----

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| DELAWARE                                                   |   | 04-3005815          |
|------------------------------------------------------------|--------|---------------------|
| (State or other jurisdiction of                            |   | (I.R.S. Employer    |
| incorporation)                                             |   | Identification No.) |
|                                                       |   |                |
| 129 MORGAN DRIVE, NORWOOD, MASSACHUSETTS 02062             |
| (Address of principal executive offices)                   |
|                                                       |   |                |
| (781) 551-9450                                             |
| (Registrant’s telephone number, including area code) |
|                                                       |   |                |
| NOT APPLICABLE                                             |
| (Former name, former address and former fiscal year,       |
| if changed since last report)                              |

|                            |   |                      |   |                                                                       |   |                                   |
|---------------------------------|--------|---------------------------|--------|----------------------------------------------------------------------------|--------|----------------------------------------|
| Large accelerated filer  o |   | Accelerated filer  o |   | Non-accelerated filer  o( Do not check if a smallerreporting company) |   | Smaller reporting company  ý |

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| PART I - FINANCIAL INFORMATION                                                                                                                                                                                                                             |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                            |   |
| Item 1 - Financial Statements                                                                                                                                                                                                                                   |   |
| Consolidated Balance Sheets at March 31, 2011 (unaudited) and December 31, 2010 (audited)                                                                                                                                                                  | 3      |
|                                                                                                                                                                                                                                                            |   |
| Unaudited Consolidated Statements of Operations and Accumulated Deficit for the Three Months Ended March 31, 2011 and March 31, 2010 and for the period from October 1, 2008 (date re-entering development stage)  through March 31, 2011 (unaudited) | 4      |
|                                                                                                                                                                                                                                                            |   |
| Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and March 31, 2010 and for the period from October 1, 2008 (date re-entering development stage) through March 31, 2011 (unaudited)                                    | 5      |
|                                                                                                                                                                                                                                                            |   |
| Notes to Consolidated Financial Statements (unaudited)                                                                                                                                                                                                          | 6      |
|                                                                                                                                                                                                                                                            |   |
| Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                            | 24     |
|                                                                                                                                                                                                                                                            |   |
| Item 3 - Quantitive and Qualitative Disclosures about Market Risk                                                                                                                                                                                               | 32     |
|                                                                                                                                                                                                                                                            |   |
| Item 4T - Controls and Procedures                                                                                                                                                                                                                               | 32     |
|                                                                                                                                                                                                                                                            |   |
|                                                                                                                                                                                                                                                            |   |
| PART II - OTHER INFORMATION                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                            |   |
| Item 1 - Legal Proceedings                                                                                                                                                                                                                                      | 32     |
|                                                                                                                                                                                                                                                            |   |
| Item 1A - Risk Factors                                                                                                                                                                                                                                          | 33     |
|                                                                                                                                                                                                                                                            |   |
| Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                            | 35     |
|                                                                                                                                                                                                                                                            |   |
| Item 3 - Defaults Upon Senior Securities                                                                                                                                                                                                                        | 35     |
|                                                                                                                                                                                                                                                            |   |
| Item 4 – (Removed and Reserved)                                                                                                                                                                                                                           | 37     |
|                                                                                                                                                                                                                                                            |   |
| Item 5 - Other Information                                                                                                                                                                                                                                      | 37     |
|                                                                                                                                                                                                                                                            |   |
| Item 6 - Exhibits                                                                                                                                                                                                                                               | 37     |
|                                                                                                                                                                                                                                                            |   |
| Signatures                                                                                                                                                                                                                                                      | 38     |

----

|                                                                                                                                      |   | MARCH 31,                     |                            | DECEMBER 31,         |                                   |                     |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------------------------------|---------------------------|----------------------------------------|--------------------------|
|                                                                                                                                      |   | 2011                          |                            | 2010                      |                                   |                     |
|                                                                                                                                      |   | (Unaudited)                   |                            | (Audited)                 |                                   |                     |
| ASSETS                                                                                                                                    |   |                          |                            |                      |                                   |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Current assets                                                                                                                            |   |                          |                            |                      |                                   |                     |
| Cash                                                                                                                                      |   | $                             | 16,3755                         |                      | $                                      | 19,719    |   |   |
| Accounts Receivable                                                                                                                       |   | —                       |                            | 25,000          |               |                     |
| Prepaid expenses and other current assets                                                                                                 |   | 1,606          |        | 2,213           |               |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Total current assets                                                                                                                      |   | 17,9811                       |                            | 46,932               |          |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Property and equipment, net                                                                                                               |   | 21,3922                       |        | 25,440               |               |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Other assets                                                                                                                              |   |                          |                            |                      |                                   |                     |
| Patents, net                                                                                                                              |   | 161,6000                      |                            | 170,988         |                    |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |   |
|                                                                                                                                      |   | $                             | 200,973               |       | $                                      | 243,360        |    |
|                                                                                                                                      |   |                          |                            |                      |                                   |
|                                                                                                                                      |   |                          |                            |                      |                                   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY                                                                                            |   |                          |                            |                      |                                   |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |
| Current liabilities                                                                                                                       |   |                          |                            |                      |                                   |
| Accounts payable and accrued expenses                                                                                                     |   | $                             | 4,013,442        |                      | $                                      | 3,773,620      |   |
| Officer loans and notes payable                                                                                                           |   |                          | 1,600,830        |                      |                                   | 1,470,134      |   |   |
| Shareholder loans and notes payable                                                                                                       |   |                          | 1,371,665        |                      |                                   | 1,346,443      |   |   |
| Other loans and notes payable                                                                                                             |   |                          | 445,873          |                      |                                   | 438,573        |   |   |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Total current liabilities                                                                                                                 |   | 7,431,810      |                            | 7,028,770       |                         |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Stockholders’ deficiency                                                                                                            |   |                          |                            |                      |                                   |                     |
| Preferred stock, par value $0.0001 per share; 5,000,000 shares authorized, none issued and outstanding                                    |   | —                       |                            | —                   |                                   |                     |
| Common stock, $0.01 par value; 40,000,000 shares authorized, 13,178,454 issued and outstanding at March 31, 2011 and at December 31, 2010 |   | 131,785        |                            | 131,785         |                                   |                     |
| Additional paid-in capital                                                                                                                |   | 19,803,033     |                            | 19,776,466      |                                   |                     |
| Accumulated deficit                                                                                                                       |   | (21,891,704    | ))))                            | (21,891,704     |  )))                              |                     |
| Accumulated deficit during development stage                                                                                              |   | (5,273,951          | )())                            | (4,801,957      | vv )                                   |                     |
|                                                                                                                                      |   |                          |                            |                      |                                   |                     |
| Total stockholders’ deficiency                                                                                                      |   | (7,230,837     | )                               | (6,785,410      |  )                                |
|                                                                                                                                      |   | $                             | 200,973          |                      | $                                      | 243,360        |   |

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APOGEE TECHNOLOGY, INC. AND SUBSIDIARY

|                                                           |   | THREE MONTHS ENDEDMARCH 31,                                                                                                                                                                            |        | Cumulative from Re-entering Development Stage on OCTOBER 1, 2008 to                                                                                                                                                                                                                                        |   |
|----------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                           |   | 2011                                                                                                                                                                                                             |        | 2010                                                                                                                                                                                                                                                                                                       |   | MARCH 31, 2011 |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Revenues                                                       |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Consulting                                                     |   | $                                                                                                                                                                                                                | 20,000      |                                                                                                                                                                                                                                                                                                       | $      | — |   | $ | 85,000 |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Costs and expenses                                             |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Research and development                                       |   | 104,387                                                                                                                                                                                                          |        | 122,571                                                                                                                                                                                                                                                                                                    |   | 1,712,737 |   |
| Selling, general and administrative                            |   | 265,818                                                                                                                                                                                                          |        | 206,259                                                                                                                                                                                                                                                                                                    |   | 2,851,520 |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
|                                                           |   | 370,205                                                                                                                                                                                                          |        | 328,830                                                                                                                                                                                                                                                                                                    |   | 4,564,257 |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Loss from operations                                           |   | (350,205                                                                                                                                                                                                         | )           | (328,830                                                                                                                                                                                                                                                                                                   | )      | (4,479,257 | ) |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Other income (expense)                                         |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Gain on extinguishment of debt                                 |   | —                                                                                                                                                                                                          |        | —                                                                                                                                                                                                                                                                                                    |   | 341,810 |   |
| Warrant expense                                                |   | —                                                                                                                                                                                                          |        | —                                                                                                                                                                                                                                                                                                    |   | (62,044 | ) |
| Interest and other expense                                     |   | (121,835                                                                                                                                                                                                         | )           | (127,811                                                                                                                                                                                                                                                                                                   | )      | (1,079,331 | ) |
| Interest and other income                                      |   | 46                                                                                                                                                                                                               |        | 500                                                                                                                                                                                                                                                                                                        |   | 4,871 |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
|                                                           |   | (121,789                                                                                                                                                                                                         | )           | (127,311                                                                                                                                                                                                                                                                                                   | )      | (794,694 | ) |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Net loss                                                       |   | $                                  (471,994 | )           | $                                                 (456,141 | )      | $                                   (5,273,951 | ) |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Accumulated deficit - beginning                                |   | $                            (26,693,661                                  | )           | $                                            (25,080,430                            | )      | $                                                  — |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Accumulated deficit - ending                                   |   |                                                                                                                                                                                                             | (27,165,655 | )                                                                                                                                                                                                                                                                                                          |   | (25,536,571 | ) |   | (5,273,951 | ) |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Basic and diluted loss per common share                        |   | $                                                                                                                                                                                                                | (0.04       | )                                                                                                                                                                                                                                                                                                          | $      | (0.04 | ) |   |   |   |
|                                                           |   |                                                                                                                                                                                                             |        |                                                                                                                                                                                                                                                                                                       |   |   |   |
| Weighted average common shares outstanding - basic and diluted |   | 13,178,454                                                                                                                                                                                                       |        | 12,132,332                                                                                                                                                                                                                                                                                                 |   |   |   |

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APOGEE TECHNOLOGY, INC. AND SUBSIDIARY

|                                                                        |   | THREE MONTHS ENDEDMARCH,                                                                                                                                                                                                                                                                                                                                                                                                    |   | Cumulative from Re-entering Development Stage onOCTOBER 1, 2008throughMARCH 31, 2011                                                                                                                                                                                                                                                                                   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                        |   | 2011                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2010                                                                                                                                                                                                                                                                                                                                                                   |   |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Cash flows from operations                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Net loss                                                                    |   | $                                                      (471,994)                                                                                   |   | $                                                (456,141)                                                                  |   | $                                                           (5,273,951) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Depreciation and amortization                                               |   | 19,436                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 16,174                                                                                                                                                                                                                                                                                                                                                                 |   | 254,211 |
|     Stock compensation expense for employees and directors   |   | 23,638                                                                                                                                                                                                                                                                                                                                                                                                                      |   | (46,903)                                                                                                                                                                                                                                                                                                                                                               |   | 81,226 |
| Original issue discount                                                     |   | 10,547                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 30,443                                                                                                                                                                                                                                                                                                                                                                 |   | 225,814 |
| Warrant Expenses                                                            |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                                                                                                                                                                                                                                                                                                                                |   | 62,044 |
| Patent impairment                                                           |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                                                                                                                                                                                                                                                                                                                                |   | 205,674 |
| Disposal of sensor equipment                                                |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                                                                                                                                                                                                                                                                                                                                |   | 3,731 |
| Gain on extinguishment of debt                                              |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                                                                                                                                                                                                                                                                                                                                |   | (341,810) |
| Changes in operating assets and liabilities:                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Accounts receivable                                                         |   | 25,000                                                                                                                                                                                                                                                                                                                                                                                                                      |   | —                                                                                                                                                                                                                                                                                                                                                                |   | — |
| Prepaid expenses and other current assets                                   |   | 607                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 1,725                                                                                                                                                                                                                                                                                                                                                                  |   | 33,507 |
| Accounts payable and accrued expenses                                       |   | 239,823                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 308,616                                                                                                                                                                                                                                                                                                                                                                |   | 2,427,330 |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Net cash used in operating activities                                       |   | (152,943)                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (146,086)                                                                                                                                                                                                                                                                                                                                                              |   | (2,322,224) |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Cash flows from investing activities                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Patent costs                                                                |   | (6,000)                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (78,128)                                                                                                                                                                                                                                                                                                                                                               |   | (162,824) |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Net cash used by investing activities                                       |   | (6,000)                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (78,128)                                                                                                                                                                                                                                                                                                                                                               |   | (162,824) |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Cash flows from financing activities                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Bank overdraft                                                              |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                                                                                                                                                                                                                                                                                                                                |   | — |
| Proceeds for shareholder loans and notes payable                            |   | 25,000                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 18,000                                                                                                                                                                                                                                                                                                                                                                 |   | 601,665 |
| Proceeds from officer loans and notes payable                               |   | 130,600                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 175,500                                                                                                                                                                                                                                                                                                                                                                |   | 841,000 |
| Proceeds from other loans and notes payable                                 |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 30,000                                                                                                                                                                                                                                                                                                                                                                 |   | 906,563 |
| Proceeds and adjustment from sale of equity securities                      |   | —                                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                                                                                                                                                                                                                                                                                                                                |   | 156,480 |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Net cash provided by financing activities                                   |   | 155,600                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 223,500                                                                                                                                                                                                                                                                                                                                                                |   | 2,505,708 |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Increase (decrease) in cash                                                 |   | (3,343)                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (714)                                                                                                                                                                                                                                                                                                                                                                  |   | 20,660 |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Cash — beginning                                                      |   | 19,719                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 4,704                                                                                                                                                                                                                                                                                                                                                                  |   | (4,284) |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Cash— ending                                                          |   | $                                                           16,376                                                        |   | $                                                       3,990                            |   | $                                                                   16,376 |
|                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Supplemental Cash Flow Information:                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Non-cash financing activities                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                                   |   |   |
| Warrants issued in connection with notes payable and stock sales            |   | $                                                              2,930                                       |   | $                                                     14,839                                            |   | $                                                                 269,652 |
| Converted promissory notes to common stock                                  |   | $                                                                    — |   | $                                                            — |   | $                                                                 615,000 |
| Converted interest to common stock                                          |   | $                                                                    —      |   | $                                                            — |   | $                                                                 286,122 |

----

APOGEE TECHNOLOGY, INC. AND SUBSIDIARY

1.                           The Company and Basis of Presentation

----

----

----

----

| Stock Options                    |   | Shares |      |   | Weighted-AverageExercisePrice |   |   | Weighted-AverageRemainingContractualTerm |   |
|---------------------------------------|--------|--------|-----------|--------|-------------------------------|--------|--------|------------------------------------------|--------|
| Outstanding at December 31, 2010 |   |   | 2,786,600 |   |                          | $      | 4.6725 |                                     |   |   |   |
| Granted                               |   |   | —   |   |                          |   |   |                                     |   |   |   |
| Exercised                             |   |   | —   |   |                          |   |   |                                     |   |   |   |
| Cancelled or expired                  |   |   | 146,000   |   |                          |   | 6.2500 |                                     |   |   |   |
| Outstanding at March 31, 2011         |   |   | 2,640,600 |   |                          | $      | 4.5853 |                                     |   |   | 3.1865 |   |
|                                  |   |   |      |   |                          |   |   |                                     |   |   |   |   |
| Vested at March 31, 2011              |   |   | 2,480,800 |   |                          | $      | 4.8206 |                                     |   |   | 2.9544 |   |
|                                  |   |   |      |   |                          |   |   |                                     |   |   |   |   |
| Exercisable at March 31, 2011         |   |   | 2,480,800 |   |                          | $      | 4.8206 |                                     |   |   | 2.9544 |   |

|                        |               |   | Options Outstanding |      |      | Options Exercisable |   |
|-----------------------------|--------------------|--------|--------------------------|-----------|-----------|--------------------------|--------|
|                        |               |   |                     |      |      | Weighted                 |   |   |   |   |   |   |   |   |   |   |
|                        |               |   |                     |      |      | Average                  |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                        |               |   |                     |      |      | Remaining                |   |   | Average |   |   |   |   |   | Average |   |
| Range of Exercise |               |   | Number                   |      |      | Contractual              |   |   | Exercise |   |   | Number |   |   | Exercise |   |
| Prices                      |               |   | Outstanding              |      |      | Term                     |   |   | Price |   |   | Exercisable |   |   | Price |   |
|                        |               |   |                     |      |      |                     |   |   |   |   |   |   |   |   |   |   |
| $                           | 0.45 — 1.69  |   |                     |      | 929,000   |                     |   |   | 5.6575 |   |   | $ | 0.9899 |   |   |   | 769,200 |   |   | $ | 1.0017 |   |
| $                           | 2.71 — 6.50  |   |                     |      | 1,116,600 |                     |   |   | 1.1929 |   |   | $ | 5.2856 |   |   |   | 1,116,600 |   |   | $ | 5.2856 |   |
| $                           | 8.45 — 12.15 |   |                     |      | 595,000   |                     |   |   | 3.0698 |   |   | $ | 8.8849 |   |   |   | 595,000 |   |   | $ | 8.8849 |   |
|                        |               |   |                     |      |      |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total at March 31, 2011     |               |   |                     | 2,640,600 |      |                     |   | 3.1865 |   |   | $ | 4.5853 |   |   |   | 2,480,800 |   |   | $ | 4.8206 |   |

----

| Property and Equipment        |   | March 31, |     |   | December 31, |   |
|-------------------------------|--------|-----------|----------|--------|-------------------|--------|
|                          |   | 2011      |     |   | 2010              |   |
|                          |   |      |     |   |              |   |
| Equipment                     |   | $         | 162,790  |   |              | $      | 162,790 |   |
| Software                      |   |      | 32,943   |   |              |   | 32,943 |   |
| Furniture and fixtures        |   |      | 22,047   |   |              |   | 22,047 |   |
| Leasehold improvements        |   |      | 92,892   |   |              |   | 92,892 |   |
|                          |   |      |     |   |              |   |   |   |
|                          |   | $         | 310,672  |   |              | $      | 310,672 |   |
|                          |   |      |     |   |              |   |   |   |
| Less accumulated depreciation |   |      | (289,280 | )      |              |   | (285,231 | ) |
|                          |   |      |     |   |              |   |   |   |
|                          |   | $         | 21,392   |   |              | $      | 25,440 |   |

| Description            |   | Depreciable Lives |   |
|------------------------|--------|------------------------|--------|
|                   |   |                   |   |
| Equipment              |   | 5 years                |   |
| Software               |   | 3 years                |   |
| Furniture and fixtures |   | 7 years                |   |
| Leasehold improvements |   | Term of lease          |   |

----

|              |   | Gross Carrying Value |    |   | Accumulated Amortization |   |     | AccumulatedImpairment |   |   | Net Book Value |   |
|-------------------|--------|----------------------|---------|--------|--------------------------|--------|----------|-----------------------|--------|--------|----------------|--------|
|              |   |                 |    |   |                     |   |     |                  |   |   |           |   |
| December 31, 2010 |   | $                    | 549,227 |   |                     |   | (132,565 | )                     |   |   | (245,674       | )      |   | $ | 170,988 |   |
| March 31, 2011    |   | $                    | 555,227 |   |                     |   | (147,953 | )                     |   |   | (245,674       | )      |   | $ | 161,600 |   |

| Year ended December 31,         |   |
|---------------------------------|--------|
| Nine months ended December 2011 |   |   | 46,522 |   |
| 2012                            |   |   | 61,910 |   |
| 2013                            |   |   | 28,142 |   |
| 2014                            |   |   | 23,826 |   |
| 2015                            |   |   | 1,200 |   |

|    Accounts Payable  |   | March 31, |      |   | December 31, |   |
|------------------------------------------|--------|-----------|-----------|--------|-------------------|--------|
|                                     |   | 2011      |      |   | 2010              |   |
|                                     |   |      |      |   |              |   |
|  Legal and accounting               |   | $         | 1,735,000 |   |              | $      | 1,761,000 |   |
| Consulting expenses                      |   |      | 58,000    |   |              |   | 53,000 |   |
| Interest owed to Promissory Note holders |   |      | 630,000   |   |              |   | 519,000 |   |
| Corporate insurance expenses             |   |      | 1,000     |   |              |   | 1,000 |   |
| Director and Advisory Committee fees     |   |      | 166,000   |   |              |   | 155,000 |   |
| Rent expenses                            |   |      | 119,000   |   |              |   | 106,000 |   |
| Other expenses                           |   |      | 601,000   |   |              |   | 570,000 |   |
|                                     |   |      |      |   |              |   |   |   |
|                                     |   | $         | 3,310,000 |   |              | $      | 3,165,000 |   |

|    Accrued Expenses  |   | March 31, |    |   | December 31, |   |
|------------------------------------------|--------|-----------|---------|--------|-------------------|--------|
|                                     |   | 2011      |    |   | 2010              |   |
|                                     |   |      |    |   |              |   |
| Accrued audit expenses                   |   | $         | 56,000  |   |              | $      | 29,000 |   |
| Accrued legal expenses                   |   |      | 50,000  |   |              |   | 48,000 |   |
| Accrued consulting expenses              |   |      | 52,000  |   |              |   | 65,000 |   |
| Accrued payroll and payroll taxes        |   |      | 526,000 |   |              |   | 447,000 |   |
| Other accrued expenses                   |   |      | 20,000  |   |              |   | 20,000 |   |
|                                     |   |      |    |   |              |   |   |   |
|                                     |   | $         | 704,000 |   |              | $      | 609,000 |   |

----

|                     |   | Interest  |    |
|--------------------------|--------|-----------|---------|
| Note Holder              |   | Converted |    |
| Herbert M. Stein         |   | $         | 204,098 |   |
| Robert Schacter, et al   |   |      | 82,024  |   |
| Total interest converted |   | $         | 286,122 |   |

----

|              |   |   |      | Promissory Notes and Loans Due ToDavid Spiegel |               |          |   |   |          |   |
|-------------------|--------|--------|-----------|------------------------------------------------|--------------------|---------------|--------|--------|---------------|--------|
|              |   |   |      |                                           |               |          |   |   |          |   |
| Date of           |   |   |      | Maturity                                       |               | Initial       |   |   | Current       |   |
| Promissory Note   |   | Amount |      | Date                                           |               | Interest Rate |   |   | Interest Rate |   |
|              |   |   |      |                                           |               |          |   |   |          |   |
| December 11, 2007 |   | $      | 150,000   |                                           | March 10, 2008     |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 21, 2008 |   |   | 100,000   |                                           | August 19, 2008    |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 20, 2008    |   |   | 100,000   |                                           | September 16, 2008 |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 1, 2008     |   |   | 50,000    |                                           | September 28, 2008 |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 15, 2008      |   |   | 50,000    |                                           | November 11, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 16, 2008     |   |   | 65,000    |                                           | December 13, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 18, 2008     |   |   | 50,000    |                                           | December 15, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 15, 2008     |   |   | 50,000    |                                           | January 11, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 28, 2008     |   |   | 50,000    |                                           | January 24, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 12, 2008   |   |   | 35,000    |                                           | February 8, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 27, 2008   |   |   | 35,000    |                                           | February 23, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| September 5, 2008 |   |   | 35,000    |                                           | March 4, 2009      |          |   | 8.00   | %             |   |   | 12.00 | % |
| October 27, 2008  |   |   | 35,000    |                                           | April 25, 2009     |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 6, 2009   |   |   | 80,000    |                                           | July 5, 2009       |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 19, 2009    |   |   | 64,000    |                                           | September 15, 2009 |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 19, 2009      |   |   | 35,000    |                                           | November 15, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 10, 2009     |   |   | 25,000    |                                           | December 7, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 1, 2009      |   |   | 32,000    |                                           | December 28, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 5, 2009  |   |   | 103,000   |                                           | May 4, 2010        |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 21, 2009 |   |   | 68,000    |                                           | June 19. 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 29, 2009 |   |   | 4,665     |                                           | July 24, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 16, 2010    |   |   | 16,000    |                                           | October 13, 2010   |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 4, 2010      |   |   | 14,000    |                                           | December 1, 2010   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 11, 2010   |   |   | 100,000   |                                           | February 7, 2011   |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 29, 2011*   |   |   | 25,000    |                                           | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
|              |   | $      | 1,371,665 |                                           |               |          |   |   |          |   |   |   |   |

----

|               |   |   |      | Promissory Notes and Loans Due ToHerbert M. Stein |               |          |   |   |          |   |
|--------------------|--------|--------|-----------|---------------------------------------------------|--------------------|---------------|--------|--------|---------------|--------|
|               |   |   |      |                                              |               |          |   |   |          |   |
| Date of            |   |   |      | Maturity                                          |               | Initial       |   |   | Current       |   |
| Promissory Note    |   | Amount |      | Date                                              |               | Interest Rate |   |   | Interest Rate |   |
|               |   |   |      |                                              |               |          |   |   |          |   |
| December 11, 2007  |   | $      | 250,000   |                                              | March 10, 2008     |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 21, 2008  |   |   | 100,000   |                                              | August 19, 2008    |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 20, 2008     |   |   | 50,000    |                                              | September 16, 2008 |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 1, 2008      |   |   | 50,000    |                                              | September 28, 2008 |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 15, 2008       |   |   | 50,000    |                                              | November 11, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 16, 2008      |   |   | 35,000    |                                              | December 13, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 18, 2008      |   |   | 40,000    |                                              | December 15, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 15, 2008      |   |   | 30,000    |                                              | January 11, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 28, 2008      |   |   | 50,000    |                                              | January 24, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 12, 2008    |   |   | 35,000    |                                              | February 8, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 27, 2008    |   |   | 35,000    |                                              | February 23, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| September 5, 2008  |   |   | 35,000    |                                              | March 4, 2009      |          |   | 8.00   | %             |   |   | 12.00 | % |
| October 27, 2008   |   |   | 25,000    |                                              | April 25, 2009     |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 2, 2009   |   |   | 30,000    |                                              | August 1, 2009     |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 17, 2009  |   |   | 10,000    |                                              | August 16, 2009    |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 19, 2009     |   |   | 25,900    |                                              | September 15, 2009 |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 13, 2009     |   |   | 33,000    |                                              | October 10, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 18, 2009       |   |   | 12,000    |                                              | November 14, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 1, 2009       |   |   | 20,000    |                                              | December 28, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 5, 2009   |   |   | 42,500    |                                              | May 4, 2010        |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 21, 2009  |   |   | 83,500    |                                              | June 19, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 25, 2010   |   |   | 79,000    |                                              | July 24, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 22, 2010  |   |   | 66,000    |                                              | August 21, 1010    |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 16, 2010     |   |   | 86,500    |                                              | October 13, 2010   |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 4, 2010       |   |   | 116,000   |                                              | December 1, 2010   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 11, 2010    |   |   | 45,700    |                                              | February 7, 2011   |          |   | 8.00   | %             |   |   | 12.00 | % |
| September 22, 2010 |   |   | 6,300     |                                              | March 21, 2011     |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 18, 2010  |   |   | 9,000     |                                              | May 17, 2011       |          |   | 8.00   | %             |   |   | 8.00 | % |
| January 6, 2011    |   |   | 20,000    |                                              | July 5, 2011       |          |   | 8.00   | %             |   |   | 8.00 | % |
| March 4, 2011*     |   |   | 27,100    |                                              | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
| March 10, 2011*    |   |   | 26,000    |                                              | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
| March 15, 2011*    |   |   | 15,000    |                                              | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
| March 16, 2011*    |   |   | 12,500    |                                              | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
| March 28, 2011*    |   |   | 50,000    |                                              | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
|               |   | $      | 1,601,000 |                                              |               |          |   |   |          |   |   |   |   |

----

|              |   |   |    | Promissory Notes and Loans Due ToOthers |               |          |   |   |          |   |
|-------------------|--------|--------|---------|-----------------------------------------|--------------------|---------------|--------|--------|---------------|--------|
|              |   |   |    |                                    |               |          |   |   |          |   |
| Date of           |   |   |    | Maturity                                |               | Initial       |   |   | Current       |   |
| Promissory Note   |   | Amount |    | Date                                    |               | Interest Rate |   |   | Interest Rate |   |
|              |   |   |    |                                    |               |          |   |   |          |   |
| July 28, 2008     |   | $      | 20,000  |                                    | March 4, 2009      |          |   | 8.00   | %             |   |   | 12.00 | % |
| October 27, 2008  |   |   | 6,000   |                                    | April 25, 2009     |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 6, 2009   |   |   | 500     |                                    | July 5, 2009       |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 17, 2009 |   |   | 37,000  |                                    | August 16, 2009    |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 19, 2009    |   |   | 500     |                                    | September 15, 2009 |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 13, 2009*   |   |   | 61,500  |                                    | October 10, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 18, 2009      |   |   | 32,500  |                                    | November 14, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 5, 2009  |   |   | 70,000  |                                    | May 4, 2010        |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 21, 2009 |   |   | 2,563   |                                    | June 19, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 4, 2010*     |   |   | 20,000  |                                    | December 1, 2010   |          |   | 12.00  | %             |   |   | 12.00 | % |
| November 18, 2010 |   |   | 126,000 |                                    | May 17, 2011       |          |   | 8.00   | %             |   |   | 8.00 | % |
| January 6, 2011   |   |   | 75,000  |                                    | July 5, 2011       |          |   | 8.00   | %             |   |   | 8.00 | % |
|              |   | $      | 451,563 |                                    |               |          |   |   |          |   |   |   |   |

----

|                                                      |   | Officer Loans Herbert M. Stein |      | Shareholder LoansDavid Spiegel |   |   Total     |   |          |
|-----------------------------------------------------------|--------|-------------------------------------|-----------|--------------------------------|--------|-----------------------|--------|---------------|
|                                                      |   |                                |      |                           |   |                  |   |          |
|  Total proceeds from Loans and Promissory Notes      |   | $                                   | 1,601,000 |                           | $      |  1,371,665       |   |  $       | 2,972,665 |   |
|  Discount  (Fair Market Value of Warrants) |   |                                | (170      | )                              |   | —               |   |          | (170 | ) |
|                                                      |   | $                                   | 1,600,830 |                           | $      |   1,371,665 |   |   $ |  2,972,495 |   |

|                                             |   | LoansOthers |                |
|--------------------------------------------------|--------|-------------|---------------------|
|                                             |   |        |                |
|  Total proceeds from Loans Promissory Notes |   | $           |   451,562 |   |
|  Discount (Fair Market Value of Warrants)   |   |        |  (5,689        |  ) |
|                                             |   | $           | 445,873             |   |

----

|              |   |      |    |   |        |   | David Spiegel |   |    |   |   |      |   |   |       |   |   |      |   |      |
|-------------------|--------|-----------|---------|--------|-------------|--------|---------------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|-----------|
|              |   |      |    |   |        |   |          |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |
|              |   |      |    |   | Stock Price |   |          |   |    |   |   | Risk Free |   |   |       |   |   |      |   |      |   |   |
|              |   | Number of |    |   | At Date of  |   | Term of       |   | Strike  |   |   | Interest  |   |   |       |   |   | Value Per |   |      |   |   |
| Date of Warrant   |   | Shares    |    |   | Issuance    |   | Warrant       |   | Price   |   |   | Rate      |   |   | Volatility |   |   | Warrant   |   |      | Total Value |   |
|              |   |      |    |   |        |   |          |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |
| February 21, 2008 |   |      | 10,000  |   |        | $      | 0.65          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.23   |   |      |   | 98.45824  | % |   | $ | 0.3462 |   |   | $ | 3,462.00 |   |
| March 20, 2008    |   |      | 10,000  |   |        | $      | 0.70          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.71   |   |      |   | 99.87467  | % |   | $ | 0.3867 |   |   |   | 3,867.00 |   |
| April 1, 2008     |   |      | 5,000   |   |        | $      | 0.85          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.94   |   |      |   | 100.00925 | % |   | $ | 0.5042 |   |   |   | 2,526.00 |   |
| May 15, 2008      |   |      | 5,000   |   |        | $      | 0.83          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.70   |   |      |   | 102.78266 | % |   | $ | 0.5036 |   |   |   | 2,518.00 |   |
| June 16, 2008     |   |      | 6,500   |   |        | $      | 0.63          |   | 3 Years |   | $      | 1.00      |   |   |       | 3.33   |   |      |   | 104.12541 | % |   | $ | 0.3555 |   |   |   | 2,310.75 |   |
| June 18, 2008     |   |      | 5,000   |   |        | $      | 0.61          |   | 3 Years |   | $      | 1.00      |   |   |       | 3.19   |   |      |   | 104.07197 | % |   | $ | 0.3397 |   |   |   | 1,698.50 |   |
| July 15, 2008     |   |      | 5,000   |   |        | $      | 0.87          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.70   |   |      |   | 104.55357 | % |   | $ | 0.5429 |   |   |   | 2,714.50 |   |
| July 28, 2008     |   |      | 5,000   |   |        | $      | 0.75          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.90   |   |      |   | 104.54508 | % |   | $ | 0.4481 |   |   |   | 2,240.50 |   |
| August 12, 2008   |   |      | 3,500   |   |        | $      | 0.75          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.73   |   |      |   | 104.93498 | % |   | $ | 0.4488 |   |   |   | 1,570.80 |   |
| August 27, 2008   |   |      | 3,500   |   |        | $      | 0.85          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.58   |   |      |   | 106.26182 | % |   | $ | 0.5331 |   |   |   | 1,865.85 |   |
| September 5, 2008 |   |      | 3,500   |   |        | $      | 0.86          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.44   |   |      |   | 106.21122 | % |   | $ | 0.5404 |   |   |   | 1,891.40 |   |
| October 27, 2008  |   |      | 3,500   |   |        | $      | 0.60          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.83   |   |      |   | 108.82589 | % |   | $ | 0.3431 |   |   |   | 1,200.85 |   |
| January 6, 2009   |   |      | 8,000   |   |        | $      | 0.75          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.10   |   |      |   | 108.80131 | % |   | $ | 0.4566 |   |   |   | 3,652.80 |   |
| March 19, 2009    |   |      | 6,400   |   |        | $      | 0.68          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.21   |   |      |   | 109.80676 | % |   | $ | 0.4057 |   |   |   | 2,596.48 |   |
| May 19, 2009      |   |      | 3,500   |   |        | $      | 0.70          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.37   |   |      |   | 111.74849 | % |   | $ | 0.4288 |   |   |   | 1,500.80 |   |
| June 10, 2009     |   |      | 2,500   |   |        | $      | 0.60          |   | 3 Years |   | $      | 1.00      |   |   |       | 2.00   |   |      |   | 126.10551 | % |   | $ | 0.3959 |   |   |   | 989.75 |   |
| July 1, 2009      |   |      | 3,200   |   |        | $      | 0.87          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.57   |   |      |   | 128.93341 | % |   | $ | 0.6295 |   |   |   | 2,014.40 |   |
| November 5, 2009  |   |      | 10,300  |   |        | $      | 1.02          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.44   |   |      |   | 131.45892 | % |   | $ | 0.7681 |   |   |   | 7,911.43 |   |
| December 21, 2009 |   |      | 6,800   |   |        | $      | 1.05          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.42   |   |      |   | 133.83768 | % |   | $ | 0.8029 |   |   |   | 5,459.72 |   |
| January 25, 2010  |   |      | 466     |   |        | $      | 0.96          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.40   |   |      |   | 134.80467 | % |   | $ | 0.7268 |   |   |   | 338.69 |   |
| April 16, 2010    |   |      | 1,600   |   |        | $      | 0.90          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.56   |   |      |   | 136.43020 | % |   | $ | 0.6800 |   |   |   | 1,088.00 |   |
| June 4, 2010      |   |      | 1,400   |   |        | $      | 0.50          |   | 3 Years |   | $      | 1.00      |   |   |       | 1.17   |   |      |   | 153.12821 | % |   | $ | 0.3740 |   |   |   | 523.60 |   |
| August 11, 2010   |   |      | 10,000  |   |        | $      | 0.30          |   | 3 Years |   | $      | 1.00      |   |   |       | 0.81   |   |      |   | 157.16541 | % |   | $ | 0.2115 |   |   |   | 2,115.00 |   |
| Total             |   |      | 119,666 |   |        |   |          |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |   |   |   |   | $ | 56,056.82 |   |

----

|               |   |      |    |   |        |   | Herbert M. Stein |   |    |   |   |      |   |   |       |   |   |      |   |      |
|--------------------|--------|-----------|---------|--------|-------------|--------|------------------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|-----------|
|               |   |      |    |   |        |   |             |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |
|               |   |      |    |   | Stock Price |   |             |   |    |   |   | Risk Free |   |   |       |   |   |      |   |      |   |   |
|               |   | Number of |    |   | At Date of  |   | Term of          |   | Strike  |   |   | Interest  |   |   |       |   |   | Value Per |   |      |   |   |
| Date of Warrant    |   | Shares    |    |   | Issuance    |   | Warrant          |   | Price   |   |   | Rate      |   |   | Volatility |   |   | Warrant   |   |      | Total Value |   |
|               |   |      |    |   |        |   |             |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |
| February 21, 2008  |   |      | 10,000  |   |        | $      | 0.65             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.23   |   |      |   | 98.45824  | % |   | $ | 0.3462 |   |   | $ | 3,462.00 |   |
| March 20, 2008     |   |      | 5,000   |   |        | $      | 0.70             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.71   |   |      |   | 99.87467  | % |   | $ | 0.3867 |   |   |   | 1,933.50 |   |
| April 1, 2008      |   |      | 5,000   |   |        | $      | 0.85             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.94   |   |      |   | 100.00925 | % |   | $ | 0.5042 |   |   |   | 2,526.00 |   |
| May 15, 2008       |   |      | 5,000   |   |        | $      | 0.83             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.70   |   |      |   | 102.78266 | % |   | $ | 0.5036 |   |   |   | 2,518.00 |   |
| June 16, 2008      |   |      | 3,500   |   |        | $      | 0.63             |   | 3 Years |   | $      | 1.00      |   |   |       | 3.33   |   |      |   | 104.12541 | % |   | $ | 0.3555 |   |   |   | 1,244.25 |   |
| June 18, 2008      |   |      | 4,000   |   |        | $      | 0.61             |   | 3 Years |   | $      | 1.00      |   |   |       | 3.19   |   |      |   | 104.07197 | % |   | $ | 0.3397 |   |   |   | 1,358.80 |   |
| July 15, 2008      |   |      | 3,000   |   |        | $      | 0.87             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.70   |   |      |   | 104.55357 | % |   | $ | 0.5429 |   |   |   | 1,628.70 |   |
| July 28, 2008      |   |      | 5,000   |   |        | $      | 0.75             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.90   |   |      |   | 104.54508 | % |   | $ | 0.4481 |   |   |   | 2,240.50 |   |
| August 12, 2008    |   |      | 3,500   |   |        | $      | 0.75             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.73   |   |      |   | 104.93498 | % |   | $ | 0.4488 |   |   |   | 1,570.80 |   |
| August 27, 2008    |   |      | 3,500   |   |        | $      | 0.85             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.58   |   |      |   | 106.26182 | % |   | $ | 0.5331 |   |   |   | 1,865.85 |   |
| September 5, 2008  |   |      | 3,500   |   |        | $      | 0.86             |   | 3 Years |   | $      | 1.00      |   |   |       | 2.44   |   |      |   | 106.21122 | % |   | $ | 0.5404 |   |   |   | 1,891.40 |   |
| October 27, 2008   |   |      | 2,500   |   |        | $      | 0.60             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.83   |   |      |   | 108.82589 | % |   | $ | 0.3431 |   |   |   | 857.75 |   |
| February 2, 2009   |   |      | 3,000   |   |        | $      | 0.70             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.27   |   |      |   | 109.04276 | % |   | $ | 0.4188 |   |   |   | 1,256.40 |   |
| February 17, 2009  |   |      | 1,000   |   |        | $      | 0.83             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.22   |   |      |   | 109.04322 | % |   | $ | 0.5219 |   |   |   | 521.90 |   |
| March 19, 2009     |   |      | 2,590   |   |        | $      | 0.68             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.21   |   |      |   | 109.80676 | % |   | $ | 0.4057 |   |   |   | 1,050.76 |   |
| April 13, 2009     |   |      | 3,300   |   |        | $      | 0.60             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.27   |   |      |   | 110.59204 | % |   | $ | 0.3469 |   |   |   | 1,144.77 |   |
| May 18, 2009       |   |      | 1,200   |   |        |   | 0.70             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.36   |   |      |   | 111.77410 | % |   | $ | 0.4288 |   |   |   | 514.56 |   |
| July 1, 2009       |   |      | 2,000   |   |        | $      | 0.87             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.57   |   |      |   | 128.93341 | % |   | $ | 0.6295 |   |   |   | 1,259.20 |   |
| November 5, 2009   |   |      | 4,250   |   |        | $      | 1.02             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.44   |   |      |   | 131.45892 | % |   | $ | 0.7681 |   |   |   | 3,264.43 |   |
| December 21, 2009  |   |      | 8,350   |   |        | $      | 1.05             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.42   |   |      |   | 133.83768 | % |   | $ | 0.8029 |   |   |   | 6,704.22 |   |
| January 25, 2010   |   |      | 7,900   |   |        | $      | 0.96             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.40   |   |      |   | 134.80467 | % |   | $ | 0.7268 |   |   |   | 5,741.72 |   |
| February 22, 2010  |   |      | 6,600   |   |        | $      | 0.70             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.48   |   |      |   | 134.43818 | % |   | $ | 0.5011 |   |   |   | 3,307.26 |   |
| April 16, 2010     |   |      | 8,650   |   |        | $      | 0.96             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.40   |   |      |   | 134.80467 | % |   | $ | 0.7268 |   |   |   | 5,882.00 |   |
| June 4, 2010       |   |      | 11,600  |   |        | $      | 0.50             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.17   |   |      |   | 153.12821 | % |   | $ | 0.3740 |   |   |   | 4,338.40 |   |
| August 11, 2010    |   |      | 4,570   |   |        | $      | 0.30             |   | 3 Years |   | $      | 1.00      |   |   |       | 0.81   |   |      |   | 157.16541 | % |   | $ | 0.2115 |   |   |   | 966.56 |   |
| September 22, 2010 |   |      | 630     |   |        | $      | 0.45             |   | 3 Years |   | $      | 1.00      |   |   |       | 0.68   |   |      |   | 166.23169 | % |   | $ | 0.3527 |   |   |   | 222.20 |   |
| November 18, 2010  |   |      | 900     |   |        | $      | 0.35             |   | 3 Years |   | $      | 1.00      |   |   |       | 0.77   |   |      |   | 170.06822 | % |   | $ | 0.2709 |   |   |   | 243.81 |   |
| January 6, 2011    |   |      | 2,000   |   |        | $      | 0.39             |   | 3 Years |   | $      | 1.00      |   |   |       | 1.11   |   |      |   | 171.68808 | % |   | $ | 0.3084 |   |   |   | 616.80 |   |
| Total              |   |      | 122,040 |   |        |   |             |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |   |   |   |   | $ | 60,132.54 |   |

|               |   |      |    |   |        |   | Robert Schacter et al* |   |    |   |   |      |   |   |       |   |   |      |   |      |
|--------------------|--------|-----------|---------|--------|-------------|--------|------------------------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|-----------|
|               |   |      |    |   |        |   |                   |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |
|               |   |      |    |   | Stock Price |   |                   |   |    |   |   | Risk Free |   |   |       |   |   |      |   |      |   |   |
|               |   | Number of |    |   | At Date of  |   | Term of                |   | Strike  |   |   | Interest  |   |   |       |   |   | Value Per |   |      |   |   |
| Date of Warrant    |   | Shares    |    |   | Issuance    |   | Warrant                |   | Price   |   |   | Rate      |   |   | Volatility |   |   | Warrant   |   |      | Total Value |   |
|               |   |      |    |   |        |   |                   |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |
| September 5, 2008  |   |      | 14,000  |   |        | $      | 0.86                   |   | 3 Years |   | $      | 1.00      |   |   |       | 2.44   |   |      |   | 106.21122 | % |   | $ | 0.5404 |   |   | $ | 7,565.60 |   |
| October 27, 2008   |   |      | 25,000  |   |        | $      | 0.60                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.83   |   |      |   | 108.82589 | % |   | $ | 0.3431 |   |   |   | 8,577.50 |   |
| January 8, 2009    |   |      | 25,000  |   |        | $      | 0.90                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.16   |   |      |   | 108.85621 | % |   | $ | 0.5777 |   |   |   | 14,442.50 |   |
| February 2, 2009   |   |      | 12,500  |   |        | $      | 0.70                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.27   |   |      |   | 109.04276 | % |   | $ | 0.4188 |   |   |   | 5,235.00 |   |
| February 17, 2009  |   |      | 12,500  |   |        | $      | 0.83                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.22   |   |      |   | 109.04322 | % |   | $ | 0.5219 |   |   |   | 6,523.75 |   |
| March 19, 2009     |   |      | 12,500  |   |        | $      | 0.68                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.21   |   |      |   | 109.80676 | % |   | $ | 0.4057 |   |   |   | 5,071.25 |   |
| April 13, 2009     |   |      | 5,000   |   |        | $      | 0.60                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.27   |   |      |   | 110.59204 | % |   | $ | 0.3469 |   |   |   | 1,734.50 |   |
| June 10, 2009      |   |      | 6,250   |   |        | $      | 0.60                   |   | 3 Years |   | $      | 1.00      |   |   |       | 2.00   |   |      |   | 126.10551 | % |   | $ | 0.3959 |   |   |   | 2,474.38 |   |
| November 5, 2009   |   |      | 20,000  |   |        | $      | 1.02                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.44   |   |      |   | 131.45892 | % |   | $ | 0.7681 |   |   |   | 15,362.00 |   |
| June 4, 2010       |   |      | 25,000  |   |        | $      | 0.50                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.17   |   |      |   | 153.12821 | % |   | $ | 0.3740 |   |   |   | 9,350.00 |   |
| June 4, 2010       |   |      | 151,750 |   |        | $      | 0.50                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.17   |   |      |   | 153.12821 | % |   | $ | 0.3740 |   |   |   | 56,754.50 |   |
| July 9, 2010       |   |      | 12,500  |   |        | $      | 0.55                   |   | 3 Years |   | $      | 1.00      |   |   |       | 1.03   |   |      |   | 156.64976 | % |   | $ | 0.4240 |   |   |   | 5,300.00 |   |
| September 22, 2010 |   |      | 12,500  |   |        | $      | 0.45                   |   | 3 Years |   | $      | 1.00      |   |   |       | 0.68   |   |      |   | 166.23169 | % |   | $ | 0.3527 |   |   |   | 4,408.75 |   |
| Total              |   |      | 334,500 |   |        |   |                   |   |    |   |   |      |   |   |       |   |   |      |   |      |   |   |   |   |   |   | $ | 142,799.73 |   |

----

|               |   |      |    |   |        |   | Others  |   |    |   |   |      |   |   |       |   |   |      |   |      |        |   |
|--------------------|--------|-----------|---------|--------|-------------|--------|---------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|-----------|-------------|--------|
|               |   |      |    |   |        |   |    |   |    |   |   |      |   |   |       |   |   |      |   |      |        |   |
|               |   |      |    |   | Stock Price |   |    |   |    |   |   | Risk Free |   |   |       |   |   |      |   |      |        |   |
|               |   | Number of |    |   | At Date of  |   | Term of |   | Strike  |   |   | Interest  |   |   |       |   |   | Value Per |   |      |        |   |
| Date of Warrant    |   | Shares    |    |   | Issuance    |   | Warrant |   | Price   |   |   | Rate      |   |   | Volatility |   |   | Warrant   |   |      | Total Value |   |
| July 28, 2008      |   |      | 2,000   |   |        | $      | 0.75    |   | 3 Years |   | $      | 1.00      |   |   |       | 2.90   |   |      |   | 104.54508 | %           |   | $ | 0.4460 |   |   | $ | 892.00 |   |
| October 27, 2008   |   |      | 600     |   |        | $      | 0.60    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.83   |   |      |   | 108.82589 | %           |   | $ | 0.3431 |   |   |   | 205.86 |   |
| January 6, 2009    |   |      | 50      |   |        | $      | 0.75    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.10   |   |      |   | 108.80131 | %           |   | $ | 0.4566 |   |   |   | 22.83 |   |
| February 17, 2009  |   |      | 8,950   |   |        | $      | 0.83    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.22   |   |      |   | 109.04322 | %           |   | $ | 0.5219 |   |   |   | 4,671.01 |   |
| March 19, 2009     |   |      | 50      |   |        | $      | 0.68    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.21   |   |      |   | 109.80676 | %           |   | $ | 0.4057 |   |   |   | 20.29 |   |
| April 13, 2009     |   |      | 10,650  |   |        | $      | 0.60    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.27   |   |      |   | 110.59204 | %           |   | $ | 0.3469 |   |   |   | 3,694.49 |   |
| May 18, 2009       |   |      | 3,200   |   |        | $      | 0.70    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.36   |   |      |   | 111.77410 | %           |   | $ | 0.4288 |   |   |   | 1,372.15 |   |
| May 19 2009        |   |      | 50      |   |        | $      | 0.70    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.37   |   |      |   | 111.74849 | %           |   | $ | 0.4288 |   |   |   | 21.44 |   |
| November 5, 2009   |   |      | 16,000  |   |        | $      | 1.02    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.44   |   |      |   | 131.45892 | %           |   | $ | 0.7681 |   |   |   | 12,289.60 |   |
| December 21, 2009  |   |      | 256     |   |        | $      | 1.05    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.42   |   |      |   | 133.83768 | %           |   | $ | 0.8029 |   |   |   | 205.54 |   |
| January 25, 2010   |   |      | 7,500   |   |        | $      | 0.96    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.40   |   |      |   | 134.80467 | %           |   | $ | 0.7268 |   |   |   | 5,451.00 |   |
| June 4, 2010       |   |      | 27,500  |   |        | $      | 0.50    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.17   |   |      |   | 153.12821 | %           |   | $ | 0.3740 |   |   |   | 10,285.00 |   |
| July 21, 2010      |   |      | 22,500  |   |        | $      | 0.55    |   | 3 Years |   | $      | 1.00      |   |   |       | 0.91   |   |      |   | 156.39589 | %           |   | $ | 0.4233 |   |   |   | 9,524.00 |   |
| September 22, 2010 |   |      | 15,000  |   |        | $      | 0.45    |   | 3 Years |   | $      | 1.00      |   |   |       | 0.68   |   |      |   | 166.23169 | %           |   | $ | 0.3527 |   |   |   | 5,290.50 |   |
| November 18, 2010  |   |      | 63,000  |   |        | $      | 0.35    |   | 3 Years |   | $      | 1.00      |   |   |       | 0.77   |   |      |   | 170.06822 | %           |   | $ | 0.2709 |   |   |   | 17,066.70 |   |
| January 6, 2011    |   |      | 7,500   |   |        | $      | 0.39    |   | 3 Years |   | $      | 1.00      |   |   |       | 1.11   |   |      |   | 171.68808 | %           |   | $ | 0.3084 |   |   |   | 2,313.00 |   |
| Total              |   |      | 184,806 |   |        |   |    |   |    |   |   |      |   |   |       |   |   |      |   |      |        |   |   |   |   |   | $ | 73,325.41 |   |

|                                        |   | Number of Interest |    |
|---------------------------------------------|--------|--------------------|---------|
| Stock/Note Holder                           |   | Warrants Issued    |    |
| Herbert M. Stein                            |   |               | 252,640 |   |
| David Spiegel                               |   |               | 144,666 |   |
| Robert Schacter et al                       |   |               | 334,500 |   |
| Others                                      |   |               | 184,806 |   |
| Total Warrants issued through April 8, 2011 |   |               | 916,612 |   |

----

|                     |   | Interest  |    |
|--------------------------|--------|-----------|---------|
| Note Holder              |   | Converted |    |
| Herbert M. Stein         |   | $         | 204,098 |   |
| Robert Schacter, et al   |   |      | 82,024  |   |
| Total interest converted |   | $         | 286,122 |   |

----

----

|                                                                    |   | December 31, |       |   | December 31, |   |
|-------------------------------------------------------------------------|--------|-------------------|------------|--------|--------------|--------|
|                                                                    |   | 2010              |       |   | 2009         |   |
|  Net operating loss carryforwards                                  |   |              |       |   |         |   |
|           Federal     |   | $                 | 22,000,000 |   |         | $      | 21,000,000 |   |
|           State  |   | $                 | 15,000,000 |   |         | $      | 14,000,000 |   |

|                                                                    |   | December 31, |    |   | December 31, |   |
|-------------------------------------------------------------------------|--------|-------------------|---------|--------|--------------|--------|
|                                                                    |   | 2010              |    |   | 2009         |   |
|  Business credits available in the future                          |   |              |    |   |         |   |
|           Federal     |   | $                 | 960,000 |   |         | $      | 960,000 |   |
|           State  |   | $                 | 300,000 |   |         | $      | 40,000 |   |

----

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

|                               |   | For the Three-Month Period EndedMarch 31, |           | Cumulative from Re-entering Development Stage on October 1, 2008to March 31, |
|------------------------------------|--------|-----------------------------------------------------|----------------|------------------------------------------------------------------------------|
|                               |   | 2011                                                |           | 2010                                                                         |   | 2011 |   |
|                               |   |                                                |           |                                                                         |   |   |   |
| Statement of Operations Data:      |   |                                                |           |                                                                         |   |   |   |
| Revenue                            |   | $                                                   | 20,000         |                                                                         | $ | — |   | $ | 85,000 |   |
| Costs and expenses                 |   | (370,205                                            | )              | (328,830                                                                     | ) | (4,564,257 | ) |
| Interest expense                   |   | (121,789                                            | )              | (127,311                                                                     | ) | (794,694 | ) |
| Net Loss                           |   | $                                                   |  (471,994 | )                                                                            | $ | (456,141 | ) | $ | (5,273,951 | ) |
|                               |   |                                                |           |                                                                         |   |   |   |
| Shares Outstanding                 |   | 13,178,454                                          |           | 12,132,332                                                                   |   | 13,178,454 |   |
|                               |   |                                                |           |                                                                         |   |   |   |
|                               |   |                                                |           |                                                                         |   |   |   |
| Total Assets                       |   | $                                                   | 200,974        |                                                                         | $ | 229,524 |   |   |   |   |
| Stockholders’ deficiency     |   | $                                                   | (7,230,837     | )                                                                       | $ | (6,473,529 | ) |   |   |   |
| Loss per share (basic and diluted) |   | $                                                   | (0.04          | )                                                                            | $ | (0.04 | ) |   |   |   |

----

----

----

|                  |   | Interest Incurred for the Three Months Ended March 31, |    |
|-----------------------|--------|--------------------------------------------------------|---------|
|                  |   | 2011                                                   |    |   |   | 2010* |   |
| David Spiegel         |   | $                                                      | 47,014  |   |   | $ | 45,758 |   |
| Herbert M. Stein      |   |                                                   | 51,063  |   |   |   | — |   |
| Robert Schacter et al |   |                                                   | — |   |   |   | — |   |
| Others                |   |                                                   | 13,211  |   |   |   | 13,590 |   |
| Total                 |   | $                                                      | 111,288 |   |   | $ | 59,348 |   |

----

|               |   |   |      | Herbert M. Stein |                        |          |   |   |          |   |
|--------------------|--------|--------|-----------|------------------|-----------------------------|---------------|--------|--------|---------------|--------|
|               |   |   |      |             |                        |          |   |   |          |   |
| Date of            |   |   |      | Maturity         |                        | Initial       |   |   | Current       |   |
| Promissory Note    |   | Amount |      | Date             |                        | Interest Rate |   |   | Interest Rate |   |
|               |   |   |      |             |                        |          |   |   |          |   |
| December 11, 2007  |   | $      | 250,000   |             | March 10, 2008              |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 21, 2008  |   |   | 100,000   |             | August 19, 2008             |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 20, 2008     |   |   | 50,000    |             | September 16, 2008          |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 1, 2008      |   |   | 50,000    |             | September 28, 2008          |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 15, 2008       |   |   | 50,000    |             | November 11, 2008           |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 16, 2008      |   |   | 35,000    |             | December 13, 2008           |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 18, 2008      |   |   | 40,000    |             | December 15, 2008           |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 15, 2008      |   |   | 30,000    |             | January 11, 2009            |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 28, 2008      |   |   | 50,000    |             | January 24, 2009            |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 12, 2008    |   |   | 35,000    |             | February  8, 2009 |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 27, 2008    |   |   | 35,000    |             | February 23, 3009           |          |   | 8.00   | %             |   |   | 12.00 | % |
| September 5, 2008  |   |   | 35,000    |             | March 4, 2009               |          |   | 8.00   | %             |   |   | 12.00 | % |
| October 27, 2008   |   |   | 25,000    |             | April 25, 2009              |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 2, 2009   |   |   | 30,000    |             | August 1, 2009              |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 17, 2009  |   |   | 10,000    |             | August 16 2009              |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 19, 2009     |   |   | 25,900    |             | September 15, 2009          |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 13, 2009     |   |   | 33,000    |             | October 10, 2009            |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 18, 2009       |   |   | 12,000    |             | November 14, 2009           |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 1, 2009       |   |   | 20,000    |             | December 28, 2009           |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 5, 2009   |   |   | 42,500    |             | May 4, 2010                 |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 21, 2009  |   |   | 83,500    |             | June 19, 2010               |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 30, 2009  |   |   | 27,000    |             | January 25, 2010            |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 7, 2010    |   |   | 15,000    |             | January 25, 2010            |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 8, 2010    |   |   | 10,000    |             | January 25, 2010            |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 14, 2010   |   |   | 27,000    |             | January 25, 2010            |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 12, 2010  |   |   | 66,000    |             | August 21, 2010             |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 16, 2010     |   |   | 86,500    |             | October 13, 2010            |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 4, 2010       |   |   | 116,000   |             | December 1, 2010            |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 11, 2010    |   |   | 45,700    |             | February 7, 2011            |          |   | 8.00   | %             |   |   | 12.00 | % |
| September 22, 2010 |   |   | 6,300     |             | March 21, 2011              |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 18, 2010  |   |   | 9,000     |             | May 17, 2011                |          |   | 8.00   | %             |   |   | 8.00 | % |
| January 6, 2011    |   |   | 20,000    |             | July 5, 2011                |          |   | 8.00   | %             |   |   | 8.00 | % |
| April 8, 2011      |   |   | 130,600   |             | October 5, 2011             |          |   | 8.00   | %             |   |   | 8.00 | % |
|               |   | $      | 1,601,000 |             |                        |          |   |   |          |   |   |   |   |

----

|              |   |   |      | David Spiegel |               |          |   |   |          |   |
|-------------------|--------|--------|-----------|---------------|--------------------|---------------|--------|--------|---------------|--------|
|              |   |   |      |          |               |          |   |   |          |   |
| Date of           |   |   |      | Maturity      |               | Initial       |   |   | Current       |   |
| Promissory Note   |   | Amount |      | Date          |               | Interest Rate |   |   | Interest Rate |   |
|              |   |   |      |          |               |          |   |   |          |   |
| December 11, 2007 |   | $      | 150,000   |          | March 10, 2008     |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 21, 2008 |   |   | 100,000   |          | August 19, 2008    |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 20, 2008    |   |   | 100,000   |          | September 16, 2008 |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 1, 2008     |   |   | 50,000    |          | September 28, 2008 |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 15, 2008      |   |   | 50,000    |          | November 11, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 16, 2008     |   |   | 65,000    |          | December 13, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 18, 2008     |   |   | 50,000    |          | December 15, 2008  |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 15, 2008     |   |   | 50,000    |          | January 11, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 28, 2008     |   |   | 50,000    |          | January 24, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 12, 2008   |   |   | 35,000    |          | February 8, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 27, 2008   |   |   | 35,000    |          | February 23, 3009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| September 5, 2008 |   |   | 35,000    |          | March 4, 2009      |          |   | 8.00   | %             |   |   | 12.00 | % |
| October 27, 2008  |   |   | 35,000    |          | April 25, 2009     |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 6, 2009   |   |   | 80,000    |          | July 5, 2009       |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 19, 2009    |   |   | 64,000    |          | September 15, 2009 |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 19, 2009      |   |   | 35,000    |          | November 15, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 10, 2009     |   |   | 25,000    |          | December 7, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| July 1, 2009      |   |   | 32,000    |          | December 28, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 5, 2009  |   |   | 103,000   |          | May 4, 2010        |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 21, 2009 |   |   | 68,000    |          | June 19, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 25, 2010  |   |   | 4,665     |          | July 24, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 16, 2010    |   |   | 16,000    |          | October 13, 2010   |          |   | 8.00   | %             |   |   | 12.00 | % |
| June 4, 2010      |   |   | 14,000    |          | December 1, 2010   |          |   | 8.00   | %             |   |   | 12.00 | % |
| August 11, 2010   |   |   | 100,000   |          | February 7, 2011   |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 29, 2011    |   |   | 25,000    |          | October 5, 2011    |          |   | 8.00   | %             |   |   | 8.00 | % |
|              |   | $      | 1,371,665 |          |               |          |   |   |          |   |   |   |   |

|              |   |   |    |   Others |               |          |   |   |          |   |
|-------------------|--------|--------|---------|--------------------|--------------------|---------------|--------|--------|---------------|--------|
|              |   |   |    |               |               |          |   |   |          |   |
| Date of           |   |   |    | Maturity           |               | Initial       |   |   | Current       |   |
| Promissory Note   |   | Amount |    | Date               |               | Interest Rate |   |   | Interest Rate |   |
|              |   |   |    |               |               |          |   |   |          |   |
| July 28, 2008     |   | $      | 20,000  |               | January 24, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| October 27, 2008  |   |   | 6,000   |               | April 25, 2009     |          |   | 8.00   | %             |   |   | 12.00 | % |
| January 6, 2009   |   |   | 500     |               | July 6, 2009       |          |   | 8.00   | %             |   |   | 12.00 | % |
| February 17, 2009 |   |   | 37,000  |               | August 16, 2009    |          |   | 8.00   | %             |   |   | 12.00 | % |
| March 19, 2009    |   |   | 500     |               | September 15, 2009 |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 13, 2009    |   |   | 31,500  |               | October 10, 2009   |          |   | 8.00   | %             |   |   | 12.00 | % |
| April 13, 2009    |   |   | 30,000  |               | October 10, 2009   |          |   | 12.00  | %             |   |   | 16.00 | % |
| April 16, 2010    |   |   | 20,000  |               | October 13, 2010   |          |   | 12.00  | %             |   |   | 12.00 | % |
| May 18, 2009      |   |   | 32,000  |               | November 14, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| May 19, 2009      |   |   | 500     |               | November 15, 2009  |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 5, 2009  |   |   | 70,000  |               | May 4, 2010        |          |   | 8.00   | %             |   |   | 12.00 | % |
| December 21, 2009 |   |   | 2,563   |               | June 19, 2010      |          |   | 8.00   | %             |   |   | 12.00 | % |
| November 18, 2010 |   |   | 126,000 |               | May 17, 2011       |          |   | 8.00   | %             |   |   | 8.00 | % |
| January 6, 2011   |   |   | 75,000  |               | July 5, 2011       |          |   | 8.00   | %             |   |   | 8.00 | % |
|              |   | $      | 451,563 |               |               |          |   |   |          |   |   |   |   |

----

|                  | Combined Amounts Loaned  |   |
|-----------------------|--------------------------|--------|
|  Name on         | 3 Months ended March 31, |   |
| Promissory Note       |                     | 2011   |   |   | 2010 |   |
|                  |                     |   |   |   |   |   |
| David Spiegel         |                     | $      | 25,000 |   |   | $ | 18,000 |   |
| Herbert M. Stein      |                     |   | 130,600 |   |   |   | 175,500 |   |
| Robert Schacter et al |                     |   | — |   |   |   | — |   |
| Others*               |                     |   | — |   |   |   | 30,000 |   |
|                  |                     | $      | 155,600 |   |   | $ | 223.500 |   |

----

----

ITEM 3

ITEM 4T

ITEM 1

----

ITEM 1A 

----

----

|   | SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS |
|--------|---------------------------------------------------|

ITEM 2

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

|   David Spiegel |
|----------------------|
|                 |   |   | Amount |   |
|                 |   |   | Accruing Post |   |
| Date of              | Maturity |   | Maturity Interest |   |
| Promissory Note      | Date |   | Interest at 12% |   |
|                 |   |   |   |   |
| December 12, 2007    | March 10, 2008 |   | $ | 150,000 |   |
| February 21, 2008    | August 19, 2008 |   |   | 100,000 |   |
| March 20, 2008       | September 16, 2008 |   |   | 100,000 |   |
| April 1, 2008        | September 28, 2008 |   |   | 50,000 |   |
| May 15, 2008         | November 11, 2008 |   |   | 50,000 |   |
| June 16, 2008        | December 13, 2008 |   |   | 65,000 |   |
| June 18, 2008        | December 15, 2008 |   |   | 50,000 |   |
| July 15, 2008        | January 11, 2009 |   |   | 50,000 |   |
| July 28, 2008        | January 24, 2009 |   |   | 50,000 |   |
| August 12, 2008      | February 8, 2009 |   |   | 35,000 |   |
| August 27, 2008      | February 23, 2009 |   |   | 35,000 |   |
| September 5, 2008    | March 4, 2009 |   |   | 35,000 |   |
| October 27,2008      | April 25 ,2009 |   |   | 35,000 |   |
| January 9, 2009      | July 5, 2009 |   |   | 80,000 |   |
| March 19, 2009       | September 15, 2009 |   |   | 64,000 |   |
| May 19, 2009         | November 15, 2009 |   |   | 35,000 |   |
| June 10, 2009        | December 7, 2009 |   |   | 25,000 |   |
| July 1, 2009         | December 28, 2009 |   |   | 32,000 |   |
| November 5, 2009     | May 4, 2010 |   |   | 103,000 |   |
| December 21, 2009    | June 19, 2010 |   |   | 68,000 |   |
| January 25, 2010     | July 24, 2010 |   |   | 4,665 |   |
| April 16, 2010       | October 13, 2010 |   |   | 16,000 |   |
| June 4, 2010         | December 1, 2010 |   |   | 14,000 |   |
| August 11, 2010      | February 7, 2011 |   |   | 100,000 |   |
| Total                |   |   | $ | 1,346,665 |   |

----

|   Herbert M. Stein |
|-------------------------|
|                    |   |   | Amount |   |
|                    |   |   | Accruing Post |   |
| Date of                 | Maturity |   | Maturity Interest |   |
| Promissory Note         | Date |   | Interest at 12% |   |
|                    |   |   |   |   |
| December 12, 2007       | March 10, 2008 |   | $ | 250,000 |   |
| February 21, 2008       | August 19, 2008 |   |   | 100,000 |   |
| March 20, 2008          | September 16, 2008 |   |   | 50,000 |   |
| April 1, 2008           | September 28, 2008 |   |   | 50,000 |   |
| May 15, 2008            | November 11, 2008 |   |   | 50,000 |   |
| June 16, 2008           | December 13, 2008 |   |   | 35,000 |   |
| June 18, 2008           | December 15, 2008 |   |   | 40,000 |   |
| July 15, 2008           | January 11, 2009 |   |   | 30,000 |   |
| July 28, 2008           | January 24, 2009 |   |   | 50,000 |   |
| August 12, 2008         | February 8, 2009 |   |   | 35,000 |   |
| August 27, 2008         | February 23, 2009 |   |   | 35,000 |   |
| September 5, 2008       | March 4, 2009 |   |   | 35,000 |   |
| October 27, 2008        | April 25, 2009 |   |   | 25,000 |   |
| February 2, 2009        | August 1, 2009 |   |   | 30,000 |   |
| February 17, 2009       | August 16, 2009 |   |   | 10,000 |   |
| March 19, 2009          | September 15, 2009 |   |   | 25,900 |   |
| April 13, 2009          | October 10, 2009 |   |   | 33,000 |   |
| May 18, 2009            | November 14, 2009 |   |   | 12,000 |   |
| July 1, 2009            | December 28, 2009 |   |   | 20,000 |   |
| November 5, 2009        | May 4, 2010 |   |   | 42,500 |   |
| December 21, 2009       | June 19, 2010 |   |   | 83,500 |   |
| January 25, 2010        | July 24, 2010 |   |   | 79,000 |   |
| February 22, 2010       | August 21, 2010 |   |   | 66,000 |   |
| April 16, 2010          | October 13, 2010 |   |   | 86,500 |   |
| June 4, 2010            | December 1, 2010 |   |   | 116,000 |   |
| August 11, 2010         | February 7, 2011 |   |   | 45,700 |   |
| Total                   |   |   | $ | 1,435,100 |   |

----

| Others            |               |
|-------------------|--------------------|
|              |               |   | Amount |   |
|              |               |   | Accruing Post |   |
| Date of           | Maturity           |   | Maturity Interest |   |
| Promissory Note   | Date               |   | Interest at 12% |   |
|              |               |   |   |   |
| July 28, 2008     | January 24, 2009   |   | $ | 20,000 |   |
| October 27, 2008  | April 25, 2009     |   |   | 6,000 |   |
| January 6, 2009   | July 5, 2009       |   |   | 500 |   |
| February 17, 2009 | August 16, 2009    |   |   | 37,000 |   |
| March 19, 2009    | September 15, 2009 |   |   | 500 |   |
| April 13, 2009    | October 10, 2009   |   |   | 31,500 |   |
| April 13, 2009*   | October 10, 2009   |   |   | 30,000 |   |
| May 18, 2009      | November 14, 2009  |   |   | 32,000 |   |
| May 19, 2009      | November 15, 2009  |   |   | 500 |   |
| November 5, 2009  | May 4, 2010        |   |   | 70,000 |   |
| December 21, 2009 | June 19, 2010      |   |   | 2,563 |   |
| June 10, 2010*    | December 1, 2010   |   |   | 20,000 |   |
| Total             |               |   | $ | 250,563 |   |

ITEM 4

ITEM 5

ITEM 6

| Exhibit |   |                                                                                                                                                                                      |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                                                                                                                                                                               |
| 10.1+   |   | Promissory Note dated as of January 6, 2011 by and between Apogee Technology, Inc. and Herbert M. Stein.  (Previously filed on a Current Report on Form 8-K, January 10, 2011.) |
| 10.2+   |   | Promissory Note dated as of January 6, 2011 by and between Apogee Technology, Inc. and Erica J. Stein.  (Previously filed on a Current Report on Form 8-K, January 10, 2011.)   |
| 10.3+   |   | Form of Warrant. (Previously filed on a Current Report on Form 8-K, January 10, 2011.)                                                                                                    |
| 31.1    |   | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.                                                                                       |
| 31.2    |   | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.                                                                                  |
| 32      |   | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer and Chief Financial Officer.                                                      |

----

SIGNATURES

|               | APOGEE TECHNOLOGY, INC.                                   |
|--------------------|----------------------------------------------------------------|
|               |                                                           |
| Date: May 16, 2011 | By:                                                            | /s/ | Herbert M. Stein |   |
|               | Name: Herbert M. Stein                                         |
|               | Title: Chairman of the Board,                                  |
|               | President, Chief Executive Officer                             |
|               | (principal executive officer)                                  |
|               |                                                           |
|               |                                                           |
|               | APOGEE TECHNOLOGY, INC.                                   |
|               |                                                           |
| Date: May 16, 2011 | By:                                                            | /s/ | Paul J. Murphy |   |
|               | Name: Paul J. Murphy                                           |
|               | Title: Chief Financial Officer and Vice President of Finance   |
|               | (principal financial officer and principal accounting officer) |

----

----