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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**___________________**FORM 10-Q**___________________

**ý                                QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

  

For the quarterly period endedSeptember 30, 2009

  

OR

  

** ̈                                TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

For the transition period from         to

  

Commissionfile number 0-53585  

**LANTIS LASER INC.**(Exact Name Of RegistrantAs Specified In Its Charter)
| Nevada                                   | 65-0813656                           |
|------------------------------------------|--------------------------------------|
| (State of Incorporation)                 | (I.R.S. Employer Identification No.) |
|                                     |                                 |
| 11    Stonebridge, Denville, NJ          | 07834                                |
| (Address of Principal Executive Offices) | (ZIP Code)                           |

 Registrant'sTelephone Number, Including Area Code: (203) 300-7622

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes x No  ̈Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act). Yes  ̈ No x

Indicate by check mark whether the Registrant has submittedelectronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes  ̈ No x (the Registrant is not yet required to submit Interactive Data)

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.
| Large accelerated    filer  ̈ | Accelerated filer  ̈  | Non-Accelerated    filer  ̈  | Smaller reporting    company x |
|----------------------------------|-------------------------------|--------------------------------------|------------------------------------|

On November 11,2009, the Registrant had 99,951,572 shares of common stock issued and outstanding.

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**TABLE OF CONTENTS**
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       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| **PART    I - FINANCIAL INFORMATION**    ITEM 1.  FINANCIAL STATEMENTS.3ITEM 2.  MANAGEMENT'S    DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.3ITEM 3.  QUANTITATIVE    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK5ITEM 4.  CONTROLS AND PROCEDURES.5    
**PART    II - OTHER INFORMATION**    ITEM 1.  LEGAL PROCEEDINGS.5ITEM 1A.  RISK    FACTORS5ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF    PROCEEDS5ITEM 3.  DEFAULT UPON    SENIOR SECURITIES.5ITEM 4.  SUBMISSION    OF MATERS TO A VOTE OF SECURITY HOLDERS.5ITEM 5.  OTHER INFORMATION.5ITEM 6.  EXHIBITS.5
 
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**PART I - FINANCIAL INFORMATION**

ITEM1. FINANCIAL STATEMENTS****Back to Table of Contents

The Registrant's unaudited interim financial statementsare attached hereto. UnauditedInterim Financial Statements

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONBack to Table of Contents

Forward-Looking Statements; Market Data

As used in this Quarterly Report, the terms *"we","us", "our", "Registrant" and the "Company"*meansLantis Laser Inc., a Nevada corporation, and its wholly-owned subsidiary, Lantis Laser,Inc., a New Jersey corporation. To the extent that we make any forward-looking statementsin the *"Management's Discussion and Analysis of Financial Condition and Results ofOperations"*in this Quarterly Report, we emphasize that forward-lookingstatements involve risks and uncertainties and our actual results may differ materiallyfrom those expressed or implied by our forward-looking statements. Our forward-lookingstatements in this Quarterly Report reflect our current views about future events and arebased on assumptions and are subject to risks and uncertainties. Generally,forward-looking statements include phrases with words such as *"expect","anticipate", "intend", "plan", "believe","seek", "estimate"*and similar expressions to identifyforward-looking statements.

Overview
The Company was incorporated under the laws ofthe State of Nevada in February 1998 under the name Beekman Enterprises, Inc. In November2004, we acquired Lantis Laser, Inc., a New Jersey corporation formed in January 1998(“Lantis New Jersey”), in a reverse-triangular merger and succeeded to itsbusiness as our sole line of business. In connection with the merger, we changed our nameto “Lantis Laser Inc.”

We were formed to commercialize the applicationof novel technologies in the dental industry. As our first product, we are developing andplan to market our “OCT Dental Imaging System.” The OCT Dental Imaging System isbased on a diagnostic imaging technology referred to as optical coherence tomography, orOCT. We have the exclusive rights to OCT in the dental field under a license agreementwith Lawrence Livermore National Laboratories and a non-exclusive license covering ascanning method with LightLab Imaging, Inc., a leader in the application of OCT in thebiomedical field. At present, our plan is not to fabricate equipment, but instead tooutsource the manufacturing of the OCT System. **Results of Operations

Three Months Ended September 30, 2009Compared to Three Months Ended September 30, 2008.

The following is derived from, and should be readin conjunction with, our condensed consolidated financial statements, and related notesfor the three months ended September 30, 2009 and 2008.
*Operating revenues. The Company is adevelopment stage company. To date, the Company has not generate any operating revenues,nor has the Company generated operating revenues since its inception in February 1998.Generation of sales can only commence upon FDA 510(k) clearance. 

*Net loss from operations.* For the threemonths ended September 30, 2009, our net loss from operations was $131,854, compared to$999,296 for the same period in the prior year, representing a decrease of $867,442 or87%. The decrease in our loss from operations was mainly due to the decrease in researchand development expenses and professional, consulting and marketing fees. Our research anddevelopment expenses decreased to $27,393 for the three months ended September 30, 2009,compared to $91,692 for the same period in the prior year. The Company decreased itsprofessional, consulting and marketing expenses to $15,959 for the three months endedSeptember 30, 2009, compared to $829,140 for the same period in the prior year, whichreduction was a result of the fact that the Company incurred significant non-cashcompensation expenses related to its initial public offering during the respective periodin the prior year.
*Total other expenses. Other expenses was$169,122 for the three months ended September 30, 2009, compared to $139,677 for thethree months ended September 30, 2008. Other expenses are comprised of amortization costsrelated to debt issuance, interest expense due to debt discount and other interestexpenses. Our interest expense increased from $31,414 during the three months endedSeptember 30, 2008 to $64,542 during the three months ended September 30, 2009. Interestexpense related to the issuance of debt at a discount for the three months ended September30, 2009 were $80,231, compared to $83,914 in the same period in the prior year.Amortization costs of $24,349 remained the same during the respective periods.
*Net loss. We had a net loss applicable tocommon shares of $300,976, or $0.00 per share, for the three months ended September 30,2009, compared to a net loss applicable to common shareholders of $1,138,973, or$0.01 per share, for the same period in the prior year. The reduction in net loss wasprincipally due to the decrease in research and development and decrease in professional,consulting and marketing fees, which reduction was a result of the fact that the Companyincurred significant non-cash compensation expenses related to its initial public offeringduring the respective period in the prior year.

Nine Months Ended September 30, 2009Compared to Nine Months Ended September 30, 2008.

The following is derived from, and should be readin conjunction with, our condensed consolidated financial statements, and related notesfor the nine months ended September 30, 2009 and 2008.
*Operating revenues. The Company is adevelopment stage company. To date, the Company has not generate any operating revenues,nor has the Company generated operating revenues since its inception in February 1998.Generation of sales can only commence upon FDA 510(k) clearance. 

*Net loss from operations.* For the ninemonths ended September 30, 2009, our net loss from operations was $473,843, compared to$3,216,387 for the same period in the prior year, representing a decrease of $2,742,544 or85%. The decrease in our loss from operations was mainly due to the decrease in researchand development expenses and professional, consulting and marketing fees. Our research anddevelopment expenses decreased to $124,568 for the nine months ended September 30, 2009,compared to $727,537 for the same period in the prior year. The Company decreased itsprofessional, consulting and marketing expenses to $51,710 for the nine months endedSeptember 30, 2009, compared to $2,235,945 for the same period in the prior year, whichreduction was a result of the fact that the Company incurred significant non-cashcompensation expenses related to its initial public offering during the respective periodin the prior year.
*Total other expenses. Other expenses was$478,290 for the nine months ended September 30, 2009, compared to $417,617 for thenine months ended September 30, 2008. Other expenses are comprised of amortization costsrelated to debt issuance, interest expense due to debt discount and other interestexpenses. Our interest expense increased from $70,936 during the nine months endedSeptember 30, 2008 to $143,280 during the nine months ended September 30, 2009. Interestexpense related to the issuance of debt at a discount for the nine months ended September30, 2009 were $263,348, compared to $248,634 in the same period in the prior year. TheCompany expensed amortization costs of $71,662 during the nine months ended September 30,2009, compared to $73,047 for the same period in the prior year.
*Net loss. We had a net loss applicable tocommon shares of $952,133, or $0.01 per share, for the nine months ended September 30,2009, compared to a net loss applicable to common shareholders of $3,634,004, or$0.03 per share, for the same period in the prior year. The reduction in net loss wasprincipally due to the decrease in research and development and decrease in professional,consulting and marketing fees, which reduction was a result of the fact that the Companyincurred significant non-cash compensation expenses related to its initial public offeringduring the respective period in the prior year.
**Liquidity and Capital Resources***Total assets. On September 30, 2009, we had total assets of $248,354, compared to$358,604 on December 31, 2008.  The Company had only insignificant cash and cashequivalents on September 30, 2009 compared to $72,858 on December 31, 2008. Prepaidexpenses and other current assets were $60,693 on September 30, 2009, compared to $5,000on December 31, 2008. We had investments valued at $81,332 on September 30, 2009 andDecember 31, 2008. Our fixed assets were $52,691 on September 30, 2009, compared to$69,552 on December 31, 2008. Other assets related to debt issuance costs were $53,581 onSeptember 30, 2009, compared to $129,862 on December 31, 2008.
*Total liabilities. We had total liabilities of $3,750,597 on September 30, 2009,composed principally of current accounts payable and accrued expenses of $1,242,497 andconvertible notes payable, net of discount and beneficial conversion features of$2,210,356. The substantial increase in current liabilites is mainly due to the Company'sdefault on convertible notes, which resulted in a reclassification of such notes tocurrent liabilities. As a result, we had no long-term liabilities as of September 30,2009. On September 30, 2009, we had a negative working capital of $3,608,515, compared toa negative working capital of $956,407 on December 31, 2008. There is no guarantee thatthe Company will be able to raise enough capital or generate revenues to sustain itsoperations. These conditions and the Company's default on a convertible note raisesubstantial doubt about the Company’s ability to continue as a going concern for areasonable period. 
*Cash flow from operations. During the nine-month period ended September 30, 2009,we had a negative cash flow from operations of $146,696, compared to negative cashflow from operations of $1,050,779 during the same period in the prior year. Our negativecash flow from operations for the nine months ended September 30, 2009 was mainly due toour net loss of $952,133 and an increase in prepaid expenses of $55,693, offset bynon-cash expenses of $150,000 related to from the issuance of common stock for consultingservices, amortization and depreciation costs of $88,523, non-cash interest expensesrelated to debt issuance of $263,348, and an increase in accounts payable and accruedinterest on a convertible note of $359,259. 

*Cash flow from investing activities.*The company had no investing activitiesduring the nine-month period ended September 30, 2009.

*Cash flow from financing activities.*During the nine-months ended September30, 2009, the Company received proceeds totaling $73,895 from a related party.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKBack to Table of Contents

N/A.

ITEM 4.CONTROLS AND PROCEDURES****Back to Table of Contents

*Evaluation of disclosure controls andprocedures.* As of September 30, 2009, the Company's chief executive officer and chieffinancial officer conducted an evaluation regarding the effectiveness of the Company'sdisclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) underthe  Exchange Act. Based upon the evaluation of these controls and procedures, ourchief executive officer and chief financial officer concluded that our disclosure controlsand procedures were effective as of the end of the period covered by this report.

*Changes in internal controls.*During the quarterly period covered by this report, no changes occurred in our internalcontrol over financial reporting that materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

**PART II - OTHER INFORMATION**

ITEM 1. LEGALPROCEEDINGS**** Back to Table of Contents

None.

ITEM 1A.RISK FACTORSBack to Table of Contents

In addition to the otherinformation set forth in this report, you should carefully consider the factors discussedin Part I, “Item 1. Description of Business, subheading Risk Factors” inour Annual Report on Form 10-K for the year ended December 31, 2008, which couldmaterially affect our business, financial condition or future results. The risks describedin our Annual Report on Form 10-K are not the only risks facing our company.Additional risks and uncertainties not currently known to us or that we currently deem tobe immaterial also may materially adversely affect our business, financial conditionand/or operating results. 

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSBack to Table of Contents

During the three months ended September 30, 2009, theCompany issued 750,000 restricted shares valued at $30,000 to Agoracom Inc. and 100,000restricted shares valued at $5,000 to Venman & Co. for consulting services. TheCompany believes that the issuances and sale of the restricted shares were exempt fromregistration pursuant to Section 4(2) of the Act as privately negotiated, isolated,non-recurring transactions not involving any public solicitation. Appropriate restrictivelegends are affixed to the stock certificates issued in such transactions. All recipientsof restricted shares either received adequate information about the Company or had access,through employment, relation and/or business relationships with the Company to suchinformation. Based on an analysis of the above factors, the Registrant has met therequirements to qualify this offering and sale for exemption under Section 4(2) of theSecurities Act of 1933.

ITEM3. DEFAULTS UPON SENIOR SECURITIES****Back to Table of Contents

As a result of the Company’sfailure to timely pay the interest due in May 2009, the convertible notes are in technicaldefault. Therefore, the Company has reclassified the debt to current liabilities.Reference is made to note 4 of the Company's notes to condensed consolidated financialstatement.

ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSBack to Table of Contents

None.

ITEM5. OTHER INFORMATION****Back to Table of Contents

None.

ITEM6. EXHIBITS****Back to Table of Contents

(a) The following documentsare filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Anydocument incorporated by reference is identified by a parenthetical reference to the SECfiling that included such document.

Exhibit    No.Description31Certification of CEO and CFO    pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the    Sarbanes-Oxley Act of 2002.32Certification of CEO and CFO    pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the    Sarbanes-Oxley Act of 2002.
**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and on the dateindicated.

/s/ Stanley B.BaronStanley B. Baron   *CEO and CFO**   Dated: November 11, 2009*
**INDEX TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTSBack to Table of Contents****
CONDENSED CONSOLIDATEDBALANCE SHEETS AS OF  SEPTEMBER 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008

CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30,2009 AND 2008 (UNAUDITED) WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND2008 (UNAUDITED) WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION) 

NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) **LANTIS    LASER INC.**(A    Development Stage Company)**Condensed    Consolidated Balance Sheets**September    30, 2009 (Unaudited) and December 31, 2008 (Audited)  
Assets**September    30, 2009****December    31, 2008**  (Unaudited0
(Audit)Current assets:      Cash$57$72,858      Prepaid expenses and other current assets60,6935,000      Investment under equity method81,33281,332     Total current assets142,082159,190     Fixed assets, net of depreciation52,69169,552   Other    assets:   Debt issuance costs,    net of amortization53,581129,862     Total other assets53,581129,862         **Total assets**$248,354$358,604  
Liabilities    and Stockholders' Equity (Deficit)  Current    liabilities:      Accrued interest - convertible notes$223,849$90,459      Accounts payable and accrued expenses1,242,4971,025,138      Related party loans73,895-  Convertible notes    payable, net of discount and beneficial conversion features2,210,356-     Total current    liabilities3,750,5971,115,597  Long-term    liabilities:      Convertible notes payable, net of discount and beneficial conversion features-2,054,999        Total long-term liabilities-2,054,999            **Total liabilities**3,750,5973,170,596  Stockholders'    equity (deficit):      Preferred stock, $.001 par value. Authorized 10,000,000 shares:         0 issued and outstanding- -    Common stock, $.001    par value. Authorized 990,000,000 shares:     99,951,572 shares    issued and outstanding at September 30, 2009,     100,118,238 shares    issued and outstanding at    December 31, 200899,951100,118      Additional paid-in capital4,592,3364,330,287      Additional paid-in capital - warrants1,167,9871,167,987      Deficit    accumulated during the development stage(9,362,517)(8,410,384)          Total stockholders' equity (deficit)(3,502,243)(2,811,992)          **Total liabilities and stockholders' equity (deficit)**$248,354$358,604  The    accompanying notes are an integral part of the consolidated financial statements.**LANTIS    LASER INC.**(A    Development Stage Company)**Condensed    Consolidated Statements of Operations (Unaudited)**For The    Nine and Three Months Ended September 30, 2009 and 2008With    Cumulative Totals Since January 14, 1998 (Inception)** ****Cumulative****Nine Months****Nine Months****Three Months****Three Months****Totals Since****Ended****Ended****Ended****Ended****Inception****September 30, 2009****September 30, 2008****September 30, 2009****September 30, 2008****January 14, 1998**  Operating    revenues   Sales$-$-$-$-$-  **Operating    expenses:**   Research and    development124,568727,53727,39391,6922,061,321      Wages and wage related expenses150,000150,00050,00050,000929,981   Professional,    consulting and marketing fees51,7102,235,94515,959829,1404,319,766   Other general and    administrative expenses130,70484,92332,88222,471508,961   Depreciation16,86117,9825,6205,99385,628     **Total operating    expenses**473,8433,216,387131,854999,2967,905,657  **Loss before other income (expense)**(473,843)(3,216,387)(131,854)(999,296)(7,905,657)     Amortization of debt issuance costs(71,662)(73,047)(24,349)(24,349)(233,990)   Loss in investment under equity    method-(25,000)--(86,332)   Interest expense - debt discount(263,348)(248,634)(80,231)(83,914)(810,280)   Interest income (expense), net(143,280)(70,936)(64,542)(31,414)(326,258)     **Total other    income (expense)**(478,290)(417,617)(169,122)(139,677)(1,456,860)   Net loss before provision for income taxes(952,133)(3,634,004)(300,976)(1,138,973)(9,362,517)Provision for income taxes-----**Net    loss applicable to common shares**$(952,133)$(3,634,004)$(300,976)$(1,138,973)$(9,362,517)  **Net    loss per basic and diluted shares**$(0.01)$(0.03)$(0.00)$(0.01)$(0.29)       **Weighted    average number of common shares outstanding**98,820,070132,825,06599,334,724100,310,52132,047,585** **The    accompanying notes are an integral part of the consolidated financial statements.**LANTIS    LASER INC.**(A    Development Stage Company)**Condensed    Consolidated Statements of Cash Flows (Unaudited)**For The    Nine Months Ended September 30, 2009 and 2008With    Cumulative Totals Since January 14, 1998 (Inception)  **Cumulative****Nine Months****Nine Months****Totals Since****Ended****Ended****Inception****September 30, 2009****September 30, 2008****January 14, 1998****Cash flows from operating activities:**      Net loss$(952,133)$(3,634,004)$(9,362,517)      Adjustments to reconcile net loss to net cash used in operating activities:    Depreciation16,86117,98285,628       Amortization of debt issuance cost71,66273,048233,990       Interest expense - debt discount132,70582,993408,274       Interest expense - beneficial conversion feature130,643165,642402,006       Loss on investment under equity method-25,00086,332       License fees payable for research and development--605,000       Warrants issued to former noteholders and consultants--469,897       Common stock issued for consulting services150,000124,500859,050        Changes in assets and liabilities:     Decrease    (increase) in prepaid expenses(55,693)1,830,0002,144,307    Increase in accounts    payable and accrued expenses217,359264,0601,395,830    Accrued    interest on convertible notes141,900-141,554    Total    adjustments805,4372,583,2256,831,868    **Net cash used in    operating activities**(146,696)(1,050,779)(2,530,649)   **Cash    flows from investing activities:****   **Acquisition of fixed assets-(4,764)(138,319)        Investment under equity method-(50,000)(167,664)          **Net cash used in investing activities**-(54,764)(305,983)  **Cash    flows from financing activities:**       Proceeds from notes payable--197,000       Proceeds from exercise of warrants-10,47834,984       Procceds from convertible notes and warrants, net of debt issuance costs--2,234,310       Payments of license fee payable--(225,000)       Proceeds from private placement, net of fees--521,500  Proceeds (payments)    from related parties73,895-73,895          **Net cash provided by financing activities**73,89510,4782,836,689  **          Net increase (decrease) in cash and cash equivalents**(72,801)(1,095,065)57**Cash    and cash equivalents - beginning of period**72,8581,461,906-**Cash    and cash equivalents - end of period**$57$366,841$57  **Cash paid during the year for:**    Income tax$-$-$-    Interest expense$78,753$126,325$92,370  **Supplemental non-cash information:**    Conversion of notes and    interest for common stock, net of discounts and issuance costs$111,882$-$371,411    Conversion of license fee    payable into capital$115,000$-$495,000    Common stock issued for    consulting services$150,000$124,500$829,050    Warrants issued to former    noteholders and consultants$-$-$469,897    Common stock issued for    prepaid expenses$30,000$105,000$2,130,000   The    accompanying notes are an integral part of the consolidated financial statements.**LANTIS LASER INC.(A DEVELOPMENT STAGE COMPANY)**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2009 AND 2008 (UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements includedherein have been prepared, without audit, pursuant to the rules and regulations of theSecurities and Exchange Commission (“SEC”). The condensed consolidated financialstatements and notes are presented as permitted on Form 10-Q and do not containinformation included in the Company’s annual consolidated financial statements andnotes thereto. Certain information and footnote disclosures normally included in financialstatements prepared in accordance with accounting principles generally accepted in theUnited States of America have been condensed or omitted pursuant to such rules andregulations, although the Company believes that the disclosures are adequate to make theinformation presented not misleading. It is suggested that these condensed consolidatedfinancial statements be read in conjunction with the December 31, 2008 audited financialstatements and the accompanying notes thereto. While management believes the proceduresfollowed in preparing these condensed consolidated financial statements are reasonable,the accuracy of the amounts are in some respects dependent upon the facts that will exist,and procedures that will be accomplished by the Company later in the year. 

These condensed consolidated unaudited financial statements reflect alladjustments, including normal recurring adjustments which, in the opinion of management,are necessary to present fairly the consolidated operations and cash flows for the periodspresented. 

Lantis Laser, Inc. (the “Company”) was incorporated in theState of New Jersey on January 14, 1998. On November 3, 2004, the Company was acquired byHypervelocity, Inc., a Nevada corporation. 

In the transaction, the Company exchanged 100% of their stock inexchange for 127,718,500 shares of common stock of Hypervelocity, Inc. The transaction wastreated for accounting purposes as a reverse merger by Lantis Laser, Inc. being theaccounting acquirer. Included in the 127,718,500 shares issued to the shareholders ofLantis Laser, Inc. in the transaction, 6,422,500 shares were issued in conversion ofconvertible notes payable the Company had entered into in 2001 and 2003. The sharesrepresent the conversion of the original notes, the interest accrued on those notes aswell as warrants that were offered and paid for by the note holders. The value of theconvertible notes, interest and warrants were $259,529. 

On December 9, 2004, Hypervelocity, Inc. changed its name to LantisLaser Inc. which is domiciled in Nevada. 

On June 16, 2006, the Company authorized a 1 for 2 reverse stock splitfor all issued shares. All shares reflected herein have been retroactively adjusted toaccount for the reverse stock split. 

In October 2006, the Company completed a private placement for the saleof 5,850,000 shares of its common stock at a price per share of $.10. For every 1.8 shareof stock purchased, the investors received 1 warrant. 

In April and May 2007, the Company issued 5% Senior Convertible 3 YearNotes to investors in the amount of $2,526,500, which equaled the gross proceeds raised bythe Company (the “Convertible Notes”). The Convertible Notes are convertible toshares of the Company’s common stock anytime in the three-year period at a fixedconversion price of $.15. The Convertible Notes will convert into 16,843,333 shares of theCompany’s common stock. The convertible noteholders received 6,737,333 detachablewarrants with their notes. The warrants are exercisable for five years from date of issueat an exercise price of $.25. The Company separately valued the warrants at $513,132, andrecorded a debt discount in that amount which is being amortized to interest expense overthe three-year Convertible Notes period. The Company has recorded an additional discountof $505,300 as the value of the beneficial conversion option. 

In May 2009, convertible notes of $125,000 were converted to 833,334shares of common stock ($.15). 

On December 19, 2007, HyGeniLase, Inc., (“HyGeniLase”) aDelaware corporation was formed. HyGeniLase is a joint venture between the Company andLaser Energetics, Inc., (“LEI”), an Oklahoma corporation, with each party owning50% of the company. HyGeniLase was formed to develop, manufacture, market, sell anddistribute dental laser process technology to the dental markets worldwide (see Note 10). 

The Company in June 2008, entered into a strategic agreement with AXSUNTechnologies whereby AXSUN will manufacture and supply the Integrated Optical CoherenceTomography Engine for the Company’s OCT Dental Imaging System. Under the terms of theagreement, the Company has exclusive rights to the OCT Engine for use in diagnosticimaging of teeth and soft tissue in human and animal dentistry. The Company issued 500,000shares of stock to AXSUN in connection with this agreement (see Note 7). 

The Company was formed to commercialize the application of noveltechnologies in the dental industry. The criteria for selected products includecompetitive edge, exclusivity and large market potential. The Company is in development ofits Optical Coherence Tomography ("OCT") "Dental Imaging" as its firstproduct. The Company has licensed the exclusive rights for the dental field for the OCTpatented technology from Lawrence Livermore National Laboratories (dental applicationpatents) and the non-exclusive rights from LightLab Imaging (scanning patents). OCT wasinvented in the early 1990’s at Massachusetts Institute of Technology and it iscurrently being commercialized by LightLab Imaging for cardiovascular imaging, cancerdetection and Carl Zeiss Meditec in ophthalmology. On May 31, 2007, the Company enteredinto an exclusive licensing agreement for the field of dentistry with The University ofFlorida Research Foundation for novel technology relevant to the imaging probe of itsDental Imaging System; the Agreement carries a $1,000 initial licensing fee with royaltypayments to commence in 2008. 

On July 9, 2008, the Company entered into an exclusive licenseagreement for the field of dentistry for a patent pending technology known as NearInfrared Transillumination Imaging (NIR). The Company paid the initial licensing fee of$10,000. This technology is synergistic with the OCT technology and the Company intends tosell it in a combination OCT/NIR platform and also as a standalone product. 

Management of the Company has extensive experience in the dentalindustry, including technology, development, marketing and distribution, clinical andresearch dentistry. 

OCT is a new diagnostic imaging technology that is based on advancedphotonics and fiber optics. It enables the capture of cross-sectional images of tissuewith an axial resolution of up to ten times that of x-ray, providing tissuecharacterization and images that cannot be obtained by any other means, including x-ray.Information is captured by shining a near- infrared light through a single optical fiberonly .006” diameter deep into the internal structures of the subject tissue. 

When the light becomes scattered in the dense biological tissue, acertain component of the reflected light remains unscattered and thus contains goodquantitative and structural image information. The OCT technology maps the changingintensities of reflections from the tissue to form an image of the subject area. Thisimage, displayed on a monitor in real time, has an unprecedented amount of diagnosticinformation and can be manipulated, printed out and stored in a digital format. 

Effective July 1, 2009, the Company adopted the Financial AccountingStandards Board (“FASB”) Accounting Standards Codification (“ASC”)105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”).ASC 105-10 establishes the FASB Accounting Standards Codification (the“Codification”) as the source of authoritative accounting principles recognizedby the FASB to be applied by nongovernmental entities in the preparation of financialstatements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC underauthority of federal securities laws are also sources of authoritative U.S. GAAP for SECregistrants. All guidance contained in the Codification carries an equal level ofauthority. The Codification superseded all existing non-SEC accounting and reportingstandards. All other non-grandfathered, non-SEC accounting literature not included in theCodification is non-authoritative. The FASB will not issue new standards in the form ofStatements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issueAccounting Standards Updates (“ASUs”). 

The FASB will not consider ASUs as authoritative in their own right.ASUs will serve only to update the Codification, provide background information about theguidance and provide the bases for conclusions on the change(s) in the Codification.References made to FASB guidance throughout this document have been updated for theCodification. 
**Going Concern**
As shown in the accompanying condensed consolidated financialstatements the Company has incurred recurring losses of $952,133 and $3,634,004 for thenine months ended September 30, 2009 and 2008 respectively, and has incurred a cumulativeloss of $9,362,517 since inception (January 14, 1998). The Company has a working capitaldeficit in the amount of $3,608,515 as of September 30, 2009. The Company is currently inthe development stage and has been spending a majority of their time in the development ofthe OCT technology for which they currently hold exclusive and non-exclusive licenses ofthe patents for. 

There is no guarantee that the Company will be able to raise enoughcapital or generate revenues to sustain its operations. These conditions raise substantialdoubt about the Company’s ability to continue as a going concern for a reasonableperiod. 

Management believes that the Company’s capital requirements willdepend on many factors. These factors include the final phase of development beingsuccessful as well as product implementation and distribution first nationally, theninternationally. In April and May 2007, the Company completed a debt offering in the formof a 5% Senior Convertible Note in the amount of $2,526,500 as well as a private placementfor $585,000 with the issue of 5,850,000 of its stock of which the Company received, netof fees, $2,786,785 from both offerings. The proceeds received will be utilized in thePhase 2 and final stages of development. 

The Company also renegotiated both of their license agreements andLawrence Livermore agreed to forgive accrued royalty fees in the amount of $380,000 as theCompany was not sufficiently capitalized to further develop its technology. 

The Company will continue to pursue traditional forms of financing, inaddition to the approximately $3,250,000 it raised through convertible notes and theissuance of common stock to assist them in meeting their current working capital needs.The Company’s ability to continue as a going concern for a reasonable period isdependent upon management’s ability to raise additional interim capital and,ultimately, achieve profitable operations. There can be no assurance that management willbe able to raise sufficient capital, under terms satisfactory to the Company, if at all. 

The condensed consolidated financial statements do not include anyadjustments relating to the carrying amounts of recorded assets or the carrying amountsand classification of recorded liabilities that may be required should the Company beunable to continue as a going concern. 
**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Development Stage Company
The Company is considered to be in the development stage as defined inASC 915*.*The Company has devoted substantially all of its efforts to thedevelopment of their OCT technology. Additionally, the Company has allocated a substantialportion of their time and investment in bringing their services to the market, and theraising of capital. 
**Principles of Consolidation**
The consolidated financial statements include the accounts of theCompany and its wholly owned subsidiary. All significant intercompany accounts andtransactions have been eliminated in consolidation. 
**Use of Estimates**
The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. On anongoing basis, the Company evaluates its estimates, including, but not limited to, thoserelated to derivative liabilities, bad debts, income taxes and contingencies. The Companybases its estimates on historical experience and on various other assumptions that arebelieved to be reasonable under the circumstances, the results of which form the basis formaking judgments about the carrying value of assets and liabilities that are not readilyapparent from other sources. Actual results could differ from those estimates. 
**Cash and Cash Equivalents**
The Company considers all highly liquid debt instruments and othershort-term investments with an initial maturity of three months or less to be cashequivalents. Any amounts of cash in financial institutions over FDIC insured limits,exposes the Company to cash concentration risk. 
**Fair Value of Financial Instruments (other than Derivative FinancialInstruments)**
The carrying amounts reported in the condensed consolidated balancesheet for cash and cash equivalents, and accounts payable approximate fair value becauseof the immediate or short-term maturity of these financial instruments. For the notespayable, the carrying amount reported is based upon the incremental borrowing ratesotherwise available to the Company for similar borrowings. 
**Research and Development**
The Company annually incurs costs on activities that relate to researchand development of new technology and products. Research and development costs areexpensed as incurred. Certain of these costs would be reduced by government grants andinvestment tax credits where applicable. The Company has expensed its payments inconnection with the license agreement as research and development costs. 
**Revenue Recognition**
The Company has not recognized revenues to date. The Companyanticipates recognizing revenue in accordance with the contracts it enters into for thedistribution of the products that are currently in development. 
**Accounts Receivable**
The Company when it will conduct business it will extend credit basedon an evaluation of the customers’ financial condition, generally without requiringcollateral. Exposure to losses on receivables is expected to vary by customer due to thefinancial condition of each customer. The Company monitors exposure to credit losses andmaintains allowances for anticipated losses considered necessary under the circumstances.The Company has not recorded any receivables, and therefore no allowance for doubtfulaccounts at September 30, 2009 and December 31, 2008, respectively. 

Accounts receivable will generally be due within 30 days and collateralis not required. 
**Income Taxes**
Under ASC 740 the liability method is used in accounting for incometaxes. Under this method, deferred tax assets and liabilities are determined based ondifferences between financial reporting and tax bases of assets and liabilities, and aremeasured using the enacted tax rates and laws that will be in effect when the differencesare expected to reverse. 
**Uncertainty in Income Taxes**
Under ASC 740-10-25 recognition and measurement of uncertain income taxpositions is required using a “more-likely-than-not” approach. Managementevaluates their tax positions on an annual basis and has determined that as of September30, 2009 no additional accrual for income taxes is necessary. 
**Advertising Costs**
The Company expenses the costs associated with advertising as incurred.Advertising expenses for the nine months ended September 30, 2009 and 2008 are included inprofessional, consulting and marketing fees in the condensed consolidated statements ofoperations. 
**Fixed Assets**
Fixed assets are stated at cost. Depreciation is computed using thestraight-line method over the estimated useful lives of the assets; computer and medicalequipment - 5 years, and furniture and fixtures - 5 years. 

When assets are retired or otherwise disposed of, the costs and relatedaccumulated depreciation are removed from the accounts, and any resulting gain or loss isrecognized in income for the period. The cost of maintenance and repairs is charged toincome as incurred; significant renewals and betterments are capitalized. Deduction ismade for retirements resulting from renewals or betterments. 
**Impairment of Long-Lived Assets**
Long-lived assets, primarily fixed assets, are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amount of theassets might not be recoverable. The Company does not perform a periodic assessment ofassets for impairment in the absence of such information or indicators. Conditions thatwould necessitate an impairment assessment include a significant decline in the observablemarket value of an asset, a significant change in the extent or manner in which an assetis used, or a significant adverse change that would indicate that the carrying amount ofan asset or group of assets is not recoverable. For long-lived assets to be held and used,the Company recognizes an impairment loss only if its carrying amount is not recoverablethrough its undiscounted cash flows and measures the impairment loss based on thedifference between the carrying amount and estimated fair value. 
**Subsequent Events**
In accordance with ASC 855 “Subsequent Events”, the Companyis required to disclose the date through which subsequent events have been evaluated andwhether that date is the date the financial statements were issued or the date thefinancial statements were available to be issued. ASC 855 is effective for financialperiods ending after June 15, 2009. Management has evaluated subsequent events throughNovember 11, 2009, the date the condensed consolidated financial statements were issued. 
**(Loss) Per Share of Common Stock**
Basic net (loss) per common share is computed using the weightedaverage number of common shares outstanding. Diluted earnings per share ("EPS")include additional dilution from common stock equivalents, such as stock issuable pursuantto the exercise of stock options and warrants. Common stock equivalents were not includedin the computation of diluted earnings per share on the consolidated statement ofoperations due to the fact that the Company reported a net loss and to do so would beanti-dilutive for the periods presented. 

The following is a reconciliation of the computation for basic anddiluted EPS: 
**Cumulative**
**Total    since**
**January    14, 1998****September    30, 2009****September    30, 2008****(Inception)**  Net loss$(952,133)$(3,634,004)$(9,362,517)Weighted-average common shares outstanding (basic)98,820,070132,825,06532,047,585Weighted-average common stock equivalents    Convertible Notes16,009,99916,843,33316,009,999   Stock options---   Warrants14,486,06614,486,06614,486,066Weighted-average commons shares outstanding    (diluted)129,316,135164,154,46462,543,650**Stock-Based Compensation

In 2006, the Company adopted the provisions of ASC 718-10 *“ShareBased Payments”*. The adoption of this principle had no effect on theCompany’s operations.

ASC 718-10 requires recognition of stock-based compensation expense forall share-based payments based on fair value. Prior to January 1, 2006, the Companymeasured compensation expense for all of its share-based compensation using the intrinsicvalue method. 

The Company has elected to use the modified-prospective approachmethod. Under that transition method, the calculated expense in 2006 is equivalent tocompensation expense for all awards granted prior to, but not yet vested as of January 1,2006, based on the grant-date fair values. Stock-based compensation expense for all awardsgranted after January 1, 2006 is based on the grant-date fair values. The Companyrecognizes these compensation costs, net of an estimated forfeiture rate, on a pro ratabasis over the requisite service period of each vesting tranche of each award. The Companyconsiders voluntary termination behavior as well as trends of actual option forfeitureswhen estimating the forfeiture rate. 

The Company measures compensation expense for its non-employeestock-based compensation under ASC 505-50, *“Accounting for Equity Instruments thatare Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods orServices".*The fair value of the option issued is used to measure thetransaction, as this is more reliable than the fair value of the services received. Thefair value is measured at the value of the Company’s common stock on the date thatthe commitment for performance by the counterparty has been reached or thecounterparty’s performance is complete. The fair value of the equity instrument ischarged directly to compensation expense and additional paid-in capital. For common stockissuances to non-employees that are fully vested and are for future periods, the Companyclassifies these issuances as prepaid expenses and expenses the prepaid expenses over theservice period. At no time has the Company issued common stock for a period that exceedsone year. 
**Segment Information**
The Company follows the provisions of ASC 280-10, *"Disclosuresabout Segments of an Enterprise and Related Information”.*This standard requiresthat companies disclose operating segments based on the manner in which managementdisaggregates the Company in making internal operating decisions. The Company onlyoperates in one reporting segment as of September 30, 2009 and for the nine months endedSeptember 30, 2009 and 2008. 
**Debt Issuance Costs**
Debt issuance costs relate to the fees paid in connection with theConvertible Notes. These fees are being amortized over the life of the Convertible Noteswhich is three years. Should the notes be converted prior to the maturity date of threeyears, then the debt issuance costs will be amortized sooner. The Company amortized$71,662 and $73,047 for the nine months ended September 30, 2009 and 2008, respectively. 
**Beneficial Conversion Features**
ASC 470-20 applies to convertible securities with beneficial conversionfeatures that must be settled in stock and to those that give the issuer a choice insettling the obligation in either stock or cash. ASC 470-20 requires that the beneficialconversion feature should be valued at the commitment date as the difference between theconversion price and the fair market value of the common stock into which the security isconvertible, multiplied by the number of shares into which the security is convertible.ASC 470-20 further limits this amount to the proceeds allocated to the convertibleinstrument. 
**Recent Accounting Pronouncements**
In September 2006, ASC issued 820, *Fair Value Measurements*. ASC820 defines fair value, establishes a framework for measuring fair value in generallyaccepted accounting principles, and expands disclosure about fair value measurements. Thisstatement is effective for financial statements issued for fiscal years beginning afterNovember 15, 2007. Early adoption is encouraged. The adoption of ASC 820 is not expectedto have a material impact on the financial statements. 

In February 2007, ASC issued 825-10, *The Fair Value Option forFinancial Assets and Financial Liabilities – Including an amendment of ASC 320-10*,(“ASC 825-10”) which permits entities to choose to measure many financialinstruments and certain other items at fair value at specified election dates. A businessentity is required to report unrealized gains and losses on items for which the fair valueoption has been elected in earnings at each subsequent reporting date. This statement isexpected to expand the use of fair value measurement. ASC 825-10 is effective forfinancial statements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years.

In December 2007, the ASC issued ASC 810-10-65, *NoncontrollingInterests in Consolidated Financial Statements*. ASC 810-10-65 establishes accountingand reporting standards for ownership interests in subsidiaries held by parties other thanthe parent, changes in a parent’s ownership of a noncontrolling interest, calculationand disclosure of the consolidated net income attributable to the parent and thenoncontrolling interest, changes in a parent’s ownership interest while the parentretains its controlling financial interest and fair value measurement of any retainednoncontrolling equity investment. 

ASC 810-10-65 is effective for financial statements issued for fiscalyears beginning after December 15, 2008, and interim periods within those fiscal years.Early adoption is prohibited. Management is determining the impact that the adoption ofASC 810-10-65 will have on the Company’s financial position, results of operations orcash flows.

In December 2007, the Company adopted ASC 805,*Business Combinations*(“ASC 805”). ASC 805 retains the fundamental requirements that the acquisitionmethod of accounting be used for all business combinations and for an acquirer to beidentified for each business combination. ASC 805 defines the acquirer as the entity thatobtains control of one or more businesses in the business combination and establishes theacquisition date as the date that the acquirer achieves control.  ASC 805 willrequire an entity to record separately from the business combination the direct costs,where previously these costs were included in the total allocated cost of theacquisition.  ASC 805 will require an entity to recognize the assets acquired,liabilities assumed, and any non-controlling interest in the acquired at the acquisitiondate, at their fair values as of that date.  

ASC 805 will require an entity to recognize as an asset or liability atfair value for certain contingencies, either contractual or non-contractual, if certaincriteria are met.  Finally, ASC 805 will require an entity to recognizecontingent consideration at the date of acquisition, based on the fair value at thatdate.  This will be effective for business combinations completed on or afterthe first annual reporting period beginning on or after December 15,2008.  Early adoption is not permitted and the ASC is being appliedprospectively only.  Upon adoption of this ASC, there would be no impact to theCompany’s results of operations and financial condition for acquisitions previouslycompleted.  The adoption of ASC 805 is not expected to have a material effect onthe Company’s financial position, results of operations or cash flows.

In March 2008, ASC issued ASC 815, *Disclosures about DerivativeInstruments and Hedging Activities*”, (“ASC 815”). ASC 815 requiresenhanced disclosures about an entity’s derivative and hedging activities. Theseenhanced disclosures will discuss: how and why an entity uses derivative instruments; howderivative instruments and related hedged items are accounted for and its relatedinterpretations; and how derivative instruments and related hedged items affect anentity’s financial position, financial performance, and cash flows. ASC 815 iseffective for financial statements issued for fiscal years and interim periods beginningafter November 15, 2008. The Company does not believe that ASC 815 will have an impact ontheir results of operations or financial position.

In April 2008, ASC issued ASC 350, “Determination of the UsefulLife of Intangible Assets”. This amends the factors that should be considered indeveloping renewal or extension assumptions used to determine the useful life of arecognized intangible asset under ASC 350. The guidance is used for determining the usefullife of a recognized intangible asset shall be applied prospectively to intangible assetsacquired after adoption, and the disclosure requirements shall be applied prospectively toall intangible assets recognized as of, and subsequent to, adoption. The Company does notbelieve ASC 350 will materially impact their financial position, results of operations orcash flows.

ASC 470-20, “Accounting for Convertible Debt Instruments That MayBe Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“ASC470-20”) requires the issuer of certain convertible debt instruments that may besettled in cash (or other assets) on conversion to separately account for the liability(debt) and equity (conversion option) components of the instrument in a manner thatreflects the issuer’s non-convertible debt borrowing rate. ASC 470-20 is effectivefor fiscal years beginning after December 15, 2008 on a retroactive basis. The Companydoes not believe that the adoption of ASC 470-20 will have a material effect on itsfinancial position, results of operations or cash flows.

ASC 815-40, “Determining Whether an Instrument (or EmbeddedFeature) Is Indexed to an Entity’s Own Stock” (“ASC 815-40”), providesguidance for determining whether an equity-linked financial instrument (or embeddedfeature) is indexed to an entity’s own stock and it applies to any freestandingfinancial instrument or embedded feature that has all the characteristics of aderivative., ASC 815-40 also applies to any freestanding financial instrument that ispotentially settled in an entity’s own stock. The Company is determining what impact,if any, ASC 815-40 will have on its financial position, results of operations and cashflows.

ASC 470-20-65, “Transition Guidance for Conforming Changes to,Accounting for Convertible Securities with Beneficial Conversion Features or ContingentlyAdjustable Conversion Ratios” (“ASC 470-20-65”). ASC 470-20-65 is effectivefor years ending after December 15, 2008. The overall objective of ASC 470-20-65 is toprovide for consistency in application of the standard. The Company has computed andrecorded a beneficial conversion feature in connection with certain of their priorfinancing arrangements and does not believe that ASC 470-20-65 will have a material effecton that accounting.

Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05, *FairValue Measurement and Disclosures (Topic 820)* (“ASU 2009-05”). ASU 2009-05provided amendments to ASC 820-10, *Fair Value Measurements and Disclosures –Overall*, for the fair value measurement of liabilities. ASU 2009-05 providesclarification that in circumstances in which a quoted market price in an active market forthe identical liability is not available, a reporting entity is required to measure fairvalue using certain techniques. ASU 2009-05 also clarifies that when estimating the fairvalue of a liability, a reporting entity is not required to include a separate input oradjustment to other inputs relating to the existence of a restriction that prevents thetransfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an activemarket for the identical liability at the measurement date and the quoted price for theidentical liability when traded as an asset in an active market when no adjustments to thequoted price of the asset are required for Level 1 fair value measurements. Adoption ofASU 2009-05 did not have a material impact on the Company’s results of operations orfinancial condition.

Other ASU’s that have been issued or proposed by the FASB ASC thatdo not require adoption until a future date and are not expected to have a material impacton the financial statements upon adoption.**NOTE 3 - FIXED ASSETS**
Fixed assets as of September 30, 2009 and December 31, 2008 were asfollows: 
**Estimated****Useful Lives**(Unaudited)**(Years)****September    30, 2009****December    31, 2008**Computer and medical equipment5$126,319$126,319Software312,00012,000138,319138,319Less: accumulated depreciation(85,628)(68,767)Weighted-average commons shares Outstanding    (Diluted)$52,691$69,552
There was $16,861 and $17,982 charged to operations fordepreciation expense for the nine months ended September 30, 2009 and 2008, respectively. 
****NOTE 4 - CONVERTIBLE NOTES**

In April and May 2007, the Company issued 5% SeniorConvertible 3 Year Notes to investors in the amount of $2,526,500, which equaled the grossproceeds raised by the Company (the “Convertible Notes”). The Convertible Notesare convertible to shares of the Company’s common stock anytime in the three-yearperiod at a fixed conversion price of $.15. The Convertible Notes will convert into16,843,333 shares of the Company’s common stock. In May 2009, convertible notes of$125,000 were converted, at a fixed conversion rate of $.15 per share, into 833,334 sharesof common stock. This conversion reduced the outstanding principal to a balance of$2,401,500. The convertible noteholders received 6,737,333 detachable warrants with theirnotes. The warrants are exercisable for 5 years at an exercise price of $.25. ThePlacement Agent received 2,947,583 exercisable at $.25 for 5 years. The Company separatelyvalued the warrants at $513,132, and recorded a debt discount in that amount which isbeing amortized to interest expense over the three-year Convertible Notes period. TheCompany has recorded an additional discount of $505,300 as the value of the beneficialconversion option. 

Proceeds of the $2,526,500 allocated as follows: 

i) Convertible Notes - $2,013,368; and ii) Warrants (also Debt Discount) - $513,132. 

The debt discount of $1,018,432 is being amortized usingthe effective interest method over the life of the Convertible Notes of three years. Aspart of the transaction, the Company incurred $292,190 of debt issuance costs. 

Interest expense on the Convertible Notes for the ninemonths ended September 30, 2009 and 2008 was $141,900 and $94,484, respectively and$223,849 is accrued at September 30, 2009. Interest expense on the debt discount was$132,705 and $125,273 for the nine months ended September 30, 2009 and 2008, respectively,and amortization of the discount on the beneficial conversion feature was $130,643 and$123,361, respectively for the nine months ended September 30, 2009 and 2008. 

As a result of the Company’s failure to timely paythe interest in May 2009, the convertible notes are in technical default. Therefore, theCompany has reclassified the debt to current liabilities. The summary of the ConvertibleNotes is as follows at September 30, 2009:

$2,401,500 Convertible Debenture, net of discount of$191,144 at 10% interest per annum due on demand $ 2,210,356
**NOTE 5 - RELATED PARTY LOANS**
The Company has unsecured loans with two of itsdirectors. There was $73,895 outstanding as of September 30, 2009. These loans were madeto fund the Company with working capital during the development stage. The loans areaccruing interest at a rate of 5% per annum. Interest expense during the nine month endedSeptember 30, 2009 and accrued at September 30, 2009 is $1,395. There were no amountsoutstanding in 2008. 
**NOTE 6 - LICENSE AND ROYALTY FEES

Lawrence Livermore
The Company on September 14, 2001, entered into aLimited Exclusive Patent License Agreement for Optical Coherence Tomography for Human andAnimal Dentistry with The Regents of the University of California (Lawrence LivermoreNational Laboratories). Pursuant to this license agreement, the Company entered into aninstallment note with Lawrence Livermore National Laboratories. In the license agreement,the Company agreed to pay to Lawrence Livermore a total of $175,000 in installmentscommencing September 2001. The $175,000 note did not include annual minimum royalty feesor interest. The first installment was a license issue fee of $15,000 which was paid bythe Company. The second installment of $50,000 was the second part of the issue fee thatwas to be paid in nine monthly installments commencing April 2003 was partially paid bythe Company ($26,000). The last installment was originally due December 31, 2005 but itwas extended by Lawrence Livermore to October 1, 2006 in the amount of $110,000. The totaldue under the license agreement was $134,000, prior to a payment made by the Company inOctober 2006 of $50,000. 

Upon payment of this amount, the parties agreed to amendthe agreement they had for payment of the balance of $84,000 along with the unpaid royaltyfees of $380,000 for 2003, 2004 and 2005 as noted below. The Company incurred $10,000 ofmaintenance fees in February 2007, and paid these on February 28, 2007. 

In addition to the license fee, the Company agreed topay minimum royalties to Lawrence Livermore beginning in 2004. The Company prior to theamendment to the agreement had not paid any of the royalties to Lawrence Livermore. 

The royalties due were for 2003 $30,000, for 2004$100,000 and $250,000 for 2005. These fees were to be paid February 28 of each year forthe prior calendar year. The royalties due were $380,000. 

The parties agreed on December 22, 2006 to amend theagreement. The Company agreed to pay Lawrence Livermore a total of $144,000 in threeinstallments; $10,000 by February 28, 2007 (which was for maintenance fees for 2007 andpaid by the Company), $84,000 by July 28, 2007 (which was paid by the Company on July 9,2007), and the final $50,000 by December 31, 2007 (which was paid by the Company onDecember 11, 2007). The $380,000 of minimum royalties have been forgiven by LawrenceLivermore and reclassified to additional paid in capital as of December 22, 2006. 

On January 1, 2008, the Company paid minimum annualroyalty fees of $20,000 for 2008. 

On February 18, 2009, the Company and Lawrence Livermoreentered into an Amended License Agreement, and again amended on October 7, 2009, whereby,the Company is obligated to pay minimum royalty fees of $20,000 by December 15, 2009 (for2009), $20,000 by February 28, 2010 (for 2010), $60,000 by February 28, 2011 (for 2011),$100,000 by February 28, 2012 (for 2012), and $250,000 by February 28, 2013 and February28 each thereafter (for 2013 and each year thereafter).

There were no amounts outstanding to Lawrence Livermoreas of September 30, 2009 and December 31, 2008.
**LightLab**
The Company, other than its obligations under theLicense Agreement with Lawrence Livermore as well as its obligations under theNon-Exclusive License Agreement for Imaging Patents between themselves and LightLabImaging, LLC entered into August 8, 2001, has no other commitments. 

The License Agreement had an original term of 5 years,commencing 2 years after the original agreement date, which would expire August 8, 2008,and the license could be renewed. The minimum royalty requirements were based on Net Salesby the Company. Since the Company generated no sales in the periods, there were no amountsdue. On December 19, 2006, the Company and LightLab Imaging, Inc. negotiated an amendmentwhereby the new term of the agreement is, unless terminated by either party to remain ineffect for three years following whichever of the following events occurs first: i) theCompany’s release of a licensed product; ii) the Company’s first commercial saleof a licensed product, or; iii) July 1, 2007 (July 1, 2010). The Company on September 18,2007 paid LightLab Imaging, LLC $50,000. 

There were no amounts outstanding to LightLab as ofSeptember 30, 2009 and December 31, 2008.
**University of Florida

On May 31, 2007, the Company entered into an exclusivelicensing agreement for the field of dentistry with The University of Florida ResearchFoundation for novel technology relevant to the imaging probe of its Dental ImagingSystem. The Agreement carries a $1,000 initial licensing fee with royalty payments tocommence in 2008. The Company has paid the minimum fees in 2008 and the minimum royaltyfor 2009 is due by December 31, 2009.
**University of California – San Francisco**
On July 9, 2008, the Company entered an exclusivelicense agreement for near-infrared transillumination for the imaging of early dentaldecay with The Regents of the University of California. The agreement requires the paymentof an initial non-refundable license fee of $10,000 and annual license fees of $5,000. Theagreement also requires the payment of certain milestone payments based on patentallowance and FDA approval. 

On August 4, 2009, the Company and The Regents of theUniversity of California entered into an Amended License Agreement (Amendment No. 1)whereby milestones were updated to provide adequate time for the Company to completedevelopment, obtain FDA clearance and transition to marketing and manufacturing. Minimumroyalties are required as follows: 
First year of sales, or no later than 2010$10,000Second year50,000Third year100,000Fourth year150,000Fifth and subsequent years200,000
Earned royalties of 5% of net sales of the product or method arerequired to the extent that they exceed the minimum royalties. The agreement continues ineffect until terminated by the parties or the patent rights expire or are abandoned. TheCompany paid $13,137 in license fees ($5,000) and other patent and legal expenses ($8,137)in 2009, and there are no amounts accrued for as of September 30, 2009.
**NOTE 7 - COMMITMENTS 

AXSUN
In June 2008, the Company entered into a strategic agreement with AXSUNTechnologies, Inc. (“AXSUN”) whereby AXSUN will manufacture and supply theintegrated OCT engine for the OCT System. Under the terms of the agreement, the Companyhas exclusive rights to the OCT engine for use in diagnostic imaging of teeth and softtissue in human and animal dentistry. The exclusivity is subject to the Company’spurchasing a minimum number of OCT engines in each year, commencing in 2009. Minimumannual purchases are required to maintain exclusivity. TheCompany will be required to order 1,000 OCT engines over an 18 month period at a per unitprice of $5,000. This agreement is for a period of 4 years, to be renewed annuallythereafter. The Company also issued 500,000 shares of stock to AXSUN in connection withthe agreement.
**Employment Agreements**
The Company has entered into employment agreements with its two seniorofficers through December 31, 2010. The agreements obligate the Company to pay theseofficers $200,000 per year through December 31, 2010. Total commitment for the Company is$350,000 through December 31, 2010. The Company and the officers can terminate theseagreements, and can adjust compensation at anytime during the length of the contracts.Through September 30, 2009, the Company has accrued compensation to these two officers inthe amount of $910,000. The amount owed to these officers, through December 31, 2009, willbe paid in the form of a convertible note bearing interest at 5% per annum, convertibleinto shares of common stock at a conversion price equal to the average bid price for 10days prior to conversion. 
**NOTE 8 - STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock and Preferred Stock
As of September 30, 2009, the Company has 990,000,000 shares of commonstock authorized with a par value of $.001. On December 9, 2004, Lantis Laser Inc.increased the authorized shares from 250,000,000 to 990,000,000. They also removed the1,000,000 shares of preferred stock from its charter, and on January 23, 2007, amendedtheir articles of incorporation to create a class of preferred stock, and authorized theissuance of 10,000,000 shares of preferred stock at $.001 par value. No shares have beenissued to date. 

The Company has 99,951,572 and 100,118,238 shares issued andoutstanding as of September 30, 2009 and December 31, 2008, respectively. 

During the nine months ended September 30, 2009:

The Company issued 2,000,000 shares to various consultants foradministrative services and public and investor relation services. These shares werevalued at various prices between $.10 and $.04 per share or $150,000. 

The Company converted $125,000 of convertible notes, at a fixedconversion rate of $.15 per share, less discount, beneficial conversion feature andissuance costs net of accrued interest, into 833,334 shares of common stock at a fixedconversion price of $.15 per share. The Company incurred additional charges to interestexpense and amortization of debt issuance costs to reflect the conversion of these notes.This resulted in a reduction of additional paid in capital in the amount of $13,118.

The Company received 3,000,000 shares of stock in settlement of itscomplaints against Ice Cold Stocks, LLC and DC International Consulting LLC. These shareswere returned to the Treasury and retired (see Note 11).

During the year ended December 31, 2008, the Company issued 575,000shares to various consulting companies for public and investor relation services and500,000 shares to a vendor in connection with a strategic supply agreement related to anOptical Coherence Tomography (OCT) engine for use in future products. These shares werevalued between $.21 and $.26 per share or $229,500. In addition, a former noteholder whoreceived warrants in 2006 exercised his warrants at $.15 per share for 69,850 shares ofcommon stock for a cash value paid to the Company of $10,478. 

In addition, two former noteholders who received warrants in 2006exercised their warrants at $.15 per share in 2007 for a cash value paid to the Company of$24,506. 

During the year ended December 31, 2006, the Company completed aprivate placement resulting in the sale of 5,850,000 shares of its common stock at a priceper share of $.10. For every 1.8 share of common stock purchased, the investors received 1warrant. The Company valued each component in accordance with APB 14. The Companyreceived, net of fees, $521,500 through December 31, 2006. The Company also issued1,500,000 to a consulting company for public and investor relation services. These shareswere valued at $.10 per share or $150,000. 

On June 16, 2006, the Company authorized a reverse 1 for 2 stock spliton all issued shares. All shares herein have been reflected retroactive to the stocksplit. 

For the year ended December 31, 2005, the Company issued no shares ofcommon stock. 

During 2004, the only shares issued were in connection with the reversemerger between Lantis Laser, Inc. and Hypervelocity, Inc. The total shares issued were127,718,500 which included the 6,422,500 shares issued for the conversion of the notes,done simultaneously with the merger. 
**Warrants**
The Company granted 3,250,000 warrants to the investors who took partin the private placement of $585,000 based on a 1: 1.8 conversion ratio. The warrants werevalued in accordance with APB 14 at a value of $208,143 utilizing the Black-Scholesmethod. 

The Company granted 1,605,625 warrants to former noteholders that hadpreviously converted their notes into shares of common stock in 2004. The Company valuedthese warrants utilizing the Black-Scholes method and expensed them in their consolidatedstatements of operations. The warrants have a fair value of $159,610. Two of these formernoteholders who received these warrants exercised their warrants at $.15 per share in 2008and 2007 for a cash value paid to the Company of $34,984. 

The Company granted 178,750 warrants to a consultant who assisted theCompany in their private placement. The Company valued these warrants utilizing theBlack-Scholes method and expensed them in their consolidated statements of operations. Thewarrants have a fair value of $17,769. 

The Company granted 6,737,333 warrants to the convertible noteholderinvestors who took part in the debt offering based on a 4:10 conversion ratio. Thewarrants were valued in accordance with APB 14 at a value of $513,132 utilizing theBlack-Scholes method. 

The Company granted 2,947,583 warrants to the placement agent whomanaged the issuance of the 5% Senior Convertible Note. The Company valued these warrantsutilizing the Black-Scholes method and expensed them in their consolidated statements ofoperations. The warrants have a fair value of $292,518. 
The following is a breakdown of the warrants: 
**Warrants**
**Exercise Price**
**Date Issued****Term**3,250,000$0.1509/28/20065 Years1,372,400$0.1509/28/20065 Years178,750$0.1509/28/20065 Years6,737,333$0.2505/01/20075 Years2,947,583$0.2505/17/20075 Years14,486,066
The value of the warrants has been determined using the Black-Scholespricing model using the following assumptions:
**Private Placement**2006 Former Noteholders**Consultant**2007 Convertible Noteholders**Consultant
Expected term    (in years)
5
5
5
3
5
Expected stock    volatility
250%
250%
250%
250%
250%
Expected stock    dividend Yield
0%
0%
0%
0%
0%
Risk-free    interest rate
2.75%
2.75%
2.75%
4.50%
2.75%
Fair value per    warrant
$ 0.0994
$ 0.0994
$ 0.0994
$ 0.0956
$    0.0992
Number of    warrants
3,250,000
1,605,625
178,750
6,737,333
2,947,583
Value of    warrants
$ 208,143
$ 159,610
$ 17,769
$ 643,835
$    292,518
Relative value    of warrants
$ 208,143
$ 159,610
$ 17,679
$ 513,132
$    292,518
The warrant agreements contain no clauses regarding adjustments toexercise price, net settlement provisions, registration rights or liquidated damagesclauses. 
**NOTE 9 - PROVISION FOR INCOME TAXES**
Deferred income taxes are determined using theliability method for the temporary differences between the financial reporting basis andincome tax basis of the Company’s assets and liabilities. Deferred income taxes aremeasured based on the tax rates expected to be in effect when the temporary differencesare included in the Company’s tax return. Deferred tax assets and liabilities arerecognized based on anticipated future tax consequences attributable to differencesbetween financial statement carrying amounts of assets and liabilities and theirrespective tax bases. 

At September 30, 2009, deferred tax assets consist of the following: 

Net operating losses$
2,971,793
Valuation allowance 
(2,971,793)$
-
At September 30, 2009, the Company had a net operating losscarryforward in the amount of $8,740,568 available to offset future taxable income through2029. The Company established valuation allowances equal to the full amount of thedeferred tax assets due to the uncertainty of the utilization of the operating losses infuture periods. A reconciliation of the Company’s effective tax rate as a percentageof income before taxes and federal statutory rate for the periods ended September 30, 2009and 2008 is summarized as follows: **2009****2008**
Federal statutory    rate $(34.0%)(34.0%)
State income taxes,    net of federal benefits3.33.3
Valuation allowance 30.730.7$0%0%**NOTE 10 - JOINT VENTURE AGREEMENT WITH LEI

On December 19, 2007, HyGeniLase, Inc.,("HyGeniLase") a Delaware corporation was formed. HyGeniLase is a joint venturebetween the Company and Laser Energetics, Inc., ("LEI"), an Oklahomacorporation, with each party owning 50% of the company. HyGeniLase was formed to develop,manufacture, market, sell and distribute dental laser process technology to the dentalmarkets worldwide. 

In this joint venture, the Company is responsible forfunding HyGeniLase, clinical evaluation, process development, market development, andsales and marketing to the human and animal dental market. The Company shall be directlycompensated by HyGeniLase for these functions at a rate equal to 5% of net sales lessdiscounts. LEI is responsible for product development, product specifications, qualitycontrol, product improvement and manufacturing. LEI shall be directly compensated byHyGeniLase for these functions at a rate equal to cost plus 10% basis.

The Company is responsible for raising the initialfunding of HyGeniLase in the amount of approximately $650,000: approximately $25,000 beingallocated to fund a laser cost study to be conducted by LEI (all of which has beenadvanced); approximately $61,000 being allocated to purchase a reconditioned researchlaser (of which $42,664 has been advanced); and $550,000 being allocated to fund thedevelopment of a pre-production prototype Alexandrite laser system to be provided by LEI(of which $100,000 has been advanced). LEI has cancelled the balance of $18,336 due on thereconditioned laser because of its late delivery, and the Company has suspended additionalpayments and funding pending delivery of the research prototype by LEI. LEI’s defaultin delivery of the research prototype occurred for technical reasons experienced by LEI. 

Upon delivery of the research prototype by LEI, subjectto our satisfactory clinical evaluation, the Company plans to resume performance of itsobligations under the terms of the joint venture. Neither party has called the other intodefault under the agreement. HyGeniLase will repay the Company for all advances it hasmade in connection with the initial funding after HyGeniLase has received funding of atleast $750,000 (in excess of the Company’s initial funding).

The $25,000 allocated to fund the laser cost study andthe $550,000 allocated to fund the development of a pre-production prototype will be (orhave been) paid to LEI for the benefit of HyGeniLase, and LEI has provided the Company,for the benefit of HyGeniLase, the laser cost study and will deliver the pre-productionprototype.

The Company recognized a loss on the investment inHyGeniLase for the year ended December 31, 2007 in the amount of $61,332 and for the yearended December 31, 2008 of $25,000 under the equity method of accounting. 
**NOTE 11 - LITIGATION**
On June 2, 2008, the Company filed a complaint, Case No.CV08-3587, in the U.S. District Court for the Central District of California –Western Division against Ice Cold Stocks, LLC (“Ice Cold”), VAR GrowthCorporation (“VAR”), Barry Davis (“Davis”), Debbie Sutz(“Sutz”) and Interwest Transfer Co., Inc. (“Interwest”). In itscomplaint, the Company seeks to enjoin Interwest from removing restrictive legends andtransferring 3,500,000 shares of stock issued in connection with a consulting agreementthe Company entered into with VAR in November 2007 and to rescind those shares. TheCompany alleged breach of contract against Ice Cold and Sutz.

On June 16, 2008, the Company filed a complaint, DocketNo. C-212-08, in the Superior Court of New Jersey, Chancery Division, General Equity Part(Bergen County) against Barry Davis (“Davis”), DC International Consulting, LLC(“DC International”), Danny Colon (“Colon”) and Interwest TransferCo., Inc. (“Interwest”). In its complaint, the Company seeks to enjoin Interwestfrom removing restrictive legends and transferring 2,500,000 shares of stock issued inconnection with a consulting agreement the Company entered into with DC International inNovember 2007 and to rescind those shares. The Company alleged that DC International,Davis and Colon, breach of contract against DC International. As of November 18, 2008, theCompany had reached agreements to settle both of the foregoing actions, pursuant to whichthe defendants would surrender for cancellation an aggregate of 3,000,000 of the total6,000,000 shares of stock. On January 28, 2009, half of the 2,500,000 shares (1,250,000shares) in the DC Consulting transaction have been returned and placed back into treasury.On February 26, 2009, Davis returned a certificate for 3,165,000 shares. Half of theoriginal 3,500,000 shares (1,750,000) were returned to treasury and a new certificate inthe amount of 1,415,000 shares (the 1,750,000 shares less 335,000 shares were unable to bereturned as they had been transferred from this group). 

During the nine months ended September 30, 2009 the3,000,000 shares in the Treasury were retired.
**NOTE 12 - FAIR VALUE MEASUREMENTS**
The Company adopted certain provisions of ASC Topic 820.ASC 820 defines fair value, provides a consistent framework for measuring fair value undergenerally accepted accounting principles and expands fair value financial statementdisclosure requirements. ASC 820’s valuation techniques are based on observable andunobservable inputs. Observable inputs reflect readily obtainable data from independentsources, while unobservable inputs reflect our market assumptions. ASC 820 classifiesthese inputs into the following hierarchy:

Level 1 inputs: Quoted prices for identical instrumentsin active markets.

Level 2 inputs: Quoted prices for similar instruments inactive markets; quoted prices for identical or similar instruments in markets that are notactive; and model-derived valuations whose inputs are observable or whose significantvalue drivers are observable.

Level 3 inputs: Instruments with primarily unobservablevalue drivers.

The following table represents the fair value hierarchyfor those financial assets and liabilities measured at fair value on a recurring basis asof September 30, 2009:**Level 1****Level 2****Level 3****Total**Cash57--57Investment under equity method-81,332-81,332Total assets5781,332-81,332Convertible debentures, net of discount--2,210,3562,210,356Total liabilities2,210,3562,210,356******************************************* |