10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

or

[  ]

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

For the transition period from                                                            To

Commission File Number : 000-29397

	MONTAVO, INC.
(Exact name of registrant as specified in its charter)

Delaware	33-0619528
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4957 Lakemont Blvd. Suite 239, Bellevue, Washington	98006
(Address of principal executive offices)	(Zip Code)

	425-747-5500
(Registrant’s telephone number, including area code)

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days.     Yes    x    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):

Large accelerated filer  ¨     Accelerated filer  ¨     Non-accelerated filer  ¨      Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  x

As of August 12, 2011, 71,402,241 shares of the registrant’s common stock were outstanding.

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q of MONTAVO, INC. (the “Company”) for the quarter ended June 30, 2011 (the “Original Filing”), that was originally filed with the U.S. Securities and Exchange Commission on August 22, 2011. The Amendment is being filed to submit Exhibit 101. The Amendment revises the exhibit index included in Part II, Item 6 of the Original Filing and Exhibit 101 (XBRL interactive data) is included as an exhibit to the Amendment.

Except as described above, the Amendment does not modify or update the disclosures presented in, or exhibits to, the Original Filing in any way. Those sections of the Original Filing that are unaffected by the Amendment are not included herein. The Amendment continues to speak as of the date of the Original Filing. Furthermore, the Amendment does not reflect events occurring after the filing of the Original Filing. Accordingly, the Amendment should be read in conjunction with the Original Filing, as well as the Company’s other filings made with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act subsequent to the filing of the Original Filing.

PART II – OTHER INFORMATION

ITEM 6 — EXHIBITS

Exhibit No.	Description
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 formatted in Extensible Business Reporting Language (XBRL).

** Provided herewith

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  September 15, 2011

MONTAVO, INC.

By:  

       Chief Executive Officer, Chief Financial Officer,

       and Principal Accounting Officer

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CONDENSED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended	79 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2010	Jun. 30, 2011
Operating expenses	$ 142	$ 309	$ 743	$ 5,212
Loss from operations	(142)	(309)	(743)	(5,212)
Interest expense	(47)	(25)	(31)	(295)
Change in value of embedded fair value derivative liabilities	4	(6)	(4)	54
Total other expense	(43)	(31)	(35)	(241)
Net loss			$ (778)	$ (5,453)
Net loss per common share - basic and diluted	$ 0.00	$ (0.01)	$ (0.02)
Weighted average shares outstanding used in computing net loss per share - basic and diluted	71,283,560	52,813,194	52,813,194	71,283,560

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CONDENSED STATEMENTS OF CASH FLOWS (USD $) In Thousands	6 Months Ended	79 Months Ended
	Jun. 30, 2010	Jun. 30, 2011
Net Loss	$ (778)	$ (5,453)
Amortization of debt discount	20	147
interest on stockholder advances		0
Share-based payments of consulting and other expenses	335	2,167
Shares issued for modification of debt terms or as fee	5	43
Shares issued in excess of liabilites converted (accounted for as compensation)		85
Excess share value issued for conversion of accounts payable-related party		0
Increase/Decrease in value of embedded fair value derivative liabilities	4	(38)
Impairment loss on patent pending and software developed for internal use		400
)ther assets	59	(10)
Accounts payable	31
Accounts payable - related party	180	659
Accrued interest	3	32
Net cash used in operating activities	(141)	(1,141)
Investment in patent		(45)
Net cash used in investing activities		(45)
Proceeds from sale of units comprised of common stock and warrants		25
Proceeds from sale of stock under Fuselier Holdings agreement (used to settle accounts payable)	58	58
Stockholder contributions to capital		22
Proceeds from issuance of notes payable	56	892
Principal payments on notes payable	(13)	(121)
Proceeds from sale of common shares	40	310
Net cash provided by financing activities	141	1,186
Seller-financed software developed for internal use		355
Shares retained by North Coast in reverse merger		264
Shares issued to convert North Coast note payable and accrued interest		0
Shares issued to convert accounts payable, accrued interest and notes payable		864
Additional shares issued to Montavo stockholders in merger		10
Shares issued in settlement of accounts payable	9	183
Beneficial conversion feature - notes payable		37
Convertible debt issued for accounts payable		$ 46	[1]

[1] Net of discount of $61 and $89, respectively

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Document and Entity Information	3 Months Ended
	Jun. 30, 2011
Document and Entity Information
Entity Registrant Name	MONTAVO, INC.
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Entity Central Index Key	0001092800
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	71,402,241
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

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Related Party Disclosures

3 Months Ended

Jun. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Note 6.   Related Party Transactions

     As disclosed in Note 4, in September 2010, we transferred $20,000 of accounts payable due to our CEO to a third party.  These amounts were then converted into a convertible promissory note for $20,000 together with two-year warrants to purchase 1,500,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement.   See Note 4.

As disclosed in Note 4, in October 2010, we transferred $25,000 of accounts payable due to our CEO to a third party.  These amounts were then converted into a convertible promissory note for $25,000 at a stated interest rate of 12%, together with two-year warrants to purchase 1,875,000 shares of our common stock at an exercise price of $0.02 per share. The promissory note is due within one year.   Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory notes contain an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holders may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. See Note 4.

In June 2009, we entered into an employment agreement with our CEO, pursuant to which, among other things, the CEO will be entitled to annual base compensation at up to $196,000, an annual bonus of up to 50% of base compensation (with actual amount to be determined by our board of directors) and a grant of options to purchase 7,500,000 shares of our common stock.  The options vest in 1/60 monthly installments beginning January 1, 2009, over a period of five years.  Pursuant to the employment contract, we are also required to issue the CEO additional options to purchase shares of our common stock over a three-year period to maintain the executive’s percentage ownership in our common stock on a fully diluted basis at 10% of the Company.  In December 2010, the provision with respect to the requirement to issue the CEO additional options to purchase shares of our common stock to maintain the executive’s percentage ownership in our common stock on a fully diluted basis at 10% of the Company was extended additional 12-months.  As a result of this provision, as previously discussed at Note 5, options to purchase an aggregate of 2,901,730 and 3,016,667 shares of our common stock at an exercise price of $0.001 were granted pursuant to our CEO’s employment contract in 2010 and 2011, respectively.  The options were fully vested on the date of grant. 

At June 30, 2011 and December 31, 2010, approximately $612,000 and $534,000, which represented amounts due to our CEO, were included in accounts payable - related parties on the accompanying balance sheet. 

As discussed in Note 5, on June 15, 2009, we issued options under the 2009 Plan to purchase 1,500,000 shares of our common stock to our CEO outside of his employment agreement.  Options to purchase 1,000,000 shares of our common stock were immediately vested as of the date of grant.  The remainder vested in monthly installments of 41,667 through June 2010.  The options have a term of ten years.  On December 31, 2009, we issued options under the 2009 Plan to purchase 7,500,000 shares of our common stock at an exercise price of $0.001 per share to our CEO pursuant to his employment agreement.  The options vest in 1/60 monthly installments beginning January 1, 2009, over a period of five years.  The options have a term of ten years. 

In September 2008, we entered into a promissory note with a stockholder in the principal amount of $25,000 with a stated interest rate of 12%.  

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Commitment and Contingencies

3 Months Ended

Jun. 30, 2011

Commitments and contingencies

Commitments and Contingencies Disclosure [Text Block]

Note 8.  Commitments and Contingencies

Acxiom Corporation — In February 2010, we entered into a database license agreement with Acxiom Corporation under which we will license their InfoBase-X telephone directories commencing February 5, 2010 for an initial term of six months (“Initial Term”).  Unless terminated, the license term automatically extends to a period of one year (“First One Year Term”), and will continue to automatically renew for successive one-year terms (“Renewal Term”) unless terminated by either party upon 30 days notice or for cause as defined in the agreement.  In consideration of the license grant, we will pay no fees for the Initial Term, and will pay annual minimum fees of $30,000 for the First One Year Term and any Renewal Term, payable monthly at a rate of $2,500 per month, plus certain additional per-click volume-based fees, based upon the following schedule:

Up to 2,500,000	$        -
2,500,0001 – 5,000,000	0.010
5,008,001 – 7,500,000	0.008
7,500,0001 – unlimited	-

infoUSA, Inc. — In April 2009, we entered into a three-year database license agreement with infoUSA, Inc. under which we licensed their Yellow Pages database commencing April 15, 2009. In consideration of the license grant, we will pay the greater of royalties calculated at $0.15 per user per month or calculated based on transaction volume, or annual minimum license fees of $100,000 for the first year and $125,000 for the second year of the agreement and thereafter.  The agreement automatically renews for an additional two year term unless terminated upon 60-day notice by either party.  Minimum fees under this agreement totaled $67,000 through December 31, 2009.  The remaining first year fees of $33,000 were due as of March 31, 2010.  We terminated this agreement effective January 19, 2010 and our remaining liability with infoUSA, Inc. is $75,000 as of June 30, 2011. 

Robert Half International —In August 2009, Robert Half International sued us claiming unpaid fees for services rendered.  On February 24, 2010, a judgment was granted against us in the amount of $87,248.91, which amount bears interest at 12% per annum.  We have included the judgment, net of payment of approximately $15,000, in accounts payable at both June 30, 2011 and December 31, 2010.  On June 24, 2010, we entered into a settlement and forbearance agreement with Robert Half International, whereby Robert Half International agreed not to pursue the judgment against us as long as we continued to make payments as follows:  on August 1, 2010, $10,000; and $10,000 thereafter on the first day of every month until the amount of $74,000 is paid in full.  We have not made the payments as indicated under the terms of the settlement and forbearance agreement and as a result, there is no assurance that Robert Half International will not pursue judgment against us.

                Moody Capital – In April 2010, we entered into an agreement with Moody Capital for investment banking services.  Under the agreement, Moody Capital will receive upon the placement of debt or equity, an 8% cash fee and 5% warrant coverage with an exercise price equal to 1.05 times the offering price of the equity transaction.   We may terminate this agreement within 30 days upon giving written notice.

Wakabayashi Fund LLC – In April 2009, we issued 325,000 shares of our common stock to Wakabayashi Fund LLC for investor relations services.  The shares were recorded at a fair value of $81,250 based on the price of our common stock in recent stock sales and the expense was recorded to operating expenses during the second quarter of 2009.  In addition, pursuant to the consulting agreement dated April 1, 2009, we were to issue 162,500 shares of our common stock monthly for a period of four months on a performance-basis, and at management’s discretion, an additional 200,000 common shares may be issued as an incentive bonus.   As of June 30, 2011, no additional shares of our common stock are issuable relating to this consulting agreement.

Other – In 2009, we issued 5,000 shares of our common stock to a consultant for recruiting services provided.  The fair value of the shares of $1,000 was recorded to operating expenses in the fourth quarter of 2009.  An additional 20,000 shares are issuable to the consultant for future services pursuant to the terms of the contract, none of which were issuable as of June 30, 2011 or December 31, 2010.

In 2009, we issued 100,000 shares of our common stock to a consultant for consulting services provided.  The fair value of the shares of $20,000 was recorded to operating expenses in the fourth quarter of 2009.  An additional 100,000 shares are issuable to the consultant for future services pursuant to the terms of the contract, none of which were issuable as of June 30, 2011 or December 31, 2010. 

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Subsequent Events

3 Months Ended

Jun. 30, 2011

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 9.  Subsequent  Events

In July 2011, we entered into a convertible promissory note in the amount of $2,500 together with two-year warrants to purchase 187,500 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $250,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. 

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Organization, Consolidation and Presentation of Financial Statements

3 Months Ended

Jun. 30, 2011

Nature of Operations [Text Block]

Note 1.  Business and Organization

We were incorporated under the laws of the State of Delaware on April 20, 1994. From our incorporation and until December 13, 2004, we had no operating history other than organizational matters. On December 13, 2004, we acquired all of the issued and outstanding capital stock of Trans Media Inc. (“Trans Media”), a Wyoming corporation (inception occurred on December 23, 2004).  The acquisition was consummated pursuant to a Plan of Arrangement and Share Exchange Agreement, dated September 29, 2004, whereby Trans Media became our wholly owned subsidiary.  This transaction is commonly referred to as a “reverse acquisition”, in which all of the outstanding capital stock of Trans Media was effectively exchanged for a controlling interest in our stock. This type of transaction is considered to be a recapitalization rather than a business combination.  Accordingly, for accounting purposes, no goodwill or other intangible assets were recorded.

On May 7, 2008 Trans Media, its wholly owned subsidiary North Coast Acquisition Corp., a Delaware corporation (“Acquisition Corp.”), and Montavo, Inc., a privately-held Washington corporation (“Montavo”), executed an Agreement (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on August 29, 2008, Acquisition Corp. was merged with and into Montavo, with Montavo being the surviving entity as a wholly owned subsidiary, and all of the issued and outstanding common stock of Montavo was exchanged for newly-issued, restricted shares of common stock.  The merger was accounted for as a reverse merger and recapitalization due to Montavo having control of the board of directors and control of management at the date of merger.

We are a development stage company in the process of deploying an advanced mobile marketing and advertising solution. We have two patents pending filed for our “method and distribution system for location based wireless presentation of electronic coupons” technology and “system and method of delivering ads”.

Liquidity Disclosure [Policy Text Block]

Note 2.  Going Concern

     We have prepared our condensed financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2011, we had a deficit accumulated during the development stage of approximately $5.5 million, negative cash flows from operations since inception and expect to incur additional losses in the future as we continue to develop and grow our business. We have funded our losses primarily through sales of common stock and warrants in private placements and borrowings from related parties and other investors. The further development of our business will require capital. At June 30, 2011, we had a working capital deficit (current assets less current liabilities) of approximately $1.6 million and no cash.

We are dependent on existing cash resources and external sources of financing to meet our working capital needs.  Current sources of liquidity are insufficient to provide for budgeted and anticipated working capital requirements.  We will therefore be required to seek additional financing to satisfy our working capital requirements. No assurances can be given that such capital will be available to us on acceptable terms, if at all. In addition to equity financing and strategic investments, we may seek additional related party loans.  If we are unable to obtain any such additional financing or if such financing cannot be obtained on terms acceptable to us, we may be required to delay or scale back our operations, including the development of our mobile marketing solution, which would adversely affect our ability to generate future revenues and may force us to curtail or cease our operating activities.

To attain profitable operations, management’s plan is to execute its strategy of (i) continuing the development of our proprietary mobile marketing solution; (ii) building additional strategic partnerships with technology partners; (iii) building strategic partnerships with premier advertising inventory partners; and (iv) executing sales relationships with national and global brands in order to drive profitability.   We will continue to be dependent on outside capital to fund our operations for the foreseeable future, and continue to be involved in discussions and negotiations with investors in order to raise additional funds to provide sufficient working capital for operations with a near-term goal of generating positive cash flow from operations.  Any financing we obtain may further dilute or otherwise impair the ownership interest of our current stockholders. If we fail to generate positive cash flows or fail to obtain additional capital when required, we could modify, delay or abandon some or all of our plans. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Debt

3 Months Ended

Jun. 30, 2011

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 4.   Notes Payable

In September 2008, we entered into a promissory note with a stockholder in the principal amount of $25,000 with a stated interest rate of 12%.  Interest expense related to this note was not material in the three months ended June 30, 2011 and 2010 and the period from inception to June 30, 2011.

On January 16, 2009, we entered into a convertible promissory note for $4,950 at a stated interest rate of 5% per annum.  On January 16, 2009, we entered into a convertible promissory note for $5,000 at a stated interest rate of 7% per annum. On January 26, 2009, we entered into a convertible promissory note for $5,062 at a stated interest rate of 5%. In April 2009, we entered into a convertible promissory note to a related party for $3,200 at a stated interest rate of 5% per annum. The notes and related accrued interest were convertible into shares of our common stock at $0.20 per share at the option of the holder. In March 2009, the first three notes discussed above were converted into 75,060 shares of common stock at a conversion rate of $0.20 per share.  On April 15, 2009, we issued 16,221 shares of our common stock at $0.20 per share pursuant to the conversion of a related party promissory note with a principal balance of approximately $3,200.

On April 6, 2009, we entered into a convertible promissory note for $23,000 at a stated rate of 7% per annum. The note and related accrued interest were convertible into shares of our common stock at $0.10 per share beginning May 30, 2009. In April 2009, the notes and accrued interest were converted into 232,683 shares of common stock.

On September 8, 2009, we entered into a convertible promissory note for $20,000 at a stated interest rate of 15%. The promissory note is due within twenty-four months after date of issue, and on demand thereafter. The note is convertible into shares of our common stock at $0.10 per share.  Terms of the convertible note provided that the conversion price of the notes be reduced in the event of subsequent financings. This provision expired as of September 8, 2010.  In accordance with the authoritative guidance related to convertible notes with down-round protection, we recorded a fair value liability for price adjustable convertible notes of $12,330 at issuance.  The fair value liability was revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).    At June 30, 2010, the Black-Scholes assumptions utilized were as follows:  stock price of $0.015, volatility of 162%, risk-free rate of 0.42%, expected life of 0.75 year, dividend yield of 0.0% and we recorded a decrease in the fair value liability of approximately $600 and $3,000 as other income during the three and six months ended June 30, 2010, respectively. 

On March 1, 2010, we entered into a promissory note for $7,000 at a stated interest rate of 8% per annum, payable upon demand by the holder.  We repaid the promissory note in May 2010.

On March 8, 2010, we entered into a promissory note for $6,000 at a stated interest rate of 8% per annum, payable upon demand by the holder. On March 8, 2010, in accordance with the terms of the promissory note, we issued 100,000 shares of our common stock to the holder as loan fees.  The loan was repaid in March 2010. 

On April 15, 2010, we entered into a promissory note for $3,000 at a stated interest rate of 8% per annum, payable upon demand by the holder. On April 15, 2010, in accordance with the terms of the promissory note, we issued 100,000 shares of our common stock to the holder as loan fees.  In December 2010, this promissory note was settled in connection with a transaction with the same holder.  See discussion below.

On May 4, 2010, we entered into a convertible promissory note for $40,000 at a stated interest rate of 12%.  The note was due on November 3, 2010, and carries a default rate of interest of 18%.  The note is convertible into shares of our common stock at a variable conversion price, such that the average of the lowest Trading Prices (as determined by averaging the highest closing bid and lowest closing ask prices) of the Company’s common stock as listed on the OTCBB during the five (5) trading day period ending one (1) day prior to the date the conversion notice is sent by the holder to the Company multiplied by 35%. In accordance with the authoritative guidance related to convertible notes with down-round protection, we recorded a fair value liability for price adjustable convertible notes of $34,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2010, the Black-Scholes assumptions utilized were as follows:  stock price of $0.015, volatility of 162%, risk-free rate of 0.22%, expected life of 0.4 year, dividend yield of 0.0% and we recorded an increase in the fair value liability of approximately $8,000 as other expense for the three months ended June 30, 2010.    At June 30, 2011, the embedded derivative fair value liability did not materially change.

On July 28, 2010, we entered into a promissory note for $10,200 at a stated interest rate of 10% per annum, or $12,000, whichever is higher.

In August and September 2010, we entered into convertible promissory notes in the aggregate amount of $40,000 together with two-year warrants to purchase 3,750,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory notes bear interest at a rate of 12% per annum, and the notes are due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory notes contain an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holders may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of $16,800 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.19%, expected life of 1.25 years, dividend yield of 0.0% and we recorded a decrease in the fair value liability of approximately $1,800 and $28,000 for the three and six months ended June 30, 2011, respectively, as other income. 

In August 2010, we entered into a promissory note for $1,000 at a stated interest rate of 8% per annum, payable upon demand by the holder.  In December 2010, we entered into a convertible promissory note with the same holder in the aggregate amount of $25,000 together with two-year warrants to purchase 1,875,000 shares of our common stock at an exercise price of $0.02 per share, whereby we received $20,000 in cash and the April promissory note for $3,000, the August $1,000 promissory note and $1,000 in accounts payable to the same party were settled.  The December 2010 promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of approximately $25,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.45%, expected life of 1.5 years, dividend yield of 0.0% and we recorded a decrease in the fair value liability of approximately $1,000 and $17,600 for the three and six months ended June 30, 2011, respectively, as other income.

In September 2010, we transferred $20,000 of accounts payable due to our CEO to a third party.  These amounts were then converted into a convertible promissory note for $20,000 together with two-year warrants to purchase 1,500,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of approximately $8,300 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.19%, expected life of 1.25 years, dividend yield of 0.0% and we recorded a decrease in the fair value liability of approximately $1,000 and $14,100 for the three and six months ended June 30, 2011, respectively, as other income.

In October 2010, we transferred $25,000 of accounts payable due to our CEO to a third party.  These amounts were then converted into a convertible promissory note for $25,000 at a stated interest rate of 12%, together with two-year warrants to purchase 1,875,000 shares of our common stock at an exercise price of $0.02 per share. The promissory note is due within one year.   Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory notes contain an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holders may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of $25,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).    At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.45%, expected life of 1.25 years, dividend yield of 0.0% and we recorded a decrease in the fair value liability of approximately $1,100 and $17,500 for the three and six months ended June 30, 2011, respectively, as other income.

In October and December 2010, we entered into convertible promissory notes in the aggregate amount of $37,500 together with two-year warrants to purchase 2,812,500 shares of our common stock at an exercise price of $0.02 per share.  The promissory notes bear interest at a rate of 12% per annum, and the notes are due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory notes contain an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holders may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of $28,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.19%, expected life of 1.25 years, dividend yield of 0.0% and we recorded an increase in the fair value liability of approximately $24,600 for the three months ended June 30, 2011 as other expense, and a decrease in the fair value liability of approximately $1,700 for the six months ended June 30, 2011 as other income. 

In February 2011, we entered into a convertible promissory note in the amount of $25,000 together with two-year warrants to purchase 1,875,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $950,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $750,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement.  In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of approximately $15,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).    At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.45%, expected life of 1.5 years, dividend yield of 0.0% and we recorded a decrease in the fair value liability of approximately $1,000 six months ended June 30, 2011 as other income.  The change in fair value of the embedded derivative liability for the three months ended June 30, 2011 was not material.

In March 2011, we entered into a convertible promissory note in the amount of $5,000 together with two-year warrants to purchase 375,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $250,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of approximately $3,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows:  stock price of $0.01, volatility of 162%, risk-free rate of 0.80%, expected life of 2 years, dividend yield of 0.0%.  The change in fair value of the embedded derivative liability for the three months ended June 30, 2011 was not material.

In April 2011, we entered into a convertible promissory note in the amount of $3,000 together with two-year warrants to purchase 225,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $750,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $750,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. . In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of approximately $1,500 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.45%, expected life of 1.75 years, dividend yield of 0.0%.  The change in fair value of the embedded derivative liability was not material.

In April, May and June 2011, we entered into convertible promissory notes in the aggregate principal amount of $41,500 together with two-year warrants to purchase 3,112,500 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $250,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. In accordance with the authoritative guidance related to instruments with down-round protection, we recorded a fair value liability of approximately $16,000 at issuance.  The fair value liability is revalued quarterly utilizing Black-Scholes valuation model computations with the increase or decrease in fair value being reported in the statement of operations as other income (expense).  At June 30, 2011, the Black-Scholes assumptions utilized were as follows: stock price of $0.01, volatility of 162%, risk-free rate of 0.45%, expected life of 2.0 years, dividend yield of 0.0%.  The change in fair value of the embedded derivative liability was approximately $4,200 for the three months ended June 30, 2011.

Notes payable to stockholder, note payable and convertible debt consists of the following at June 30, 2011 and December 31, 2010 (amounts in thousands, except percentages):

		June 30,		June 30,
		2011		2010
12% Promissory note due to stockholder	$	25	$	25
10% Promissory note		10		10
18% Convertible Promissory note, in default (due 11/3/10)		40		40
12% Convertible Promissory note due 8/3/11, net of discount of $1 and $4 at June 30, 2011 and December 31, 2010, respectively		19		19
12% Convertible Promissory note, due 8/5/11, net of discount of $0 and $3 at June 30, 2011 and December 31, 2010, respectively		10		7
15% Convertible Promissory note, due 9/8/2011, net of discount of $3 and $1 at June 30, 2011 and December 31, 2010 respectively		19		16
12% Convertible Promissory notes, due 9/8/11, net of discount of $3 and $10 at June 30, 2011 and December 31, 2010, respectively		27		20
12% Convertible promissory note, due 10/5/11, net of discount of $7 and $19 at June 30, 2011 and December 31, 2010, respectively		18		6
12% Convertible Promissory note due 10/13/11, net of discount of $4 and $11 at June 30, 2011 and December 31, 2010, respectively		21		14
12% Convertible Promissory note, due 12/3/11, net of discount of $4 and $8 at June 30, 2011 and December 31, 2010, respectively		4		-
12% Covnertible Promissory note, due 12/22/11, net of discount of $3 and $5 at June 30, 2011 and December 31,, 2010, respectively		2		-
12% Convertible Promissory note, due 12/29/11, net of discount of $12 and $25 at June 30, 2011 and December 31, 2010, respectively		13		-
12% Convertible Promissory note, due 2/8/12, net of discount of $9 and $0 at June 30, 2011 and December 31, 2010, respectively		16		-
12% Convertible Promissory note, due 3/30/12, net of discount of $2 and $0 at June 30, 2011 and December 31, 2010, respectively		3		-
12% Convertible Promissory note, due 4/5/12, net of discount of $2 and $0 at June 30, 2011 and December 31, 2010, respectively		3		-
12% Convertible Promissory note due 4/13/12 net of discount of $1 and $0 at June 30, 2011 and December 31, 2010, respectively		1		-
12% Convertible Promissory note due 4/25/12, net of discount of $1 and $0 at June 30, 2011 and December 31, 2010, respectively		2		-
12% Convertible Promissory note, due 5/4/12, net of discount of $2 and $0 at June 30, 2011 and December 31, 2010, respectively		2		-
12% Convertible Promissory note, due 5/12/12		1		-
12% Convertible Promissory note, due 5/16/12, net of discount of $3 and 40 at June 30, 2011 and December 31, 2010, respectively		9		-
12% Convertible Promissory note, due 5/23/12, net of discount of $1 and $0 at June 30, 2011 and December 31, 2010, respectively		3		-
12% Convertible promissory note, due 5/27/12, net of discount of $3 and $0 at June 30, 2011 and December 31, 2010, respectively		6		0
12% Convertible promissory note, due 6/8/12, net of discount of $1 and $0 at June 30, 2011 and December 31, 2010, respectively		2		-
12% Convertible promissory note, due 6/28/12, net of discount of $1 and $0 at June 30, 2011 and December 31, 2010, respectively		-		-
	$	256	$	154

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Equity

3 Months Ended

Jun. 30, 2011

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 5.  Stockholders’ Equity (Deficit)

           Preferred Stock — On August 28, 2008, our stockholders approved an increase in the number of authorized shares of our preferred stock from 1,000,000 to 5,000,000 shares.  Our board of directors has the authority, without action by the stockholders, to designate the rights, preferences and privileges of each series, any or all of which may be greater than the rights of our common stock. No shares of preferred stock have been designated or issued.  On May 19, 2010, a Certificate of Amendment was filed giving effect to the increase in the number of authorized preferred shares to 25,000,000.

           Common Stock — Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of our common stock. Subject to the rights of the holders of any class of our capital stock having any preference or priority over our common stock, the holders of shares of our common stock are entitled to receive dividends that are declared by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in our net assets remaining after payment of liabilities, subject to prior rights of preferred stock, if any, then outstanding. Our common stock has no preemptive rights, conversion rights, redemption rights or sinking fund provisions, and there are no dividends in arrears or default. All shares of our common stock have equal distribution, liquidation and voting rights, and have no preferences or exchange rights.

On August 28, 2008, our stockholders approved an increase in the number of authorized shares of our common stock from 20,000,000 to 99,000,000.  A Certificate of Amendment was filed May 19, 2010, giving effect to the increase in the number of authorized common shares to 400,000,000.

Common Stock Issuances — In 2009, we issued 400,000 shares of our common stock for future software development services valued at $100,000 based on the closing market price on the date of issuance of the shares, pursuant to a three-year contract with Treemo, Inc.  As of December 31, 2009, none of the software development services had been utilized, and accordingly these costs were recorded as prepaid expenses in our balance sheet as of that date.  During 2010, management determined that our ability to utilize this prepaid was impaired and accordingly we recorded a $90,000 reduction of the prepaid to operating expenses during 2010.

On December 4, 2009, we entered into an agreement with Fuselier Holdings I, Inc.  (“Fuselier Holdings”).  Under the terms of the agreement, Fuselier Holdings will negotiate with vendors on our behalf and settle certain accounts payable in exchange for shares of our common stock.  We receive cash under the terms of the agreement from Fuselier Holdings, and such cash is used to settle certain accounts payable at our discretion.  Fuselier Holdings is authorized under the agreement to settle accounts payable in incremental amounts up to $25,000, and negotiate settlement in shares of our common stock at a per share price determined by averaging the closing price of the previous three (3) full trading days as reported on the over-the-counter bulletin board (“OTCBB”) commencing on the day immediately preceding the day on which our stock is deemed to be freely tradable upon delivery to Fuselier Holdings, or a mutually agreed upon price (“Per Share Price Calculation”).  On December 4, 2009, we also entered into a consulting agreement with Dr. Jean Fuselier Sr., whereby we will issue shares of our common stock to Dr. Fuselier equal to the amount of the accounts payable settled, at a per share price determined in accordance with the Per Share Price Calculation.  In January 2010, 654,450 shares of our common stock were issued or issuable to Dr. Fuselier for services valued at $25,000 under the contract as previously discussed above, and 797,658 shares of our common stock were issued or issuable to Fuselier Holdings in settlement of accounts payable totaling $25,000.  In February 2010, 1,250,000 shares of our common stock were issued or issuable to Dr. Fuselier for services valued at $25,000 under the contract as previously discussed above, and 1,250,000 shares of our common stock were issued or issuable to Fuselier Holdings in settlement of accounts payable totaling $25,000. 

In April 2010, we amended our agreement with Fuselier Holdings, such that if our common stock closed at prices below $0.03 per share at three mutually agreed upon intervals during April 2010, we would issue shares of our common stock to Fuselier Holdings at a per share price of $0.02 rather than the price determined in accordance with the Per Share Price Calculation.   In addition, we agreed that, for a period of 180 days after the date of issuance, should Fuselier Holdings sell the stock and be unable to receive net proceeds equal to $8,000, at our option, we will either issue additional shares to Fuselier Holdings or pay cash such that the amount received by Fuselier Holdings is equal to $8,000.  In April 2010, we also amended our consulting agreement with Dr. Jean Fuselier, previously described above, such that our common stock closed at prices below $0.03 per share at three mutually agreed upon intervals during April 2010, we would issue shares of our common stock to Dr. Jean Fuselier equal to the amount of the accounts payable settled, at a per share price of $0.02 rather than the price determined in accordance with the Per Share Calculation.  In addition, we agreed that, for a period of 180 days after the date of issuance, should Dr. Fuselier sell the stock and be unable to receive net proceeds equal to $8,000, at our option, we will either issue additional shares to Dr. Jean Fuselier or pay cash such that the amount received by Dr. Fuselier is equal to $8,000.  The amendments to the Fuselier Holdings agreement and the Dr. Jean Fuselier consulting agreement were only applicable to the April 2010 settlement of $8,000 in accounts payable and not to future or past Fuselier Holdings or Dr. Jean Fuselier consulting agreement transactions.   In April 2010, 400,000 shares of our common stock were issued or issuable to Dr. Fuselier for services valued at $8,000 under the amended contract, and 400,000 shares of our common stock were issued or issuable to Fuselier Holdings in settlement of accounts payable totaling $8,000.  As a result of the April 2010 amendment, in June 2010 we issued an additional 400,000 shares of our common stock to Fuselier Holdings and in June 2010 we issued an additional 400,000 shares of our common stock to Dr. Jean Fuselier.  There is no further obligation to issue shares under this agreement.

In January 2010, we issued 400,000 shares of our common stock for $20,000 in legal services.  In February 2010, we issued 133,333 shares of our common stock for approximately $9,000 of legal services to settle accounts payable.

In February 2010, we entered into a one-year agreement with Moxie Ventures, Inc. for business development services.  Pursuant to the terms of the agreement, we will issue Moxie Ventures, Inc. $5,000 in shares of our common stock on a monthly basis, as determined by dividing $5,000 by the closing price of our common stock as of the first five trading days of each month, up to a maximum of 20,000 shares per month.  In addition, under the terms of the agreement, we will pay them certain cash success fees upon capital raising activities.  During 2010, an aggregate of 220,000 shares of our common stock were issuable under the agreement, and we recorded $55,000 in related operating expense.  In the first quarter of 2011, an additional 20,000 shares of our common stock were issuable under the terms of the agreement and we recorded $5,000 in operating expense.

In March 2010, in connection with the promissory note transaction described in Note 4, we also entered into an advisory services agreement with the noteholder, pursuant to which we will issue him 150,000 shares of our common stock over a period of 12 months for services rendered under the agreement.  In the first quarter of 2010, 12,500 shares were issued or issuable under the terms of the agreement and accordingly we recorded expense of $375 during the three months ended March 31, 2010 related to the value of the shares based on the closing price of our common stock on March 31, 2010.  In the second quarter of 2010, 37,500 shares were issued or issuable under the terms of the agreement and accordingly we recorded expense of approximately $570 for the three months ended June 30, 2010, related to the value of the shares based on the closing price of our common stock on June 30, 2010.  In the third quarter of 2010, 37,500 shares were issued or issuable under the terms of the agreement and accordingly we recorded expense of approximately $900 for the three months ended September 30, 2010, related to the value of the shares based on the closing price of our common stock on September 30, 2010.  In the fourth quarter of 2010, an additional 37,500 shares were issued or issuable under the terms of the agreement and accordingly we recorded approximately $750 in operating expense based on the closing price of our common stock on December 31, 2010.  In the first quarter of 2011, an additional 25,000 shares were issued or issuable under the terms of the agreement and accordingly we recorded approximately $250 in operating expense based on the closing price of our common stock on March 31, 2011.  There are no additional shares issuable under the terms of this agreement.

In the first quarter of 2010, 75,000 shares of our common stock were issued or issuable to consultants for services provided.  The aggregate fair value of the shares of approximately $2,000 based on the closing price of our common stock on March 31, 2010 was recorded to operating expenses in the first quarter of 2010.  In the second quarter of 2010, 45,000 shares of our common stock were issued or issuable to consultants for services provided.  The aggregate fair value of the shares of approximately $675 based on the closing price of our common stock on June 30, 2010 was recorded to operating expenses in the second quarter of 2010.  In September 2010, we entered into a one-year agreement with a consultant for services.  Pursuant to the term of the agreement, we will issue the consultant 40,000 shares of our common stock on a monthly basis.  In the third quarter of 2010, 70,000 shares of our common stock were issued or issuable to a consultant for services provided.  The aggregate fair value of the shares of approximately $1,700 based on the closing price of our common stock on September 30, 2010 was recorded to operating expenses in the third quarter of 2010.  In the first quarter of 2011, 120,000 shares of our common stock were issued or issuable to a consultant for services provided under the terms of the agreement as described above.  The aggregate fair value of the shares of approximately $1,200 based on the closing price of our common stock on March 31, 2011 was recorded to operating expenses in the first quarter of 2011.  In the second quarter of 2011, 120,000 shares of our common stock were issued or issuable to a consultant for services provided.  The aggregate fair value of the shares of approximately $1,200 based on the closing price of our common stock on June 30, 2011 was recorded to operating expenses in the second quarter of 2011.

In March 2010, we entered into an agreement with a consultant for capital raising services.  Under the terms of the agreement, we issued the consultant 150,000 shares of our common stock upon signing.  An additional 650,000 shares are issuable on a performance basis pursuant to the terms of the contract.  In any event, if the consultant secures financing for the Company of $1,000,000 or more, all 800,000 shares become immediately earned and issuable.  The consultant is also entitled to a 10% cash fee and 5% warrant coverage on qualified financings, such warrants to be two-year warrants with exercise price at 10% above the price of the qualified financing and be provided piggyback registration rights. 

On March 19, 2010, we issued 1,000,000 shares of our common stock for cash at $0.01 per share for gross proceeds of $10,000.  On March 22, 2010, we issued 500,000 shares of our common stock for cash at $0.01 per share for gross proceeds of $5,000.  On March 25, 2010, we issued 1,000,000 shares of our common stock for cash at $0.01 per share for gross proceeds of $10,000.  On March 29, 2010, we issued 600,000 shares of our common stock for cash at $0.025 per share for gross proceeds of $15,000. 

In April 2010, we entered into a nine-month agreement with a consultant for investor relations services.  Pursuant to the terms of the agreement, we issued the consultant 300,000 shares of our common stock upon signing of the agreement.  The aggregate fair value of the shares of approximately $12,000 based on the closing price of our common stock was recorded to operating expenses in the second quarter of 2010.  Under the terms of the agreement, an additional 200,000 shares of the agreement are issuable to the consultant for future services pursuant to the terms of the contract, none of which were issuable as of June 30, 2011 or December 31, 2010.

In the second quarter of 2010, we entered into a consulting agreement with a company for advisory services.  Under the terms of the agreement, we issued 1,000,000 shares of our common stock to the consultant for prior services.  The fair value of the shares of approximately $16,000 based on the closing price of our common stock on April 28, 2010 was recorded to operating expenses in the second quarter of 2010. 

In the second quarter of 2010, we entered into a consulting agreement with an individual for advisory services.  Under the terms of the agreement, we issued 1,000,000 shares of our common stock to the consultant for prior services.  The fair value of the shares of approximately $16,000 based on the closing price of our common stock on April 28, 2010 was recorded to operating expenses in the second quarter of 2010.

In July 2010, we entered into a six-month consulting agreement for business advisory services, pursuant to which we will issue the consultant 100,000 shares of our common stock per month and pursuant to which 300,000 shares of our common stock were issued or issuable to the consultant for services provided as of September 30, 2010.  The aggregate fair value of the shares of approximately $7,000 based on the closing price of our common stock on September 30, 2010 was recorded to operating expenses in the third quarter of 2010.  In the fourth quarter of 2010, an additional 300,000 shares of our common stock were issued or issuable to the consultant for services provided.  The aggregate fair value of the shares of approximately $6,000 based on the closing price of our common stock on December 31, 2010 was recorded to operating expenses in the fourth quarter of 2010.  No further shares are issuable under this agreement.

In July 2010, we entered into an advisory services agreement with a consulting firm, pursuant to which we issued 2,000,000 shares of our common stock valued at $30,000 for services.

On August 6, 2010, we issued 133,333 shares of our common stock to a vendor in payment of finance charges.

In October 2010, we entered into advisory services agreements with two consultants whereby we agreed to issue an aggregate of 11,250,000 shares of our common stock for services over the one-year term of the agreements.

Stock Incentive Plans — In May 2009, our board of directors approved the 2009 Employee Stock Incentive Plan (the “2009 Plan”).  Under the 2009 Plan, up to 6,000,000 shares of our common stock may be issued to directors, employees or consultants pursuant to share awards or options to purchase our common stock.  We filed a Form S-8 on June 12, 2009 to register the shares of common stock issuable under the 2009 Plan.  On February 11, 2010, we amended our 2009 Plan and filed a revised Form S-8 increasing the number of reserved shares to 15,000,000.  On May 7, 2010, we again amended our 2009 Plan and filed a subsequent revision to the Form S-8, increasing the number of reserved shares to 35,000,000.

     Employee Stock Options — Stock options to purchase shares of our common stock are granted under our 2009 Plan to certain employees and consultants, at prices at or above the fair market value on the date of grant.

     Non-cash compensation expense is recognized on a straight-line basis over the applicable vesting periods of one to five years, based on the fair value on the grant date. The vesting period is deemed to be the requisite service period.  Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the 2009 Plan and certain employment agreements we have with key officers).

     The fair value of stock-based option awards was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions for the periods presented as follows:

	Three months ended		Six months ended
	June30,		June 30,
	2011	2010	2011	2010
Expected dividend yield	0%	0%	0%	0%
Risk free interest rate	1.76%	1.96%	1.76%	2.62%
Expected stock volatility	162%	162%	162%	162%
Expected option life	5.8 years	5.8 years	5.8 years	5.7 years
Fair value of options granted	$   0.01	$    0.01	$    0.01	$    0.02

As of June 30, 2011, we had approximately $187,000 of total unrecognized compensation cost related to unvested stock options. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. We expect to recognize this cost over a weighted average period of approximately 2.5 years.

As of June 30, 2011, there were 17,426,730 stock options outstanding with a weighted average exercise price of $0.003 per share and a weighted average remaining contractual life of 6.8 years. Of these, 10,660,063 stock options were exerciseable with a weighted average exercise price of $0.005 per share and weighted average remaining contractual life of 8.2 years.  The intrinsic value of stock options outstanding of $125,100 and exercisable of $91,400 at June 30, 2011 is based on the $0.01 closing market price of our common stock on that date, and is calculated by aggregating the difference between $0.01 and the exercise price of each of the outstanding vested and unvested stock options which have an exercise price less than $0.01. The total fair value of options that vested during the three months ended June 30, 2011 and 2010, net of forfeitures, was approximately $47,000 and $78,000 respectively.   The total fair value of options that vested during the six months ended June 30, 2011 and 2010, net of forfeitures, was approximately $67,000 and $166,000 respectively.

Non-Employee Stock Option Grants — In 2010, we granted options under our 2009 Plan to purchase an aggregate of 2,901,730 shares of our common stock at an exercise price of $0.001 pursuant to our CEO’s employment contract.  In June 2011, we granted options to purchase an additional 3,016,667 shares of our common stock at an exercise price of $0.001 pursuant to our CEO’s employment contract.  As the options were fully vested on the date of grant as described in Note 6, we recognized immediate expense of approximately $67,000 in 2010 and $30,000 in 2011, respectively, related to the fair value of the options.  The options have a 10-year term.

In January 2010, we issued options, pursuant to terms of a consulting agreement for software design services, to a consultant to purchase 55,000 shares of our common stock at an exercise price of $0.05 per share, of which options 10,000 vested immediately and the remainder vested in equal monthly installments of 5,000 options through September 2010 pursuant to the terms of the software design services contract. 

In June 2009, we issued options under our 2009 Plan to purchase 1,000,000 shares of our common stock at an exercise price of $0.001 to our former Chief Development Officer, who is engaged in software development.  The options vested as follows:  1/3 vested immediately, and the remainder vested monthly over two years beginning June 1, 2008.  Through June 30, 2010, we recorded expense of approximately $129,800 related to the fair value of the options, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.13, volatility of 162%, risk free rate of 3.40%, expected term of 5.75 years, dividend yield of 0.0%.  The options expire on May 15, 2019. 

In June 2009, we issued options under our 2009 Plan to purchase 1,000,000 shares of our common stock at an exercise price of $0.001 to Armada Capital, who is engaged in providing advisory services to the Company.  The options vested as follows:  1/3 vested immediately, and the remainder vested monthly over two years beginning June 1, 2008.  Through June 30, 2010, we recorded expense of approximately $129,800 related to the fair value of the options, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.13, volatility of 162%, risk free rate of 3.40%, expected term of 5.75 years, dividend yield of 0.0%.  The options expire on May 15, 2019. 

In June 2009, we issued options under our 2009 Plan to purchase 1,500,000 shares of our common stock at an exercise price of $0.001 to Brook Lang, who was engaged in providing management services to the Company and is now the Company’s CEO.  The options vested as follows:  1/3 vested immediately, and the remainder vested monthly over two years beginning June 1, 2008.  Through June 30, 2010, we recorded expense of approximately $195,000 related to the fair value of the options, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.13, volatility of 162%, risk free rate of 3.40%, expected term of 5.75 years, dividend yield of 0.0%.  The options expire on May 15, 2019.

In August 2009, we issued options under our 2009 Plan to purchase 60,000 shares of our common stock at an exercise price of $0.01 per share to a consultant engaged in providing strategic advisory services to our company, of which options 20,000 vested immediately and the remainder vest in equal monthly installments of 5,000 options through August 2010 pursuant to the terms of the advisory services contract.  Through September 30, 2010, we recorded expense of approximately $6,400 related to the fair value of the options, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.11, volatility of 162%, risk free rate of 1.78%, expected term of three years, dividend yield of 0.0%.   The options expire on August 10, 2014.

Warrants — On May 10, 2010, we entered into an agreement with a consultant for financial and business advisory services.  Under the terms of the agreement, we issued a five-year fully-vested warrant to purchase up to 200,000 shares of our common stock at an exercise price of $0.01 and on May 31, 2010, we issued a five-year fully vested warrant to purchase up to 100,000 shares of our common stock at an exercise price to the consultant for services rendered under the agreement.  The warrants were recorded as expense in the second quarter of 2010 at their fair value of approximately $3,000, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.01, volatility of 162%, risk free rate of 2.26%, expected term of 5 years, dividend yield of 0.0%.  We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions, and accordingly are accounted for as equity.  Additional warrants were granted during July and August 2010 to this consultant pursuant to the terms of the consulting agreement.  During July 2010, we issued five-year warrants to purchase an additional 500,000 shares of our common stock at an exercise price of $0.01 per share for financial and advisory services to the same consultant.  The warrants were recorded as expense in the third quarter of 2010 at their fair value of approximately $6,000, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.01, volatility of 162%, risk free rate of 2.26%, expected term of 5 years, dividend yield of 0.0%.  We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions, and accordingly are accounted for as equity. 

On August 2, 2010, the consulting agreement was amended to provide for the issuance to the consultant of 20% of any shares or warrants issued under an August 2010 agreement with a public relations and marketing consulting firm.  Accordingly, in August 2010, we issued two-year warrants to purchase an additional 220,000 shares of our common stock at an exercise price of $0.001 per share to the consultant under the terms of the consulting agreement, as amended and two-year warrants to purchase an additional 140,000 shares of our common stock at an exercise price of $0.05 per share under the terms of the consulting agreement, as amended (see below).  The warrants were recorded as expense in the third quarter of 2010 at their fair value of approximately $4,000, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.01, volatility of 162%, risk free rate of 0.56%, expected term of 2 years, dividend yield of 0.0%.  We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions, and accordingly are accounted for as equity.   

Under a success-based arrangement discussed below, two-year warrants to purchase an additional 500,000 shares of our common stock at an exercise price of $0.05 per share and two year warrants to purchase an additional 500,000 shares of our common stock at an exercise price of $0.10 per share are also potentially issuable to the consultant.

                In August 2010, we entered into an annual contract with a public relations and marketing consulting firm for services.  Under the terms of the contract, we issued two-year warrants to purchase 400,000 shares of our common stock at an exercise price of $0.001 to the consulting firm for services.  In addition, we are required to make monthly cash payments of $10,000, with the first two months’ cash payments deferred for two months.  In August 2010, we issued two-year warrants to purchase 700,000 shares of our common stock at an exercise price of $0.001 per share for public relations and marketing services to the same public relations and marketing consulting firm. In addition, in August 2010, we issued additional two-year warrants to purchase 700,000 shares of our common stock at an exercise price of $0.05 to the same consulting firm for services under the agreement.  The warrants were recorded as expense in the third quarter of 2010 at their fair value of approximately $21,000, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.01, volatility of 162%, risk free rate of 0.53%, expected term of 2 years, dividend yield of 0.0%.  We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions, and accordingly are accounted for as equity. 

In addition, we agreed to a success-fee arrangement with the public relations and marketing consulting firm, under which if certain performance criteria met, two-year warrants to purchase 2,500,000 shares of our common stock at an exercise price of $0.05 per share and two-year warrants to purchase 2,500,000 shares of our common stock at an exercise price of $0.10 per share are potentially issuable to the consulting firm as a success fee.  

  See discussion of warrants issued in connection with notes payable at Note 4, Notes Payable.            

In March 2011, we issued fully vested five-year warrants to purchase an aggregate of 480,000 shares of our common stock at an exercise price of $0.001 per share for financial and advisory services to a consultant. The warrants were recorded as expense in the first quarter of 2011 at their fair value of approximately $4,700, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.01, volatility of 162%, risk free rate of 0.80%, expected term of 5 years, dividend yield of 0.0%.  We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions, and accordingly are accounted for as equity.   

In April 2011, we issued fully vested five-year warrants to purchase an aggregate of 360,000 shares of our common stock at an exercise price of $0.001 per share for financial and advisory services to a consultant. The warrants were recorded as expense in the second quarter of 2011 at their fair value of approximately $4,300, which was determined using the Black-Scholes model using the following assumptions:  stock price of $0.01, volatility of 162%, risk free rate of 1.79%, expected term of 5 years, dividend yield of 0.0%.  We evaluated the warrants and determined that the warrants do not contain any provisions equivalent to net-cash settlement provisions, and accordingly are accounted for as equity.   

The following summarizes warrant activity during the six months ended June 30, 2011 (in thousands):

Warrants outstanding, December 31, 2010		16,223
Warrants issued		6,427
Warrants exercised		—
Warrants expired		—
Warrants outstanding, June 30, 2011		22,650
Weighted average exercise price, June 30, 2011	$	0.03

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Income Taxes

3 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 7.  Income Taxes

     We continue to record a valuation allowance in the full amount of deferred tax assets since realization of such tax benefits has not been determined by our management to be more likely than not. At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year, and the rate so determined is used in providing for income taxes on a current year-to-date basis. The difference between the expected provision or benefit computed using the statutory tax rate and the recorded provision or benefit of zero, is primarily due to the estimated change in valuation allowance more likely to result due to taxable losses anticipated for the applicable fiscal year.

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CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid In Capital	Deficit Accumulated During Develoment Stage	Stockholder's Equity
Imputed interest on stockholder advances at Dec. 31, 2004
Common stock issued or issuable for services			$ 71		$ 71
Common stock issued or issuable for services (shares)		3,000,000
Options and warrants issued for services			4		4
Net Loss				(197)	(197)
Imputed interest on stockholder advances at Dec. 31, 2005			1		1
Common stock issued for cash			2		2
Options and warrants issued for services			9		9
Common stock issued for cash (shares)		59,375
Compensation and other expense related to options and warrants			2		2
Net Loss				(344)	(344)
Common stock issued by stockholders on behalf of Montavo for loan modification (accounted for as contribution of capital) at Dec. 31, 2006			38		38
Imputed interest on stockholder advances at Dec. 31, 2006			1		1
Options and warrants issued for services			1		1
Common stock issued for cash (shares)		15,000
Compensation and other expense related to options and warrants			2		2
Net Loss				(227)	(227)
Imputed interest on stockholder advances at Dec. 31, 2007			1		1
Common stock issued for cash			84		84
Common stock issued or issuable for services			310		310
Common stock issued or issuable for services (shares)		2,525,000
Common stock issued for cash (shares)		296,625
Compensation and other expense related to options and warrants			9		9
Common stock retained by North Coast in reverse merger			(264)		(264)
Common stock retained by North Coast in reverse merger (shares)		13,080,000
Common stock issued upon conversion of North Coast notes payable			250		250
Common stock issued upon conversion of North Coast notes payable (shares)		1,398,841
Common stock issued upon conversion of Montavo notes payable, accrued interest and accounts payable			949		949
Common stock issued upon conversion of Montavo notes payable, accrued interest and accounts payable (shares)		1,840,000
Common stock issued upon exercise of options by waiving of exercise price of options			10		10
Common stock issued upon exercise of options by waiving of exercise price of options (shares)		1,169,000
Recapitalization		10,089,512
Net Loss				(843)	(843)
Imputed interest on stockholder advances at Dec. 31, 2008			1		1
Common stock issued for cash			113		113
Common stock issued or issuable for services			445		445
Common stock issued or issuable for services (shares)		2,771,906
Common stock issued for cash (shares)		461,625
Warrants issued for services			27		27
Options issued for Services			485		485
Common stock issued in settlement of accounts payable due to related party		1,333,333	173		173
Common stock issued upon conversion of notes payable and accrued interest	232,683	232,683	23		23
Common stock issued in settlement of accounts payable	1,054,286	1,054,286	74		74
Issuance of units comprised of common stock and warrants for cash		1,000,000	25		25
Stockholder contribution of capital			5		5
Beneficial conversion feature of convertible debt			37		37
Net Loss				(1,916)	(1,916)
Common stock issued upon conversion of note payable and related accrued interest at Dec. 31, 2009	91,281	91,281	18		18
Imputed interest on stockholder advances at Dec. 31, 2009			1		1
Common stock issued or issuable for services			$ 83		$ 83
Common stock issued or issuable for services (shares)		2,431,950
Common stock issued upon conversion of note payable and related accrued interest at Mar. 31, 2010

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Accounting Policies

3 Months Ended

Jun. 30, 2011

Nature of Operations [Text Block]

Note 1.  Business and Organization

We were incorporated under the laws of the State of Delaware on April 20, 1994. From our incorporation and until December 13, 2004, we had no operating history other than organizational matters. On December 13, 2004, we acquired all of the issued and outstanding capital stock of Trans Media Inc. (“Trans Media”), a Wyoming corporation (inception occurred on December 23, 2004).  The acquisition was consummated pursuant to a Plan of Arrangement and Share Exchange Agreement, dated September 29, 2004, whereby Trans Media became our wholly owned subsidiary.  This transaction is commonly referred to as a “reverse acquisition”, in which all of the outstanding capital stock of Trans Media was effectively exchanged for a controlling interest in our stock. This type of transaction is considered to be a recapitalization rather than a business combination.  Accordingly, for accounting purposes, no goodwill or other intangible assets were recorded.

On May 7, 2008 Trans Media, its wholly owned subsidiary North Coast Acquisition Corp., a Delaware corporation (“Acquisition Corp.”), and Montavo, Inc., a privately-held Washington corporation (“Montavo”), executed an Agreement (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on August 29, 2008, Acquisition Corp. was merged with and into Montavo, with Montavo being the surviving entity as a wholly owned subsidiary, and all of the issued and outstanding common stock of Montavo was exchanged for newly-issued, restricted shares of common stock.  The merger was accounted for as a reverse merger and recapitalization due to Montavo having control of the board of directors and control of management at the date of merger.

We are a development stage company in the process of deploying an advanced mobile marketing and advertising solution. We have two patents pending filed for our “method and distribution system for location based wireless presentation of electronic coupons” technology and “system and method of delivering ads”.

Liquidity Disclosure [Policy Text Block]

Note 2.  Going Concern

     We have prepared our condensed financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2011, we had a deficit accumulated during the development stage of approximately $5.5 million, negative cash flows from operations since inception and expect to incur additional losses in the future as we continue to develop and grow our business. We have funded our losses primarily through sales of common stock and warrants in private placements and borrowings from related parties and other investors. The further development of our business will require capital. At June 30, 2011, we had a working capital deficit (current assets less current liabilities) of approximately $1.6 million and no cash.

We are dependent on existing cash resources and external sources of financing to meet our working capital needs.  Current sources of liquidity are insufficient to provide for budgeted and anticipated working capital requirements.  We will therefore be required to seek additional financing to satisfy our working capital requirements. No assurances can be given that such capital will be available to us on acceptable terms, if at all. In addition to equity financing and strategic investments, we may seek additional related party loans.  If we are unable to obtain any such additional financing or if such financing cannot be obtained on terms acceptable to us, we may be required to delay or scale back our operations, including the development of our mobile marketing solution, which would adversely affect our ability to generate future revenues and may force us to curtail or cease our operating activities.

To attain profitable operations, management’s plan is to execute its strategy of (i) continuing the development of our proprietary mobile marketing solution; (ii) building additional strategic partnerships with technology partners; (iii) building strategic partnerships with premier advertising inventory partners; and (iv) executing sales relationships with national and global brands in order to drive profitability.   We will continue to be dependent on outside capital to fund our operations for the foreseeable future, and continue to be involved in discussions and negotiations with investors in order to raise additional funds to provide sufficient working capital for operations with a near-term goal of generating positive cash flow from operations.  Any financing we obtain may further dilute or otherwise impair the ownership interest of our current stockholders. If we fail to generate positive cash flows or fail to obtain additional capital when required, we could modify, delay or abandon some or all of our plans. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Presentation and Significant Accounting Policies [Text Block]

Note 3.  Summary of Critical Accounting Policies

     Basis of Preparation — The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles for complete financial statements. The accompanying unaudited financial information should be read in conjunction with the audited financial statements, including the notes thereto, as of and for the year ended December 31, 2010, included in our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the interim periods ended June 30, 2011 are not necessarily indicative of the results for the year ending December 31, 2011 or for any future period.

     Use of Estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The more significant accounting estimates inherent in preparation of our financial statements include estimates for valuation of equity related instruments and valuation allowance for deferred income tax assets. 

      Cash — On occasion, we maintain balances in excess of federal insurance limits.

Financial Instruments and Fair Value —Our financial instruments consist of accounts payable, accrued expenses, accounts payable -  related parties, and notes payable.  We consider fair value to be an exit price representing the amount that would be received upon the sale of an asset or the transfer of a liability.  The fair value of financial instruments other than accounts payable - related parties, note payable to stockholder and convertible notes payable approximate the recorded value based on the short-term nature of these financial instruments. The fair value of note payable to stockholder and accounts payable - related parties is presently undeterminable due to the related party nature of the obligations.

     We currently measure and report at fair value the embedded derivative liabilities for price adjustable convertible debt and warrants which are further discussed below and in detail in Note 4. The following table summarizes our financial liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010 (in thousands):

	Balance at June 30, 2011		Level 1 Quoted prices in active markets for identical assets	Level 2 Significant other observable inputs	Level 3 Significant unobservable inputs
Liabilities:
Embedded fair value derivative liabilities	$	131	—	—	$	131
Total financial liabilities at fair value	$	131	—	—	$	131
	Balance at December 31, 2010		Level 1 Quoted prices in active markets for identical assets	Level 2 Significant other observable inputs	Level 3 Significant unobservable inputs
Liabilities:
Embedded fair value derivative liabilities	$	233	—	—	$	233
Total financial liabilities at fair value	$	233	—	—	$	233

The following table is a roll forward for the six months ended June 30, 2011 of the embedded derivative fair value liabilities, as to which fair value is determined by Level 3 inputs (in thousands):

Beginning balance at January 1, 2011	$	233
Embedded derivative fair value liabilities		36
Change in fair value included in net loss		(138)
Ending balance at June 30, 2011	$	131

    The following table is a roll forward for the six months ended June 30, 2010 of the embedded derivative fair value liability, as to which fair value is determined by Level 3 inputs (in thousands):

Beginning balance at January 1, 2010	$	4
Embedded derivative fair value liabilities		34
Change in fair value included in net loss		4
Ending balance at June 30, 2010	$	42

Embedded Derivative Liabilities — We evaluate financial instruments for freestanding or embedded derivatives.  Derivative instruments that have been separated from the host contract are recorded at fair value with changes in value recognized as other income (expense) in the statements of operations in the period of change.   We use the Black-Scholes option-pricing model as our method of valuation for embedded fair value liabilities. Our determination of the fair value of embedded derivatives using the Black-Scholes model is affected by our stock price as well as highly subjective assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the contractual life of the underlying security and expected stock price volatility over the term (if the use of expected stock price volatility over the term has a material impact on the financial statements).   The valuation of embedded fair value derivative liabilities does not include the impact of adjustments for the probability of certain events occurring that would have an impact on the valuations since management believes the likelihood of those events occurring is remote.

Income taxes — We account for income taxes using an asset and liability method which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts expected to be realized. The provision for income taxes represents the tax payable for the period and change during the period in net deferred tax assets and liabilities.

            We have identified our federal tax return as our “major” tax jurisdiction, as defined. We do not believe any reserves for uncertain income tax positions are required. Our policy for recording interest and penalties associated with uncertain income tax positions is to record such items as a component of interest expense.

Net loss per common share —Basic and diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share excludes the effect of common stock equivalents (convertible notes, stock options and warrants) since such inclusion in the computation would be anti-dilutive. The following common stock equivalents have been excluded for all periods presented (in thousands), as of June 30: 

	June 30,	June 30,
	2011	2010
Convertible notes	200	200
Stock options	17,472	12,969
Total	40,277	15,669

On September 8, 2009, we entered into a convertible promissory note for $20,000 at a stated interest rate of 15%. The promissory note is due within twenty-four months after date of issue, and on demand thereafter. The note is convertible into shares of our common stock at $0.10 per share.  Terms of the convertible note provide that the conversion price of the notes will be reduced in the event of subsequent financings at an effective price per share less than the conversion price, such that in the event we secure a future equity investment round totaling a minimum of $1,000,000 within 12 months of the date of the note, the convertible note will automatically be converted into shares of stock in the amount of 50% of the price per share of the equity investment or the maximum price of $0.10 per share, whichever is lower. This provision expired as of September 8, 2010.  The shares issuable under the note are included in the table above at the stated conversion rate of $0.10.

On May 4, 2010, we entered into a convertible promissory note for $40,000 at a stated interest rate of 12%.  The note was due, on November 3, 2010, and carries a default rate of interest of 18%.  The note is convertible into shares of our common stock at a variable conversion price, such that the average of the lowest Trading Prices (as determined by averaging the highest closing bid and lowest closing ask prices) of the Company’s common stock as listed on the OTCBB during the five (5) trading day period ending one (1) day prior to the date the conversion notice is sent by the holder to the Company multiplied by 35%.  The shares issuable under the note are excluded from the table above as the note is convertible at a variable conversion price.  See Note 4.

In August, September, October and December 2010, we entered into convertible promissory notes in the aggregate amount of $122,500 together with two-year warrants to purchase 9,937,500 shares of our common stock at an exercise price of $0.02 per share, for cash of $77,500 and transfer to third parties of accounts payable due to our CEO of $45,000 (later converted into convertible promissory notes).  The promissory notes bear interest at a rate of 12% per annum, and the notes are due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory notes contain an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holders may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreements, if the share price of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement.  The shares issuable under the notes are excluded from the table above as the notes are convertible at a variable conversion price.  See Note 4.

In February 2011, we entered into a convertible promissory note in the amount of $25,000 together with two-year warrants to purchase 1,875,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $950,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $750,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. The shares issuable under the note are excluded from the table above as the note is convertible at a variable conversion price.  See Note 4.

In March 2011, we entered into a convertible promissory note in the amount of $5,000 together with two-year warrants to purchase 375,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $250,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement. The shares issuable under the notes are excluded from the table above as the note is convertible at a variable conversion price.  See Note 4.

In April 2011, we entered into a convertible promissory note in the amount of $3,000 together with two-year warrants to purchase 225,000 shares of our common stock at an exercise price of $0.02 per share.  The promissory note bears interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory note contains an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $750,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreement, if the share price of the first $750,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement.  The shares issuable under the note are excluded from the table above as the note is convertible at a variable conversion price.  See Note 4.

In April, May and June 2011, we entered into convertible promissory notes in the aggregate amount of $41,500 together with two-year warrants to purchase 3,112,500 shares of our common stock at an exercise price of $0.02 per share.  The promissory notes bear interest at a rate of 12% per annum, and the note is due in one year.  Upon default, the interest rate is 18%.  As the Company is currently seeking to raise financing under a private placement transaction, the promissory notes contain an optional conversion clause whereby, during a 30-day period after the completion of such private placement transaction raising in excess of $250,000, the holder may either convert the promissory note at the share price of such private placement transaction or demand repayment out of the proceeds of such financing.  Under the terms of the promissory note agreements, if the share price of the first $250,000 of such private placement is below $0.02 (the strike price of the warrants), the strike price of the warrants will be downward adjusted to such share price of the private placement.  The shares issuable under the notes are excluded from the table above as the notes are convertible at a variable conversion price.  See Note 4.

Debt Discounts —Debt discounts are being amortized through periodic charges to interest expense over the maximum term of the related financial instrument using the effective interest method. Amortization of debt discounts was $33,000 and $1,000 during the three months ended June 30, 2011 and 2010, respectively and total amortization of debt discounts amounted to approximately $63,000, $20,000 and $147,000 during the six months ended June 30, 2011, 2010 and the period from inception to June 30, 2011, respectively.  

 Share-Based Payments—We have granted shares of our common stock and stock options and warrants to purchase shares of our common stock to various parties for services and in connection with financing activities.  We use the Black-Scholes option-pricing model as our method of valuation for share-based awards. Share-based compensation expense is based on the value of the portion of the stock-based award that will vest during the period, adjusted for expected forfeitures.  Our determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected life of the award, expected stock price volatility over the term of the award (if the use of expected stock price volatility over the term of the award has a material impact on the financial statements) and historical and projected exercise behaviors.   The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual or updated results differ from our current estimates, such amounts will be recorded in the period estimates are revised. Although the fair value of share-based awards is determined in accordance with authoritative guidance, the Black-Scholes option pricing model requires the input of highly subjective assumptions and other reasonable assumptions could provide differing results.  Non-cash compensation expense is recognized on a straight-line basis over the applicable vesting periods of one to five years (deemed to be the service period), based on the fair value of such share-based awards on the grant date.

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CONDENSED BALANCE SHEETS (USD $) In Thousands	Jun. 30, 2011		Dec. 31, 2010	Jun. 30, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007	Dec. 31, 2006	Dec. 31, 2005	Dec. 31, 2004
ASSETS
Prepaid expenses and other assets	$ 10		$ 10	$ 59
Total current assets	10		10
Total assets	10		10
Accounts payable and accrued expenses	550		523	27
Accounts payable - related parties	612		534
Note payable to stockholder	25		25
Accrued interest	32		17	3
Convertible debt, net of discount	221	[1]	119
Note payable	10		10
Embedded fair value derivative liabilities	131		233	4
Total current liabilities	1,581		1,461
Preferred stock		[2]
Common stock and additional paid-in capital,	3,882	[3]	3,799
Deficit accumulated during the development stage	(5,453)		(5,250)
Total stockholders' equity (deficit)	(1,571)		(1,451)		43,418,467	36,473,353	6,074,375	6,059,375	6,000,000	3,000,000
Total liabilities and stockholders' equity (deficit)	$ 10		$ 10

[1] Net of discount of $61 and $89, respectively

[2] $0.001 par value; 25,000,000 shares authorized and no shares issued and outstanding

[3] $0.001 par value; 400,000,000 shares authorized: 71,402,241 and 71,117,241 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively