |   |   |   | -      |   |   |   | -      |   |   |   | -      |   | -      |   |   | -      |   |   |   | 5,000  |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of 11,229 shares convertible preferred stock into 44,915 shares of common stock at $2.24 per share |   |   | (11,229 | )      |   |   | (112   | )      |   |   | (49,888 | )      |   |   | 44,915 |   |   |   | 4      |   |   |   | 49,996 |   | -      |   |   | -      |   |   |   | -      |   |
|                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share  |   |   | (5,614  | )      |   |   | (56    | )      |   |   | (24,944 | )      |   |   | 11,229 |   |   |   | 2      |   |   |   | 24,998 |   | -      |   |   | -      |   |   |   | -      |   |

----

Table of Contents 

|   |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |
|--------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|
|   |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value |   |   | Additional Paid-in Capital |   | CommonStockSubscribed |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |

| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share |   |   | (5,614 | ) |   |   | (56 | ) |   |   | (24,944 | ) |   |   | 11,229 |   |   |   | 2 |   |   |   | 24,998 |   | - |   |   | - |   |   |   | - |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|--------|---|--------|--------|-----|---|--------|--------|---------|---|--------|--------|--------|--------|--------|--------|---|--------|--------|--------|--------|--------|---|--------|--------|---|--------|--------|--------|---|--------|

|                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share  |   |   | (5,614  | )      |   |   | (56    | )      |   |   | (24,944 | )      |   |   | 11,229 |   |   |   | 1      |   |   |   | 24,999 |   | -      |   |   | -      |   |   |   | -      |   |
|                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of 16,843 shares convertible preferred stock into 33,686 shares of common stock at $2.24 per share |   |   | (16,843 | )      |   |   | (168   | )      |   |   | (74,832 | )      |   |   | 33,686 |   |   |   | 3      |   |   |   | 74,997 |   | -      |   |   | -      |   |   |   | -      |   |
|                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Conversion of 16,843 shares convertible preferred stock into 33,686 shares of common stock at $2.24 per share |   |   | (16,843 | )      |   |   | (168   | )      |   |   | (74,832 | )      |   |   | 33,686 |   |   |   | 3      |   |   |   | 74,997 |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                          |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of 5,614 shares convertible preferred stock into 11,229 shares of common stock at $2.22 per share  |   |   | (5,614  | )      |   |   | (168   | )      |   |   | (24,944 | )      |   |   | 11,229 |   |   |   | 1      |   |   |   | 24,999 |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |

----

Table of Contents 

|   |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |
|--------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|
|   |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value |   |   | Additional Paid-in Capital |   | CommonStockSubscribed |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |

| Conversion of 1,123 shares convertible preferred stock into 2,246 shares of common stock at $2.24 per share |   |   | (1,122 | )  |   |   | (11    |  )  |   |   | (4,989 | )  |   |   | 2,246     |   |   |   |  - |   |   |   | 5,000     |   |   |   |  - |   |   |   |  -    |   |   |   |  -    |    |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|---------------|--------|--------|--------|---------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|------------|--------|--------|--------|------------|---------|
|                                                                                                        |   |   |   |    |   |   |   |          |   |   |   |    |   |   |      |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |       |   |   |   |       |    |
| Beneficial conversion feature of note payable for the year ended December 31, 2002                          |   |   | -      |    |   |   | -      |          |   |   | -      |    |   |   | -         |   |   |   | -       |   |   |   | 1,175,356 |   |   |   | -       |   |   |   | -          |   |   |   | 1,175,356  |    |
|                                                                                                        |   |   |   |    |   |   |   |          |   |   |   |    |   |   |      |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |       |   |   |   |       |    |
| Loss for the year ended December 31, 2002                                                                   |   |   | -      |    |   |   | -      |          |   |   | -      |    |   |   | -         |   |   |   | -       |   |   |   | -         |   |   |   | -       |   |   |   | (3,061,599 | )      |   |   | (3,061,599 | )  |
|                                                                                                        |   |   |   |    |   |   |   |          |   |   |   |    |   |   |      |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |       |   |   |   |       |    |
| Balance as of December 31, 2002                                                                             |   |   | -      |    |   | $      | -      |          |   | $      | -      |    |   |   | 2,430,190 |   |   | $      | 243     |   |   | $      | 2,330,973 |   |   | $      | -       |   |   | $      | (6,567,962 | )      |   | $      | (4,236,746 | )  |
|                                                                                                        |   |   |   |    |   |   |   |          |   |   |   |    |   |   |      |   |   |   |    |   |   |   |      |   |   |   |    |   |   |   |       |   |   |   |       |    |

| Beneficial conversion feature of note payable for the year ended December 31, 2003 |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 29,401    |   |   |   | -      |   |   |   | -          |   |   |   | 29,401     |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Loss for the year ended December 31, 2003                                          |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | (540,986   | )      |   |   | (540,986   | )      |
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Balance as of December 31, 2003                                                    |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 2,430,190 |   |   | $      | 243    |   |   | $      | 2,360,374 |   |   | $      | -      |   |   | $      | (7,108,948 | )      |   | $      | (4,748,331 | )      |

----

Table of Contents 

|                                                                                |   | Preferred Stock |    |   | Common Stock |   |    |                       |   |   |    |   |   |   |   |
|-----------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|---------|----------------------------|--------|--------|---------|--------|--------|--------|--------|
|                                                                                          |   | Shares          |    |   | Value        |   |    | Additional Paid-in Capital |   |   | Shares  |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | TotalStockholdersEquity |   |
|  Issuance of 1,404 shares of common stock at $2.24 to a consultant for services rendered |   |            |  - |   |         |   |  - |                       |   |   |  - |   |   |   | 1,404  |   |   |   |  - |   |   |   | 3,125 |   |   |   |  - |   |   |   |  - |   |   |   | 3,125 |   |

|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
|-----------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
| Issuance of 1,404 shares of common stock at $2.24 to a consultant for services rendered |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,404     |   |   |   | -      |   |   |   | 3,125     |   |   |   | -      |   |   |   | -          |   |   |   | 3,125      |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Value of 26,107 warrants issued to consultants                                          |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 93,000    |   |   |   | -      |   |   |   | -          |   |   |   | 93,000     |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Beneficial conversion feature of note payable for the year ended December 31, 2004      |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 17,149    |   |   |   | -      |   |   |   | -          |   |   |   | 17,149     |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Loss for the year ended December 31, 2004                                               |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | (1,252,796 | )      |   |   | (1,252,796 | )      |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Balance as of December 31, 2004                                                         |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 2,432,998 |   |   | $      | 243    |   |   | $      | 2,476,773 |   |   | $      | -      |   |   | $      | (8,361,744 | )      |   | $      | (5,884,728 | )      |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Issuance of 134,746 shares of common stock at $2.24 for a technology license            |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 134,746   |   |   |   | 13     |   |   |   | 299,987   |   |   |   | -      |   |   |   | -          |   |   |   | 300,000    |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Issuance of 6,661 shares at $3.74 per share for cash                                    |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 6,661     |   |   |   | 1      |   |   |   | 24,999    |   |   |   | -      |   |   |   | -          |   |   |   | 25,000     |   |

----

Table of Contents 

|    |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|         |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |

| Beneficial conversion feature of note payable for the year ended December 31, 2005 |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 72,000    |   |   |   | -      |   |   |   | -          |   |   |   | 72,000     |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Loss for the year ended December 31, 2005                                          |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | (1,141,448 | )      |   |   | (1,141,448 | )      |
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |
| Balance as of December 31, 2005                                                    |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 2,574,405 |   |   | $      | 257    |   |   | $      | 2,873,759 |   |   | $      | -      |   |   | $      | (9,503,192 | )      |   | $      | (6,629,176 | )      |
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |       |   |

| Issuance of 4,913 shares of common stock pursuant to an antidilution agreement |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 4,913  |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,235  |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,235  |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,235  |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |

----

Table of Contents 

|    |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|         |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |

| Issuance of 3,706 shares of common stock pursuant to an antidilution agreement |   |   | -       |   |   |    | -       |   |   |    | -       |   |   |   | 3,705     |   |   |    | -      |   |   |    | -         |   |   |    | -       |   |   |    | -           |    |   |    | -          |    |
|--------------------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|---------|--------|--------|---------|---------|--------|--------|--------|-----------|--------|--------|---------|--------|--------|--------|---------|-----------|--------|--------|---------|---------|--------|--------|---------|-------------|---------|--------|---------|------------|---------|
|                                                                           |   |   |    |   |   |    |    |   |   |    |    |   |   |   |      |   |   |    |   |   |   |    |      |   |   |    |    |   |   |    |        |    |   |    |       |    |
| Issuance of 3,706 shares of common stock pursuant to an antidilution agreement |   |   | -       |   |   |    | -       |   |   |    | -       |   |   |   | 3,705     |   |   |    | -      |   |   |    | -         |   |   |    | -       |   |   |    | -           |    |   |    | -          |    |
|                                                                           |   |   |    |   |   |    |    |   |   |    |    |   |   |   |      |   |   |    |   |   |   |    |      |   |   |    |    |   |   |    |        |    |   |    |       |    |
| Issuance of 1,235 shares of common stock pursuant to an antidilution agreement |   |   | -       |   |   |    | -       |   |   |    | -       |   |   |   | 1,235     |   |   |    | -      |   |   |    | -         |   |   |    | -       |   |   |    | -           |    |   |    | -          |    |
|                                                                           |   |   |    |   |   |    |    |   |   |    |    |   |   |   |      |   |   |    |   |   |   |    |      |   |   |    |    |   |   |    |        |    |   |    |       |    |
| Issuance of 225 pursuant to an antidilution agreement                          |   |   | -       |   |   |    | -       |   |   |    | -       |   |   |   | 225       |   |   |    | -      |   |   |    | -         |   |   |    | -       |   |   |    | -           |    |   |    | -          |    |
|                                                                           |   |   |    |   |   |    |    |   |   |    |    |   |   |   |      |   |   |    |   |   |   |    |      |   |   |    |    |   |   |    |        |    |   |    |       |    |
| Beneficial conversion feature of note payable for the year ended               |   |   | -       |   |   |    | -       |   |   |    | -       |   |   |   | -         |   |   |    | -      |   |   |    | 4,000     |   |   |    | -       |   |   |    | -           |    |   |    | 4,000      |    |
|                                                                           |   |   |    |   |   |    |    |   |   |    |    |   |   |   |      |   |   |    |   |   |   |    |      |   |   |    |    |   |   |    |        |    |   |    |       |    |
| Loss for the year ended December 31, 2006                                      |   |   | -       |   |   |    | -       |   |   |    | -       |   |   |   | -         |   |   |    | -      |   |   |    | -         |   |   |    | -       |   |   |    | (1,076,266  | )       |   |    | (1,076,266 | )       |
|                                                                           |   |   |    |   |   |    |    |   |   |    |    |   |   |   |      |   |   |    |   |   |   |    |      |   |   |    |    |   |   |    |        |    |   |    |       |    |
| Balance at December 31, 2006                                                   |   |   |  - |   |   | $  |  - |   |   | $  |  - |   |   |   | 2,591,893 |   |   | $  | 257    |   |   | $  | 2,877,759 |   |   | $  |  - |   |   | $  | (10,579,458 | )  |   | $  | (7,701,442 | )  |

----

Table of Contents 

|                                                                                        |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                             |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |
| Issuance of 7,018 shares of common stock at $3.74 per share for services rendered                |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 7,017  |   |   |   | 2 |   |   |   | 26,249 |   |   |   | - |   |   |   | - |   |   |   | 26,251 |   |
|                                                                                             |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 25,989 shares of common stock  for $3.74 per share for licensing agreement |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 25,988 |   |   |   | 2 |   |   |   | 97,204 |   |   |   | - |   |   |   | - |   |   |   | 97,206 |   |
|                                                                                             |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of 25,989 shares  of common stock for $3.74 per share for licensing agreement |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | 25,990 |   |   |   | 2 |   |   |   | 97,204 |   |   |   | - |   |   |   | - |   |   |   | 97,206 |   |
|                                                                                             |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 119,053 shares  of common stock to be issued at $0.37 per share for license agreement  |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 445,305 |   |   |   | - |   |   |   | 445,305 |   |
|                                                                                             |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 119,053 shares to be issued at $0.37 per share for license agreement                             |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 445,305 |   |   |   | - |   |   |   | 445,305 |   |
|                                                                                             |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beneficial conversion feature of note payable for the year ended December 31, 2007               |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | 6,604,430 |   |   |   | - |   |   |   | - |   |   |   | 6,604,430 |   |
|                                                                                             |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss for the year months ended December 31, 2007                                                 |   |            | -      |   |         |   | -      |                       |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,768,669 | ) |   |   | (2,768,669 | ) |

----

Table of Contents 

|   |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |   |                       |   |
|--------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|----------------------------|--------|
|   |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |
|   |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Balance at December 31, 2007                                                      |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 2,650,888 |   |   | $      | 263    |   |   | $      | 9,702,846 |   |   | $      | 890,610  |   |   | $      | (13,348,127 | )      |   | $      | (2,754,408 | )      |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|----------|--------|--------|--------|-------------|--------|--------|--------|------------|--------|
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |        |   |   |   |       |   |
| Recapitalization upon reverse merger                                              |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 3,000,000 |   |   |   | 300    |   |   |   | (300      | )      |   |   | -        |   |   |   | -           |   |   |   | -          |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |        |   |   |   |       |   |
| Issuance of 119,053 shares of common stock at $0.37 per share, previously accrued |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 119,053   |   |   |   | 12     |   |   |   | 445,293   |   |   |   | (445,305 | )      |   |   | -           |   |   |   | -          |   |

|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |   |     |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Issuance of 119,053 shares of common stock at $0.37 per share, previously accrued                                                                                         |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 119,053   |   |   |   | 12     |   |   |   | 445,293 |   |   |   | (445,305 | )      |   |   | -      |   |   |   | -      |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Issuance of 1,055,507 shares of common stock for cash at a price of $0.011 per share                                                                                      |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,055,508 |   |   |   | 106    |   |   |   | 44,690  |   |   |   | -        |   |   |   | -      |   |   |   | 44,796 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Issuance of 100,000 shares of common stock and 20,000 warrants to purchase additional shares of common stock at a price of $0.05 per share as a discount on notes payable |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 100,000   |   |   |   | 10     |   |   |   | 55,991  |   |   |   | -        |   |   |   | -      |   |   |   | 56,001 |   |

----

Table of Contents 

|    |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|         |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |
|         |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Issuance of 1,055,508 shares of common stock at a price of $0.03 per share to a board member for services |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 1,055,507 |   |   |   | 105    |   |   |   | 29,895  |   |   |   | -      |   |   |   | -      |   |   |   | 30,000  |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Issuance of 150,000 shares of common stock at a price of $1.25 per share to officers for services         |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 150,000   |   |   |   | 15     |   |   |   | 187,485 |   |   |   | -      |   |   |   | -      |   |   |   | 187,500 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |
| Issuance of 137,500 shares of common stock at a price of $0.05 per share as a discount to notes payable   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 137,500   |   |   |   | 14     |   |   |   | 6,861   |   |   |   | -      |   |   |   | -      |   |   |   | 6,875   |   |

| Sale of 707,200 shares of common stock and 707,200 warrants to purchase additional shares of common stock at a price of $2.50 per share for cash, net of costs of $359,729 |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 707,200  |   |   |   | 71     |   |   |   | 1,408,200 |   |   |   | -      |   |   |   | -      |   |   |   | 1,408,271 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
|                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |      |   |
| Cancellation of shares issued for technology license                                                                                                                       |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | (279,788 | )      |   |   | (28    | )      |   |   | (842,486  | )      |   |   | -      |   |   |   | -      |   |   |   | (842,514  | )      |

----

Table of Contents 

|                                                                                                                                               |   |  Preferred Stock |   |   |  Common Stock |   |   |                             |   |   |         |   |   |        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|--------------------|--------|--------|----------------------------------|--------|--------|--------------|--------|--------|-------------|--------|
|                                                                                                                                               |   |  Shares          |   |   |  Value        |   |   |  Additional Paid-in Capital |   |   |  Shares |   |   |  Value |   |   |  Additional Paid-in Capital |   |   |  CommonStockSubscribed |   |   |  AccumulatedDeficit During the Development Stage |   |   |  Total StockholdersEquity |   |
| Value of options to purchase 2,250,000 shares of common stock at a price of $2,50 per shares issued to board member for extension of payment terms |   |                  | -      |   |               |   | -      |                             |   |   | -            |   |   |        | -      |   |   |   | - |   |   |   | 2,811,962 |   |   |   | - |   |   |   | - |   |   |   | 2,811,962 |   |
|                                                                                                                                               |   |                  |   |   |               |   |   |                             |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Value of warrants to purchase 75,000 shares of common stock at $2,50 per share issued to a board member for services                               |   |                  | -      |   |               |   | -      |                             |   |   | -            |   |   |        | -      |   |   |   | - |   |   |   | 93,733 |   |   |   | - |   |   |   | - |   |   |   | 93,733 |   |
|                                                                                                                                               |   |                  |   |   |               |   |   |                             |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Value of warrants to 70,180 shares of common stock at $1,78 per share issued to a board member for extension of credit terms                       |   |                  | -      |   |               |   | -      |                             |   |   | -            |   |   |        | -      |   |   |   | - |   |   |   | 129,278 |   |   |   | - |   |   |   | - |   |   |   | 129,278 |   |
|                                                                                                                                               |   |                  |   |   |               |   |   |                             |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Value of vested portion of options issued to officer                                                                                               |   |                  | -      |   |               |   | -      |                             |   |   | -            |   |   |        | -      |   |   |   | - |   |   |   | 54,848 |   |   |   | - |   |   |   | - |   |   |   | 54,848 |   |
|                                                                                                                                               |   |                  |   |   |               |   |   |                             |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount to notes payable due to beneficial conversion feature                                                                                     |   |                  | -      |   |               |   | -      |                             |   |   | -            |   |   |        | -      |   |   |   | - |   |   |   | 1,019,208 |   |   |   | - |   |   |   | - |   |   |   | 1,019,208 |   |

----

Table of Contents 

|    |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|         |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |
|         |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Loss for the year ended December 31, 2008 |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -          |   |   |   | -      |   |   |   | (5,989,872  | )      |   |   | (5,989,872 | )  |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|--------|--------|------------|---------|
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |    |
| Balance as of December 31, 2008           |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 8,814,921 |   |   | $      | 880    |   |   | $      | 15,592,797 |   |   | $      | -      |   |   | $      | (19,337,999 | )      |   | $      | (3,744,322 | )       |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |    |

| 40,845 shares to be issued for the exercise of 42,108 warrants to purchase shares of common stock |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -          |   |   |   | 1,137  |   |   |   | -           |   |   |   | 1,137      |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|--------|--------|------------|--------|
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Issuance of shares for services at a price of $0.30 per share                                     |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 50,000    |   |   |   | 5      |   |   |   | 14,995     |   |   |   | -      |   |   |   | -           |   |   |   | 15,000     |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Issuance of shares for services at a price of $0.44 per share                                     |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 50,000    |   |   |   | 5      |   |   |   | 21,995     |   |   |   | -      |   |   |   | -           |   |   |   | 22,000     |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Value of vested portion of 100,000 options issued to consultant                                   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 41,598     |   |   |   | -      |   |   |   | -           |   |   |   | 41,598     |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Loss for the year ended December 31, 2009                                                         |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -          |   |   |   | -      |   |   |   | (1,761,268  | )      |   |   | (1,761,268 | )      |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Balance as of December 31, 2009                                                                   |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 8,914,921 |   |   | $      | 890    |   |   | $      | 15,671,385 |   |   | $      | 1,137  |   |   | $      | (21,099,267 | )      |   | $      | (5,425,855 | )      |

----

Table of Contents 

|    |   | Preferred Stock |   |   | Common Stock |   |   |                       |   |   |   |   |   |   |   |
|--------------|--------|-----------------|--------|--------|--------------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|         |   | Shares          |   |   | Value        |   |   | Additional Paid-in Capital |   |   | Shares |   |   | Value  |   |   | Additional Paid-in Capital |   |   | CommonStockSubscribed |   |   | AccumulatedDeficit During the Development Stage |   |   | Total StockholdersEquity |   |
|         |   |            |   |   |         |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Discount to  notes payable associated with  beneficial conversion feature |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 895,100    |   |   |   | -      |   |   |   | -           |   |   |   | 895,100    |   |
|-----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|--------|--------|------------|--------|
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Discount to accrued interest associated with beneficial conversion feature                    |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 111,845    |   |   |   | -      |   |   |   | -           |   |   |   | 111,845    |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Value of vested portion of 100,000 options issued to consultant                               |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 10,399     |   |   |   | -      |   |   |   | -           |   |   |   | 10,399     |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Loss for the three months ended March 31, 2010                                                |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -          |   |   |   | -      |   |   |   | (1,001,300  | )      |   |   | (1,001,300 | )      |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |        |   |   |   |       |   |
| Balance as of March 31, 2010 (unaudited)                                                      |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 8,914,921 |   |   | $      | 890    |   |   | $      | 16,688,729 |   |   | $      | 1,137  |   |   | $      | (22,100,567 | )      |   | $      | (5,409,811 | )      |

|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |              |   |   |   |             |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|--------|--------|------------------|--------|
| Value of vested portion of 100,000 options issued to consultant |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | 10,399     |   |   |   | -      |   |   |   | -                 |   |   |   | 10,399           |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |              |   |   |   |             |   |
| Income for the three months ended June 30, 2010                 |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -         |   |   |   | -      |   |   |   | -          |   |   |   | -      |   |   |   |  (27,608     | )      |   |   |  (27,608)   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |              |   |   |   |             |   |
| Balance as of June 30, 2010 (unaudited)                         |   |   | -      |   |   | $      | -      |   |   | $      | -      |   |   |   | 8,914,921 |   |   | $      | 890    |   |   | $      | 16,699,128 |   |   | $      | 1,137  |   |   | $      |  (22,128,175 | )      |   | $      |  (5,427,020 | )      |

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Table of Contents 

OMNIMMUNE 

|                                                                                    |   | For the Six  |       |    | For the Six  |   |     | Cumulative            |   |
|-----------------------------------------------------------------------------------------|--------|--------------|------------|---------|--------------|--------|----------|-----------------------|--------|
|                                                                                    |   | Months Ended |       |    | Months Ended |   |     | from Inception        |   |
|                                                                                    |   | June 30,     |       |    | June 30,     |   |     | (January 12, 2005) to |   |
|                                                                                    |   | 2010         |       |    | 2009         |   |     | June 30, 2010         |   |
| Cash flows from operating activities:                                                   |   |         |       |    |         |   |     |                  |   |
|    Net loss                                                              |   | $            | (1,028,908 | )       |         | $      | (837,413 | )                     |   | $ | (22,128,175 | ) |
|   Adjustments to reconcile net loss to net                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
|   cash used in operating activities:                                          |   |         |       |    |         |   |     |                  |   |   |   |   |
|   Non-cash compensation                                                       |   |         | 20,798     |    |         |   | 20,800   |                  |   |   | 4,105,906 |   |
|   Amortization of discount on notes payable                                   |   |         | 188,911    |    |         |   | 8,034    |                  |   |   | 8,953,647 |   |
|   Amortization of discount on accrued interest                                |   |         | 651        |    |         |   | -        |                  |   |   | 651 |   |
|   Impairment of technology licenses and equity securities                     |   |         | -          |    |         |   | -        |                  |   |   | 1,701,936 |   |
|   (Gain) or loss on restructuring of debt                                     |   |         | 505,755    |    |         |   | -        |                  |   |   | (5,071,245 | ) |
|    Gain on termination of license agreement                              |   |         | (497,072   | )       |         |   | -        |                  |   |   | (497,072 | ) |
|   Redemption of shares previously issued for license agreement                |   |         | -          |    |         |   | -        |                  |   |   | (842,513 | ) |
|   Net change in operating assets and liabilities:                             |   |         |       |    |         |   |     |                  |   |   |   |   |
|         Advances to related party               |   |         | -          |    |         |   | -        |                  |   |   | (10,000 | ) |
|        Prepaid insurance                             |   |         | 19,131     |    |         |   | (1,039   | )                |   |   | (6,674 | ) |
|        Accounts payable and accrued liabilities, net |   |         | 371,801    |    |         |   | 663,292  |                  |   |   | 9,385,382 |   |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
|    Net cash used in operating activities                                 |   |         | (418,933   | )       |         |   | (146,326 | )                     |   |   | (4,098,157 | ) |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
| Cash flows from investing activities:                                                   |   |         |       |    |         |   |     |                  |   |   |   |   |
|     Cash received from settlement of technology license agreement   |   |         | 310,000    |    |         |   | -        |                  |   |   | 310,000 |   |
|    Cash portion of investment in technology license                      |   |         | -          |    |         |   | -        |                  |   |   | (6,000 | ) |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
|    Net cash provided by investing activities                        |   |         | 310,000    |    |         |   | -        |                  |   |   | 304,000 |   |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
| Cash flows from financing activities:                                                   |   |         |       |    |         |   |     |                  |   |   |   |   |
|   Proceeds from cash advances                                                 |   |         | 11,000     |    |         |   | 100,000  |                  |   |   | 1,017,400 |   |
|   Principal payments on cash advances                                         |   |         | -          |    |         |   | -        |                  |   |   | (130,000 | ) |
|   Proceeds from notes payable                                                 |   |         | 183,500    |    |         |   | -        |                  |   |   | 1,828,474 |   |
|   Proceeds from the exercise of warrants                                      |   |         | -          |    |         |   | 1,137    |                  |   |   | 1,137 |   |
|   Principal payments on debt                                                  |   |         | -          |    |         |   | (5,085   | )                |   |   | (512,993 | ) |
|   Stock sold for cash, net of costs                                           |   |         | -          |    |         |   | -        |                  |   |   | 1,738,271 |   |
|   Proceeds from (repayments) to lines of credit                               |   |         | (3,410     | )  |         |   | -        |                  |   |   | 249,652 |   |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
|    Net cash provided by financing activities                             |   |         | 191,090    |    |         |   | 96,052   |                  |   |   | 4,191,941 |   |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                    |   |         | 82,157     |    |         |   | (50,274  | )                     |   |   | 87,784 |   |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
| Cash and cash equivalents at beginning of period                                        |   |         | 5,627      |    |         |   | 52,615   |                  |   |   | - |   |
|                                                                                    |   |         |       |    |         |   |     |                  |   |   |   |   |
| Cash and cash equivalents at end of period                                              |   | $            | 87,784     |    |         | $      | 2,341    |                  |   | $ | 87,784 |   |

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Table of Contents 

| Supplemental disclosures of cash flow information:                         |   |   |    |   |   |   |   |   |   |
|----------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                                                       |   |   |    |   |   |   |   |   |   |
| Cash paid during the period for:                                           |   |   |    |   |   |   |   |   |   |
| Interest                                                                   |   | $      | 8,958   |   |   | $      | 4,975  |   |   | $ | 83,038 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Taxes                                                                      |   | $      | -       |   |   | $      | -      |   |   | $ | - |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Discount to notes payable associated with beneficial conversion feature    |   | $      | 895,100 |   |   | $      | 8,034  |   |   | $ | 15,786,340 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Discount to accrued interest associated with beneficial conversion feature |   | $      | 111,845 |   |   | $      | -      |   |   | $ | 111,845 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Common stock issued for services                                           |   | $      | -       |   |   | $      | -      |   |   | $ | 354,875 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Notes payable issued under restructure of debt                             |   | $      | -       |   |   | $      | -      |   |   | $ | 7,284,998 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Value of warrant issued as discount on debt                                |   | $      | -       |   |   | $      | -      |   |   | $ | 331,510 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Notes payable issued for accounts payable                                  |   | $      | -       |   |   | $      | -      |   |   | $ | 287,768 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Common stock issued for technology license                                 |   | $      | -       |   |   | $      | -      |   |   | $ | 920,610 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Common stock issued for the conversion of preferred stock                  |   | $      | -       |   |   | $      | -      |   |   | $ | 355,000 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Notes payable issued for services                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 3,746,971 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Impairment of technology licenses                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 616,908 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Value of warrants issued for debt                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 12,747 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Issuance of common stock for cash                                          |   | $      | -       |   |   | $      | -      |   |   | $ | 1,408,271 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| (Gain) loss from the restructuring of debt                                 |   | $      | 505,755 |   |   | $      | -      |   |   | $ | (5,071,238 | ) |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Value of vested portion of options issued for services                     |   | $      | -       |   |   | $      | -      |   |   | $ | 2,908,409 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Common stock issued for accounts payable                                   |   | $      | -       |   |   | $      | -      |   |   | $ | 30,000 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Cash advance converted to note payable                                     |   | $      | 20,000  |   |   | $      | -      |   |   | $ | 541,200 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Capitalization of interest on debt                                         |   | $      | -       |   |   | $      | -      |   |   | $ | 33,751 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Value of warrants and options issued for services                          |   | $      | -       |   |   | $      | 20,800 |   |   | $ | 2,905,694 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |

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OMNIMMUNE 

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|                             |   | Options |      |   | Weighted AverageExercise Price |   |
|----------------------------------|--------|---------|-----------|--------|--------------------------------|--------|
| Outstanding at December 31, 2009 |   |    | 2,350,000 |   |                           | $      | 2.50 |   |
| Issued                           |   |    | -         |   |                           |   | - |   |
| Exercised                        |   |    | -         |   |                           |   | - |   |
| Forfeited or expired             |   |    | -         |   |                           |   | - |   |
| Outstanding at June 30, 2010     |   |    | 2,350,000 |   |                           | $      | 2.50 |   |
| Vested at June 30, 2010          |   |    | 2,344,402 |   |                           | $      | 2.50 |   |
| Non-vested at June 30, 2010      |   |    | 5,598     |   |                           | $      | 2.50 |   |

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|         |   | June 30,2010 |    |   | December 31,2009 |   |
|--------------|--------|--------------|---------|--------|------------------|--------|
| Bank loan    |   | $            | 149,976 |   |             | $      | 149,976 |   |
| Credit cards |   |         | 99,673  |   |             |   | 103,083 |   |
| Total        |   | $            | 249,649 |   |             | $      | 253,059 |   |

|                                                              |   | June 30, |      |   | December 31, |   |
|-------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                                              |   | 2010     |      |   | 2009         |   |
| Number of notes payable                                           |   |     | 26        |   |         |   | 16 |   |
| Number of notes payable - related party                           |   |     | 4         |   |         |   | 4 |   |
|                                                              |   |     |      |   |         |   |   |   |
| Principal amount - notes payable, net of discount                 |   | $        | 1,016,803 |   |         | $      | 1,016,420 |   |
| Principal amount - notes payable - related party, net of discount |   | $        | 1,006,246 |   |         | $      | 1,003,563 |   |
|                                                              |   |     |      |   |         |   |   |   |
| Accrued interest, net of discount                                 |   | $        | 317,570   |   |         | $      | 327,076 |   |
| Accrued interest - related party                                  |   | $        | 487,929   |   |         | $      | 483,836 |   |

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|                                                   |   | For the Three Months Ended June 30, |   |   | For the Six Months Ended June 30, |   |
|--------------------------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|
|                                                   |   | 2010                                |   |   | 2009                              |   |   | 2010 |   |   | 2009 |   |
| Accrued interest - notes payable                       |   | $                                   | 55,489 |   |                              | $      | 47,218 |   |   | $ | 101,368 |   |   | $ | 93,914 |   |
| Accrued interest - notes payable – related party |   |                                | 2,058  |   |                              |   | 1,230 |   |   |   | 4,094 |   |   |   | 2,446 |   |
| Bank credit line                                       |   |                                | 3,085  |   |                              |   | 3,085 |   |   |   | 6,136 |   |   |   | 6,136 |   |
| Amortization of discount on notes payable              |   |                                | 10,968 |   |                              |   | 4,796 |   |   |   | 188,911 |   |   |   | 8,034 |   |
| Amortization of discount on accrued interest           |   |                                | 651    |   |                              |   | - |   |   |   | 968 |   |   |   | - |   |
| Credit Cards                                           |   |                                | 2,493  |   |                              |   | 2,489 |   |   |   | 4,872 |   |   |   | 4,976 |   |
| Insurance interest                                     |   |                                | 329    |   |                              |   | - |   |   |   | 658 |   |   |   | - |   |
| Total interest                                         |   | $                                   | 75,073 |   |                              | $      | 58,818 |   |   | $ | 307,007 |   |   | $ | 115,506 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Principal balance: |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | June 30, 2010      |   |   | December 31, 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               |   |   |   |   |
| Convertible note payable to a related party in the amount of $2,000,000 dated June 14, 1994. On March 3, 2007, this note was replaced with a new note in the amount of $3,170,188, which included accrued interest in the amount of $959,089, a salary payable of $106,575, and a loss of $104,524.  On March 1, 2008, this note was replaced with a new note in the amount of $500,000, the amount of $2,670,188 was forgiven by the note holder. The note signed on March 1, 2008 is a non interest bearing note, and is payable contingent upon (a) the Company’s receipt of revenues, as defined, in which case the Company will pay 2% of such revenues, as received, in satisfaction of this note; and/or (b) the sale of substantially all of the Company’s assets.  Interest in the amount of $0 was accrued on these  notes during the three  months ended June 30, 2010 and 2008, respectively.    Interest in the amount of $0 was accrued on these  notes during the six  months ended June 30, 2010 and 2008, respectively.   Total accrued interest at June 30, 2010 and 2009 amounted to $222,521. |   | $                  | 500,000 |   |   | $ | 500,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               |   |   |   |   |   |   |
| Convertible note payable to a related party in the amount of $1,170,356 dated May 15, 2002.  On March 3, 2007, this note was replaced with a new note in the amount of $1,342,127, which included accrued interest of $379,324, and a gain of $207,553. On March 1, 2008, this note was replaced with a new note in the amount of $500,000, the amount of $842,127 was forgiven by the debt holder. The note dated March 1, 2008 is a non interest bearing note, and is payable contingent upon (a) the Company’s receipt of revenues, as defined, in which case the Company will pay 2% of such revenues, as received, in satisfaction of this note; and/or (b) the sale of substantially all of the Company’s assets. Interest in the amount of $0 was accrued on these notes during the three  months ended June 30, 2010 and 2009, respectively.   Interest in the amount of $0 was accrued on these notes during the six  months ended June 30, 2010 and 2009, respectively.   Total accrued interest at June 30, 2010 and 2009 amounted to $94,206.                                                                                            |   |               | 500,000 |   |   |   | 500,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               |   |   |   |   |   |   |
| Convertible note payable to a related party in the amount of $25,000 dated March 10, 2005.  On March 3, 2007, this note was replaced with a new note in the amount of $30,211, which includes accrued interest of $4,938 and a loss of $272.  On March 31, 2008, this note was replaced with a new note in the amount of $33,232, which includes accrued interest of $3,021. The note bears interest at the rate of 10% per annum, and was due in full on February 28, 2013.  This note is convertible into common stock of the Company at a conversion price of $0.1781 per share. A beneficial conversion feature in the amount of $33,232 was recorded as a discount to the note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $829  was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $1,648 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009 amounted to $7,757 and $4,434, respectively.                                                  |   |               | 33,232 |   |   |   | 33,232 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               |   |   |   |   |
| Convertible note payable to a related party in the amount of $37,000 dated February 26, 2005.  On March 3, 2007, this note was replaced with a new note in the amount of $44,848, which included accrued interest of $6,418, and loss of $1,430. On March 1, 2008, this note was replaced with a new note in the amount of $49,333, which includes accrued interest of $4,485.  The note bears interest at the rate of 10% per annum, and is due in full on February 1, 2013. This note is convertible into common stock of the Company at a conversion price of $1.78 per share. A beneficial conversion feature in the amount of $49,333 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $1,230  was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $2,446 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009 amounted to $11,515 and $6,582, respectively.                                                       |   |               | 49,333 |   |   |   | 49,333 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               |   |   |   |   |   |   |
| Note payable in the amount of $8,110 dated December 31, 1997.  On March 3, 2007, this note was replaced with a new note in the amount of $19,442, which included accrued interest of $7,437, and loss of $3,895. The note bears interest at the rate of 10% per annum, and became due in full and payable on February 28, 2010.  Interest in the amount of $485  was accrued on this note during the three months ended June 30, 2010 and 2009.   Interest in the amount of $964 was accrued on this note during the six months ended June 30, 2010 and 2009.   Total accrued interest at June 30, 2010 and 2009  amounted to $6,482 and $4,538, respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note is currently past due and may be called by the payee at any time.                                                                                                                                                                                                                                                                             |   |               | 19,442 |   |   |   | 19,442 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Principal balance: |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | June 30, 2010      |    |   | December 31, 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |   |   |   |   |
| Note payable in the amount of $11,932 dated December 31, 1999.  On March 3, 2007, this note was replaced with a new note in the amount of $23,641, which included accrued interest of $8,168, and a loss of $3,540. The note bears interest at the rate of 10% per annum, and became due in full and payable on February 28, 2010.  Interest in the amount of $589  was accrued on this note during the three months ended June 30, 2010 and 2009.  Interest in the amount of $1,172 was accrued on this note during the three months ended June 30, 2010 and 2009.  Total accrued interest at June 30, 2010 and 2009  amounted to $7,882 and $5,518 respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note is currently past due and may be called by the payee at any time.                                                                                                                                                                                                                                                                          |   |               | 23,641  |   |   |   | 23,641 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |   |   |   |   |
| Note payable in the amount of $33,860 dated December 31, 2000.  On March 3, 2007, this note was replaced with a new note in the amount of $60,971, which included accrued interest of $20,882, and a loss of $6,228. The note bears interest at the rate of 10% per annum, and became due in full and payable on February 28, 2010.  Interest in the amount of $1,520   was accrued on this note during the three months ended June 30, 2010 and 2008. Interest in the amount of $3,023 was accrued on this note during the six months ended June 30, 2010 and 2008. Total accrued interest at June 30, 2010 and 2009  amounted to $20,329 and $14,232, respectively.  During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note is currently past due and may be called by the payee at any time.                                                                                                                                                                                                                                                                           |   |               | 60,971  |   |   |   | 60,971 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |   |   |   |   |
| Note payable in the amount of $25,000 dated February 28, 2001. On March 3, 2007, this note was replaced with a new not in the amount of $44,355, which included accrued interest in the amount of $15,014, and a loss of $4,341. On March 1, 2008, this note was replaced with a new note in the amount of $127,305, which consolidated two other notes payable to this note holder in the amounts of $41,774, and $28,603, and accrued interest of $11,573.The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into shares  of common stock at a rate of $1.78 per share.  A beneficial conversion in the amount of $127,305 was recorded for this note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.2%. Interest in the amount of $3,174  was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $6,313 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009 amounted to $29,716 and $16,986, respectively. |   |               | 127,305 |   |   |   | 127,305 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |   |   |   |   |
| Note payable in the amount of $16,750 dated June 1, 2002.  On March 3, 2007, this note was replaced with a new note in the amount of $45,224, which included accrued interest in the amount of $14,275, and a loss of $3,322. The note bears interest at the rate of 10% per annum, and became due in full and payable on February 28, 2010.  Interest in the amount of $1,128  was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $2,243 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009  amounted to $15,079 and $10,556, respectively. During the period ended December 31, 2008, the Company exercised its right to extend the maturity date until February 28, 2010. This note is currently past due and may be called by the payee at any time.                                                                                                                                                                                                                                                                         |   |               | 45,224  |   |   |   | 45,224 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |   |   |   |   |
| Note payable in the amount of $18,000 dated June 1, 2002.  On March 3, 2007, this note was replaced with a new note in the amount of $28,350, which included accrued interest in the amount of $8,551, and a loss of $1,798. On March 1, 2008, this  note was replaced with a new note in the amount of $31,185, which includes accrued interest in the amount of $2,835. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2013. This note is convertible into shares  of common stock at a rate of $1.78 per shares.  A beneficial conversion feature in the amount of $31,285 was recorded for this note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $777  was accrued on this note during the three months ended June 30, 2010 and 2009.  Interest in the amount of $1,546 was accrued on this note during the six months ended June 30, 2010 and 2009.  Total accrued interest at June 30, 2010 and 2009 amounted to $7,279 and $4,161, respectively.                                               |   |               | 31,185  |   |   |   | 31,185 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Principal balance: |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | June 30, 2010      |    |   | December 31, 2009 |   |
| Note payable in the amount of $62,019 dated July 1, 2005. On January 1, 2007, this note was replaced with a new note in the amount of $94,334, which included accrued interest of $9,328, and a loss of 422,987. On March 1, 2008, this note was replaced with a new note in the amount of $88,132, which includes accrued interest in the amount of $2,221. The note bears interest at the rate of 10% per annum, and is due in full on February 28, 2013.  This note is convertible into shares  of common stock at a price of $1.78 per share.  A beneficial conversion feature was recorded in the amount of $91,149 on the note. Interest in the amount of $2,197  was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $4,370 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30 2010 and 2009 amounted to $19,822 and $11,009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               | 88,139  |   |   |   | 88,139 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |   |   |   |   |
| Note payable in the amount of $25,000 dated October 6, 2005.  On March 3, 2007, this note was replaced with a new note in the amount of $28,603, which included interest in the amount of $3,500, and a loss of $103. On March 1, 2008, this note was consolidated into a new note in the amount of $29,025, and is due on February 28, 2013. Interest in the amount of $723 was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $1,439 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009 amounted to $6,774 and $3,872, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               | 29,025  |   |   |   | 29,025 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |   |   |   |   |
| Note payable in the amount of $69,806 dated March 3, 2007. On March 1, 2008, this note was replaced with a new note in the amount of $76,787, which included accrued interest in the amount of $6,981. The note bears interest at a rate of 10% per annum, and is due in full on February 28, 2013.  This note is convertible into shares (post shares) of common stock at a rate of $1.78 per share.  A beneficial conversion feature in the amount of $76,787 was recorded on the note and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%. Interest in the amount of $1,914 93 was accrued on this note during the three months ended June 30, 2010 and 2009.  Interest in the amount of $3,808 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009 amounted to $17,864 and $10,186, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |               | 76,787  |   |   |   | 76,787 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |   |   |   |   |
| Note payable  in the amount of $550,000 dated June 24, 2008.  The note bears interest at a rate of 10% per annum, and became due in full and payable on June 24, 2010.  This note becomes convertible into shares  of common stock upon the closing of a qualified financing.  Interest in the amount of $13,712  was accrued during the three months ended June 30, 2010 and 2009.  Interest in the amount of $27,274 was accrued during the six months ended June 30, 2010 and 2009.  Total accrued interest at June 30, 2010 and 2009 amounted to $110,904 and $55,904, respectively. This note is currently past due and may be called by the payee at any time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 550,000 |   |   |   | 550,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |   |   |   |   |
| Convertible note payable in the amount of $521,200 dated March 1, 2008. The note bears interest at a rate of 10% per annum, and is due in full on February 28, 2013. This note was originally convertible into common stock at a rate of $1.78 per share.  A beneficial conversion feature in the amount of $521,200 was recorded and is being amortized over the term of the note via the effective interest rate method at a rate of 8.3%.  During the three months ended March 31, 2010, the Company entered into a debt restructuring agreement, whereby the conversion rate for the note payable was reduced to $0.01 per share.  This restructuring agreement was accounted for as an extinguishment of debt, and the unamortized  balance of the discount of in the amount of $505,755 was charged to operations during the three months ended March 31, 2010.  A new discount representing the value of the beneficial conversion feature associated with the $0.01 conversion price was calculated in the amount of $521,200, and this amount was charged to additional paid-in capital.   Interest in the amount of $12,994  was accrued on this note during the three months ended June 30, 2010,  and 2009.   Interest in the amount of $25,846 was accrued on this note during the six months ended June 30, 2010,  and 2009.   Total accrued interest at June 30, 2010 and 2009 amounted to $124,839 and $72,719, respectively. |   |               | 521,200 |   |   |   | 521,200 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |   |   |   |   |
| Note payable in the amount of $287,768 dated October 31, 2008. The note bears interest at a rate of 10% per annum, and was due in full on June 30, 2009.  Interest in the amount of $7,174   was accrued on this note during the three months ended June 30, 2010 and 2009. Interest in the amount of $14,270 was accrued on this note during the six months ended June 30, 2010 and 2009. Total accrued interest at June 30, 2010 and 2009 amounted to $47,856 and $19,079, respectively. This note is currently past due and may be called by the payee at any time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |               | 287,768 |   |   |   | 287,768 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |   |   |   |   |
| Convertible note payable in the amount of $10,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $10,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $249 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $458 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $457 and $0, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               | 10,000  |   |   |   | - |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Principal balance: |         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | June 30, 2010      |         |   | December 31, 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $30,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $30,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $748 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $1,373 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $1,373 and $0, respectively.   |   |               | 30,000       |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $55,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $55,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $1,371 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $2,441 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $2,441 and $0, respectively. |   |               | 55,000       |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $10,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $10,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $249 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $441 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $441 and $0, respectively.       |   |               | 10,000       |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $10,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $10,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $249 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $441 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $441 and $0, respectively.       |   |               | 10,000       |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $20,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $20,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $499 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $883 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $883 and $0, respectively.       |   |               | 20,000       |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $5,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $5,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $96 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $221 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $221 and $0, respectively.               |   |               | 5,000        |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $25,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $25,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $479 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $1,103 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $1,103 and $0, respectively.        |   |               |  25,000 |   |   |   |   |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Principal balance: |         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | June 30, 2010      |         |   | December 31, 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $15,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $15,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $288 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $66662 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $662 and $0, respectively.    |   |               |  15,000 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $3,500 dated March 26, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on March 26, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $3,500 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $87 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $92 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively Total accrued interest at June 30, 2010 and 2009 amounted to $92 and $0, respectively.                |   |               | 3,500        |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $10,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $10,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $249 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $493 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $493 and $0, respectively. |   |               | 10,000       |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |         |   |   |   |   |   |
| Convertible note payable in the amount of $10,000 dated January 22, 2010.  The note bears interest at the rate of 10% per annum, and is due in full on January 22, 2015. This note is convertible into common stock of the Company at a conversion price of $0.01 per share. A beneficial conversion feature in the amount of $10,000 was recorded as a discount to the note, and is being amortized over the term of the note via the effective interest rate method at a rate of 8%. Interest in the amount of $249 and $0 was accrued on this note during the three months ended June 30, 2010 and 2009, respectively. Interest in the amount of $493 and $0 was accrued on this note during the six months ended June 30, 2010 and 2009, respectively. Total accrued interest at June 30, 2010 and 2009 amounted to $493 and $0, respectively. |   |               | 10,000       |   |   |   | - |   |

| Total outstanding                                   |   | $      | 3,146,752 |    |   | $      | 2,943,252 |    |
|-----------------------------------------------------|--------|--------|-----------|---------|--------|--------|-----------|---------|
| Less discount on notes payable                      |   |   | 1,123,703 |    |   |   | 932,269   |    |
| Total – net of discounts                      |   |   | 2,023,049 |    |   |   | 2,010,983 |    |
|  Less current portion – net of discounts |   |   | (987,046  | )  |   |   | (987,046  | )  |
|  Long-term portion – net of discounts    |   | $      | 1,036,003 |    |   | $      | 1,023,937 |    |
|                                                |   |   |      |    |   |   |      |    |
| Related Party                                       |   | $      | 1,006,246 |    |   | $      | 1,003,563 |    |
| Related Party – current portion               |   |   | -         |    |   |   | -         |    |
| Related Party – long term portion             |   | $      | 1,006,246 |    |   | $      | 1,003,563 |    |
|                                                |   |   |      |    |   |   |      |    |
| Non-related party                                   |   | $      | 1,016,803 |    |   | $      | 1,016,420 |    |
| Non-related party – current portion           |   |   | 987,046   |    |   |   | 987,046   |    |
| Non-related party – long term portion         |   | $      | 29,757    |    |   | $      | 29,374    |    |

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| Warrants Outstanding |      | Warrants Exercisable |
|----------------------|-----------|----------------------|
| Exercise Prices      |      | Number Outstanding   |   | Weighted Average RemainingContractual Life (years) |   | Weighted AverageExercise Price |   |  Number Exercisable |   | Weighted AverageRemaining ContractualLife (years) |
| $               | 1.78-2.50 |                 | 145,180 |   | 5.42 |   |  $ | 1.78-2.50 |   | 145,180 |   | 5.42 |
| 5.00                 |      | 727,200              |   | 3.11 |   |   | 5.00 |   | 727,200 |   | 3.11 |
| Total                |      | 872,380              |   | 3.50 |   |   |   |   | 872,380 |   | 3.50 |

| Warrants Outstanding |      | Warrants Exercisable |
|----------------------|-----------|----------------------|
| Exercise Prices      |      | Number Outstanding   |   | Weighted Average RemainingContractual Life (years) |   | Weighted AverageExercise Price |   |  Number Exercisable |   | Weighted AverageRemaining ContractualLife (years) |
| $               | 1.78-2.50 |                 | 145,180 |   | 5.42 |   | $  | 1.78-2.50 |   | 145,180 |   | 5.42 |
| 5.00                 |      | 727,200              |   | 3.11 |   |   | 5.00 |   | 727,200 |   | 3.11 |
| Total                |      | 872,380              |   | 3.50 |   |   |   |   | 872,380 |   | 3.50 |

|                             |   | Number of Shares |    |   | Weighted AveragePrice Per Share |   |
|----------------------------------|--------|------------------|---------|--------|---------------------------------|--------|
| Outstanding at December 31, 2009 |   |             | 872,380 |   |                            | $      | 4.54 |   |
| Granted                          |   |             | -       |   |                            |   | - |   |
| Exercised                        |   |             | -       |   |                            |   | - |   |
| Cancelled or expired             |   |             | -       |   |                            |   | - |   |
| Outstanding at June 30, 2010     |   |             | 872,380 |   |                            | $      | 4.54 |   |

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| Options Outstanding |   | Options Exercisable |
|---------------------|--------|---------------------|
| Exercise Prices     |   |                | Number Outstanding |   | Weighted Average Remaining Contractual Life (years) |   | Weighted Average Exercise Price |   |  Number Exercisable |   | Weighted AverageRemaining ContractualLife (years) |
| $                   | 2.50   |                |   |   | 2,350,000 |   | 7.77 |   | $ | 2.50 |   | 2,344,402 |   | 7.77 |
| Total               |   |                |   | 2,350,000 |   | 7.77 |   |   |   |   | 2,344,402 |   | 7.77 |

| Options Outstanding |   | Options Exercisable |
|---------------------|--------|---------------------|
| Exercise Prices     |   |                | Number Outstanding |   | Weighted Average Remaining Contractual Life (years) |   | Weighted Average Exercise Price |   |  Number Exercisable |   | Weighted AverageRemaining ContractualLife (years) |
| $                   | 2.50   |                |   |   | 2,350,000 |   | 7.77 |   | $ | 2.50 |   | 2,285,791 |   | 7.77 |
| Total               |   |                |   | 2,350,000 |   | 7.77 |   |   |   |   | 2,285,791 |   | 7.77 |

|                             |   | Number of Shares |      |   | Weighted AveragePrice Per Share |   |
|----------------------------------|--------|------------------|-----------|--------|---------------------------------|--------|
| Outstanding at December 31, 2009 |   |             | 2,350,000 |   |                            | $      | 2.50 |   |
| Granted                          |   |             | -         |   |                            |   | - |   |
| Exercised                        |   |             | -         |   |                            |   | - |   |
| Cancelled or expired             |   |             |  -   |   |                            |   |  - |   |
| Outstanding at June 30, 2010     |   |             | 2,350,000 |   |                            | $      | 2.50 |   |
| Exercisable at June 30, 2010     |   |             | 2,344,402 |   |                            | $      | 2.50 |   |
| Not exercisable at June 30, 2010 |   |             | 5,598     |   |                            | $      | 2.50 |   |

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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------------|---------------------------------------------------------------------------------------------|

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|                             |   | Options |      |   | Weighted AverageExercise Price |   |
|----------------------------------|--------|---------|-----------|--------|--------------------------------|--------|
| Outstanding at December 31, 2009 |   |    | 2,350,000 |   |                           | $      | 2.50 |   |
| Issued                           |   |    | -         |   |                           |   | - |   |
| Exercised                        |   |    | -         |   |                           |   | - |   |
| Forfeited or expired             |   |    | -         |   |                           |   | - |   |
| Outstanding at June 30, 2010     |   |    | 2,350,000 |   |                           | $      | 2.50 |   |
| Vested at June 30, 2010          |   |    | 2,344,402 |   |                           | $      | 2.50 |   |
| Non-vested at June 30, 2010      |   |    | 5,598     |   |                           | $      | 2.50 |   |

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| •  |       future financial and operating results, including projections of revenues, income, expenditures, cash balances and other financial items; |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •  |       capital requirements and the need for additional financing; |
|---------------|-------------------------------------------------------------------------------------------------|

| •  |        our ability to develop commercially viable products; |
|---------------|------------------------------------------------------------------------------------------------|

| •  |        our intellectual property rights and similar rights of others, including actual or potential competitors; |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| •  |        the outcome of regulatory submissions and approvals and clinical trials; |
|---------------|--------------------------------------------------------------------------------------------------------------------|

| •  |        the performance of our future products and their potential to generate revenues; |
|---------------|----------------------------------------------------------------------------------------------------------------------------|

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| •  |        our beliefs and opinions about the safety and efficacy of any of our future products and the results of our studies; |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •  |        development of new products; |
|---------------|------------------------------------------------------------------------|

| •  |        growth, expansion and acquisition strategies; |
|---------------|-----------------------------------------------------------------------------------------|

| •  |        current and future economic and political conditions; |
|---------------|-------------------------------------------------------------------------------------------------|

| •  |        overall industry and market performance; |
|---------------|------------------------------------------------------------------------------------|

| •  |        competition; |
|---------------|--------------------------------------------------------|

| •  |        management’s goals and plans for future operations; and |
|---------------|---------------------------------------------------------------------------------------------------------|

| •  |        other assumptions described in this report underlying or relating to any forward-looking statements. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------|

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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|--------------|------------------------------------------------------------|

| ITEM 4. | CONTROLS AND PROCEDURES |
|--------------|-------------------------|

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| ITEM 1. | LEGAL PROCEEDINGS |
|--------------|-------------------|

| ITEM 1A. | RISK FACTORS |
|---------------|--------------|

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| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
|--------------|-------------------------------------------------------------|

| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
|--------------|---------------------------------|

| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
|--------------|-----------------------------------------------------|

| ITEM 5. | OTHER INFORMATION |
|--------------|-------------------|

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| ITEM 6. | EXHIBITS |
|--------------|----------|

| EXHIBIT NO. |   | NAME OF EXHIBIT                                                                                                                                                                                                                                                                                                          |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1         |   | Agreement of Merger, dated as of August 6, 2008, by and between Roughneck Supplies, Inc. and Omnimmune Holdings, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on August 12, 2008).                                                                                             |
| 2.2         |   | Agreement of Merger and Plan of Reorganization, dated as of August 7, 2008, by and among the Omnimmune Holdings, Inc., Omnimmune Acquisition Corp., a wholly owned subsidiary of the Company, and Omnimmune Corp. (incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed on August 12, 2008). |
| 2.3         |   | Certificate of Merger, effective August 6, 2008, merging Roughneck Supplies, Inc. with and into Omnimmune Holdings, Inc. (incorporated by reference to Exhibit 2.3 to our Current Report on Form 8-K filed on August 12, 2008).                                                                                          |
| 2.4         |   | Articles of Merger, effective August 7, 2008, merging Omnimmune Corp. with and into Omnimmune Acquisition Corp. (incorporated by reference to Exhibit 2.4 to our Current Report on Form 8-K filed on August 12, 2008).                                                                                                   |
| 4.1         |   | Second Amended and Restated Convertible Demand Promissory Note                                                                                                                                                                                                                                                           |
| 10.1        |   | Registration Rights Agreement, dated as of August 7, 2008, by and among Omnimmune Holdings, Inc. and the stockholders of Omnimmune Holdings, Inc. parties thereto (incorporated by reference to Exhibit 10.15 to our Current Report on Form 8-K filed on August 12, 2008).                                          |
| 10.2        |   | Form of Lock-Up Agreement between the Company and executive officers and certain stockholders (incorporated by reference to Exhibit 10.18 to our Current Report on Form 8-K filed on August 12, 2008).                                                                                                                   |
| 10.3        |   | Amendment and Pledge dated July 31, 2008, to Gift Agreement entered into as of April 18, 2008, by and among The Ohio State University Medical Center, The Ohio State University Foundation and Omnimmune Corp. (incorporated by reference to Exhibit 10.23 to our Current Report on Form 8-K filed on August 12, 2008).  |
| 10.4        |   | License Termination Agreement dated June 18, 2010 with The Ohio State University.                                                                                                                                                                                                                                        |
| 31.1        |   | Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                    |
| 32.1        |   | Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                    |

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SIGNATURES

|                      |   |                                                                                                                                                                                                                       |
|---------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |   | OMNIMMUNE HOLDINGS, INC.                                                                                                                                                                                                   |
|                      |   |
| Dated: September 21, 2010 |   | /s/ HARRIS A. LICHTENSTEIN                                 |                     |
|                      |   | Harris A. Lichtenstein                                                                                                                                                                                                |
|                      |   | Chief Executive Officer                                                                                                                                                                                                    |

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