0001445866-12-000845.txt : 20121105 0001445866-12-000845.hdr.sgml : 20121105 20121105164817 ACCESSION NUMBER: 0001445866-12-000845 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121105 DATE AS OF CHANGE: 20121105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Omnitek Engineering Corp CENTRAL INDEX KEY: 0001404804 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 000000000 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53955 FILM NUMBER: 121180599 BUSINESS ADDRESS: STREET 1: 1945 S. Rancho Santa Fe Road CITY: San Marcos STATE: CA ZIP: 92078 BUSINESS PHONE: (760-591-0888 MAIL ADDRESS: STREET 1: 1945 S. Rancho Santa Fe Road CITY: San Marcos STATE: CA ZIP: 92078 10-Q 1 omn10q930.htm 10-Q omn10q930.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended:  SEPTEMBER 30, 2011

Commission File Number     000-53955

OMNITEK ENGINEERING CORP.
 (Exact name of Registrant as specified in its charter)

California
 
33-0984450
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
1945 S. Rancho Santa Fe Road, San Marcos, California 92078
 (Address of principal executive offices, Zip Code)

(760) 591-0089
 (Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 90 days.  Yes x   No 

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x   No 

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 definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
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  No x

As of October 30, 2012, the Registrant had 19,749,582 shares of its no par value Common Stock outstanding.

 
 
 

 

 
  Page  
PART I - FINANCIAL INFORMATION
 
     
   
 
 
         
 
 
 
 
 
 
 
   
PART II - OTHER INFORMATION
     
 
 
 
 
 
 
 
 
 
 
 


 
 
PART I
FINANCIAL INFORMATION

 

OMNITEK ENGINEERING CORP.  
Condensed Balance Sheets  
   
ASSETS
 
             
 
September 30,
 
December 31,
 
 
2012
 
2011
 
 
(unaudited)
 
 
 
CURRENT ASSETS
           
Cash
  $ 3,240,057     $ 31,196  
Accounts receivable, net
    218,065       13,506  
Accounts receivable -related party
    30,876       16,715  
Inventory
    912,384       1,020,117  
Prepaid expense
    10,628       2,512  
Deposits
    251,036       41,943  
                 
Total Current Assets
    4,663,046       1,125,989  
                 
FIXED ASSETS, net
    15,338       13,249  
                 
OTHER ASSETS
               
Long-term investments, net
    1,211,845       -  
Intellectual property, net
    5,979       8,256  
                 
Total Other Assets
    1,217,824       8,256  
                 
TOTAL ASSETS
  $ 5,896,208     $ 1,147,494  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
  $ 70,411     $ 57,828  
Accrued expenses - related parties
    277,343       351,580  
Accounts payable - related parties
    25       2,568  
Customer deposits
    256,997       286,608  
                 
Total Current Liabilities
    604,776       698,584  
                 
Total Liabilities
    604,776       698,584  
                 
STOCKHOLDERS' EQUITY
               
Common stock, 125,000,000 shares authorized no par value
               
   19,749,582 and 17,137,812 shares issued and outstanding,
               
   respectively
    8,196,061       2,659,299  
Additional paid-in capital
    4,840,228       4,213,313  
Accumulated deficit
    (7,744,857 )     (6,423,702 )
                 
Total Stockholders' Equity
    5,291,432       448,910  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 5,896,208     $ 1,147,494  
                 
                 
The accompanying notes are an integral part of these condensed financial statements.
 
 
 
 

 
Condensed Statements of Operations
 
(unaudited)
 
                         
                         
                         
 
For the Three
 
For the Three
   
For the Nine
   
For the Nine
 
 
Months Ended
 
Months Ended
   
Months Ended
   
Months Ended
 
 
September 30,
 
September 30,
   
September 30,
   
September 30,
 
 
2012
 
2011
   
2012
   
2011
 
                     
REVENUES
  $ 562,367     $ 317,160     $ 1,249,267     $ 1,306,906  
COST OF GOODS SOLD
    281,633       168,637       631,694       654,005  
GROSS MARGIN
    280,734       148,523       617,573       652,901  
                                 
OPERATING EXPENSES
                               
                                 
General and administrative
    353,438       265,999       1,789,028       775,088  
Research and development expense
    88,922       40,845       166,070       100,791  
Depreciation and amortization expense
    1,606       21,155       4,596       62,396  
                                 
Total Operating Expenses
    443,966       327,999       1,959,694       938,275  
                                 
LOSS FROM OPERATIONS
    (163,232 )     (179,476 )     (1,342,121 )     (285,374 )
                                 
OTHER INCOME (EXPENSE)
                               
                                 
Interest expense
    -       -       (490 )     -  
Interest income
    21,082       1       22,256       2  
                                 
Total Other Income (Expense)
    21,082       1       21,766       2  
                                 
LOSS BEFORE INCOME TAXES
    (142,150 )     (179,475 )     (1,320,355 )     (285,372 )
INCOME TAX EXPENSE
    -       -       800       800  
                                 
NET LOSS
  $ (142,150 )   $ (179,475 )   $ (1,321,155 )   $ (286,172 )
                                 
BASIC AND DILUTED LOSS PER SHARE
  $ (0.01 )   $ (0.01 )   $ (0.07 )   $ (0.02 )
                                 
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
                 
  OF COMMON SHARES OUTSTANDING
    19,749,582       17,055,203       18,872,509       16,290,048  
                                 
                                 
                                 
The accompanying notes are an integral part of these condensed financial statements.
 
 
 
 
 
OMNITEK ENGINEERING CORP.
 
 
(unaudited)
 
   
For the Nine
   
For the Nine
 
   
Months Ended
   
Months Ended
 
   
September 30,
   
September 30,
 
   
2012
   
2011
 
OPERATING ACTIVITIES
 
 
       
Net loss
  $ (1,321,155 )   $ (286,172 )
Adjustments to reconcile net loss to
               
  net cash used by operating activities:
               
Amortization and depreciation expense
    4,596       62,396  
Amortization of premium on long-term investments
    16,378       -  
Options and warrants granted
    626,915       184,243  
Changes in operating assets and liabilities:
               
Accounts receivable
    (204,559 )     (32,499 )
Accounts receivable–related parties
    (14,161 )     (11,903 )
Deposits
    (209,093 )     27,325  
Prepaid expense
    (8,116 )     -  
Inventory
    107,733       (399 )
Accounts payable and accrued expenses
    12,583       (102,304 )
Customer deposits
    (29,611 )     (57,992 )
Accounts payable-related parties
    (2,543 )     (3,033 )
Accrued expenses-related parties
    (74,237 )     (35,538 )
                 
Net Cash Used in Operating Activities
    (1,095,270 )     (255,876 )
                 
 INVESTING ACTIVITIES
               
Purchase of long-term investments
    (1,228,223 )     -  
Purchase of property and equipment
    (4,408 )     (15,471 )
                 
Net Cash Used in Investing Activities
    (1,232,631 )     (15,471 )
                 
FINANCING ACTIVITIES
               
Issuance of common stock for cash
    5,536,762       150,000  
Repayment of note payable
    (40,000 )     -  
Exercise of warrants and options for cash
    -       134,500  
Proceeds of note payable
    40,000       -  
                 
Net Cash Provided by Financing Activities
    5,536,762       284,500  
                 
NET INCREASE IN CASH
    3,208,861       13,153  
CASH AT BEGINNING OF PERIOD
    31,196       34,944  
                 
CASH AT END OF PERIOD
  $ 3,240,057     $ 48,097  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
               
CASH PAID FOR:
               
Interest
  $ 490     $ -  
Income taxes
  $ 800     $ 800  
                 
   
The accompanying notes are an integral part of these condensed financial statements.
 
 

 
3

 
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
September 30, 2012
(unaudited)
 

NOTE 1 - CONDENSED FINANCIAL STATEMENTS
 

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2012, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2011 audited financial statements.  The results of operations for the periods ended September 30, 2012 and 2011 are not necessarily indicative of the operating results for the full years.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
 

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 the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Recent Accounting Pronouncements
 

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

Inventory
 

Inventory is stated at the lower of cost or market.  The Company’s inventory consists of finished goods and raw material and is located in San Marcos, California at September 30, 2012 and December 31, 2011 consisted of the following:

     
September 30,
 2012
   
December 31, 2011
 
Raw materials
      1,189,455       946,762  
Finished goods
      332,004       674,198  
Peru (finished goods)
      18,454       18,454  
In transit
      -       8,232  
Allowance for obsolete inventory
      (627,529 )     (627,529 )
Total
    $ 912,384     $ 1,020,117  
                   

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2012 and December 31, 2011, respectively.
 

 
4

 
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
September 30, 2012
(unaudited)


NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 

Basic and Diluted Net Income (Loss) Per Share
 

The Company computes net income (loss) per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. As of September 30, 2012, 677,380 warrants and options were excluded from the Diluted EPS calculation as their effect is anti-dilutive.

Income Taxes
 

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2012 and December 31, 2011 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2007.

Held to Maturity Investments
 

During the nine months ended September 30, 2012, the Company purchased various corporate bonds. The Company intends to hold the bonds to maturity. Accordingly, the Company has recorded and is amortizing the premium on the bonds over the remaining life. As of September 30, 2012, the Company has amortized $16,378 of the premium leaving amortized cost basis remaining of $1,211,845.


 
5

 
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
September 30, 2012
(unaudited)


NOTE 3 - RELATED PARTY TRANSACTIONS
 

Accounts Receivable – Related Parties
 

During the years ended December 31, 2007 through 2010, the Company a minority interest in various distributors in exchange for use of the Company’s name and logo. As of December 31, 2011, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd., a 20% interest in Omnitek Peru S.A.C., and a 5% interest in Omnitek Stationary, Inc.  As of September 30, 2012 and December 31, 2011, the Company was owed $30,876 and $16,715, respectively, by these related parties for the purchase of products.

Accounts Payable – Related Parties
 

The Company regularly incurs expenses that are paid for by related parties and purchases goods and services from related parties. As of September 30, 2012 and December 31, 2011, the Company owed related parties for such expenses, goods and services in the amounts of $25 and $2,568, respectively.

Accrued Expenses – Related Parties
 

During the periods ended September 30, 2012 and December 31, 2011, related parties were due amounts for services performed for the Company.  As of September 30, 2012 and December 31, 2011 the related parties’ payables consisted of the following:

 
September 30,
 
December 31,
 
 
2012
 
2011
 
Amounts due to the president
 
$
214,628
   
$
271,253
 
Amounts due to other officers of the company
   
62,715
     
80,327
 
Total
 
$
277,343
   
$
351,580
 

NOTE 4 - NOTES PAYABLE
 

Line of Credit Payable
 

On February 15, 2012 the Company entered into a revolving line of credit agreement with a shareholder for $50,000 for an initial period of 6 months. During the six months ended September 30, 2012, the Company borrowed a total of $40,000, and accrued interest expense of $490. As of September 30, 2012 the Company has repaid all of the outstanding debt and now owes $-0- under the revolving line of credit. The Company granted 5,000 stock purchase warrants as consideration for the funding of the revolving line of credit resulting in an expense of $15,450.

NOTE 5 - STOCK OPTIONS AND WARRANTS
 

In April 2007, the Company’s shareholders approved its 2006 Long-Term Incentive Plan (“the Plan”).   Under the plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion.  As of September 30, 2012 the Company has a total of 5,635,313 options and warrants issued under the plan.  During the nine months ended September 30, 2012 the Company issued an additional amount of 2,810,313 options and warrants.

During the nine months ended September 30, 2012 and 2011, the Company recognized expense of $626,915 and $126,534, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718.
 
 
 
6

 
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
September 30, 2012
(unaudited)


NOTE 5 - STOCK OPTIONS AND WARRANTS (CONTINUED)
 

A summary of the status of the options and warrants granted at September 30, 2012 and December 31, 2011 and changes during the periods then ended is presented below:


   
2012
   
2011
 
   
Shares
   
Weighted Average Exercise Price
   
Shares
   
Weighted Average Exercise Price
 
Outstanding at beginning of period
    2,820,000     $ 0.73       5,870,000     $ 0.52  
Granted
    2,815,313       3.29       -       -  
Exercised
    -       -       (1,177,983 )     0.15  
Expired or canceled
    -       -       (1,872,017 )     0.43  
Outstanding at end of period
    5,635,313       2.30       2,820,000       0.73  
Exercisable
    5,635,313     $ 2.30       2,820,000     $ 0.73  



A summary of the status of the options and warrants outstanding at September 30, 2012 is presented below:

     
Total Outstanding
   
Total Exercisable
     
            Average           Weighted
      Number     Remaining     Number     Average
Range
    O/S     Life (Yrs)     Exercisable     Exercisable
$ 0.01 - 0.50       200,000       2.03       200,000     $ 0.38
$ 0.51 - 0.75       1,580,000       2.35       1,580,000     $ 0.63
$ 0.76 – 1.00       1,040,000       2.10       1,040,000     $ 0.94  
$ 1.01 – 2.00       90,000       2.69       90,000     $ 0.99  
$ 2.01 – 3.00       5,000       4.37       5,000     $ 2.68  
$ 3.01 – 4.00       2,720,313       4.52       2,720,313     $ 3.88  
$ 0.01 – 4.00       5,635,313       3.24       5,635,313     $ 2.24  

NOTE 6 - SIGNIFICANT EVENTS
 

On April 9, 2012, the Company closed a private placement (the “Private Placement”) with select accredited investors (the “Investors”) related to the sale and issuance of an aggregate of 2,602,246 shares of common stock (the “Common Stock”) of the Company (the “Shares”) and warrants to purchase an aggregate of 2,602,246 shares of Common Stock (the “Warrants”). The aggregate gross proceeds raised by the Company was $5,516,762 million. Each Share was be sold to the Investors at $2.12 per Share. The Warrants will expire five (5) years from the date of issue and may be exercised at $3.88 per Share, subject to adjustment in certain circumstances.


 
7

 
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
September 30, 2012
(unaudited)


NOTE 6 - SIGNIFICANT EVENTS (Continued)
 

In connection with the Private Placement, the Company paid its placement agents (the “Placement Agents”) an aggregate cash commission equal to $386,173.  In addition, the Company will reimburse the Placement Agents $23,632 for costs and expenses incurred in connection with the Private Placement, and issue to the Placement Agents five-year warrants to purchase an aggregate of 78,067 shares of common stock, at an exercise price of $3.88 per share, subject to adjustment in certain circumstances (the “Placement Agent Warrants”).  The Company also issued to two consultants, five-year warrants to purchase an aggregate of 40,000 shares of common stock, at an exercise price of $3.88 per share. The Company recognized $502,965 of compensation expense for the warrants issued.

NOTE 7 - SUBSEQUENT EVENTS
 

In accordance with ASC 855-10, the Company’s management has reviewed all material events there are no material subsequent events to report.


 
 
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 
 
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this periodic report.  Some of the statements under “Management’s Discussion and Analysis,” “Description of Business” and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the alternative fuels engines industry in general. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. The safe harbor provisions of the federal securities laws do not apply to any forward-looking statements contained in this registration statement.
 
All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.
 
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.
 
A.           Results of Operations

For the three months ended September 30, 2012 and 2011

Revenues increased to $562,367 for the three months ended September 30, 2012 from $317,160 for the three months ended September 30, 2011, an increase of $245,207 or 77%.  We expect the sales for the remainder of 2012 to be on a par with or somewhat higher than 2011 while we complete additions to our product offerings.

Our cost of sales increased to $281,633 for the three months ended September 30, 2012 from $168,637 for the three months ended September 30, 2011, an increase of $112,996. Our gross margin was 50% for the three months ended September 30, 2012 compared to 47% in 2011.  We anticipate our gross margin to be between  40% to 45% for the remainder of the year.

Our operating expenses for the three months ended September 30, 2012 were $443,966 compared to $327,999 in 2011, an increase of $115,967 or 35%.  General and administrative expense for the three months ended September 30, 2012 was $353,438 as compared to $265,999 for the three months ended September 30, 2011.  The increase is due primarily to the non-cash option issued expense of $108,500 for the three months ended September 30, 2012 as compared to $57,709 for the three months ended September 30, 2011.  Major components of general and administrative expenses for the three months ended September 30, 2012 were professional fees of $19,431, rent expense of $33,375, and salary and wages of $78,056. This compares to professional fees of $40,492, rent expense of $31,298 and salaries and wages of $64,130 for the three months ended September 30, 2011.   In the three months ended September 30, 2012 professional fees were lower by approximately $21,061 due to reduction in legal expenses incurred. Research and development outlays were increased to $88,922 for the three months ended September 30, 2012 compared to $40,845 for the three months ended September 30, 2011 as work was done on a number of development projects.

Our net loss for the three months ended September 30, 2012 was $142,150, ($0.01 per share) compared to a net loss of $179,475 ($0.01 per share) for the three months ended September 30, 2011. The decreased loss was the result of fewer expenses in the three months ended September 30, 2012 compared to the three months ended September 30, 2011.
 
 


Results for the three months ended September 30, 2012 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $108,500 and depreciation and amortization of $1,606. For the three month period a year earlier, non-cash expenses for the value of options and warrants granted were $114,791 and depreciation and amortization of $21,155.

For the nine months ended September 30, 2012 and 2011

Revenues decreased to $1,249,267 for the nine months ended September 30, 2012 from $1,306,906 for the nine months ended September 30, 2011, a decrease of $57,639 or 4%.  We expect our sales for the remainder of 2012 to be on a par with or slightly higher than 2011.

Our cost of sales decreased to $631,694 for the nine months ended September 30, 2012 from $654,005 for the nine months ended September 30, 2011, a decrease of $22,311. Our gross margin was 49% for the nine months ended September 30, 2012 compared to 50% in 2011.  We anticipate our margin to be between 42% and 45% for the remainder of the year.

Our operating expenses for the nine months ended September 30, 2012 were $1,959,694 compared to $938,275 in 2011, an increase of $1,021,419 or 109%.  General and administrative expense for the nine months ended September 30, 2012 was $1,789,028 as compared to $775,088 for the nine months ended September 30, 2011.  The increase is due primarily to the increase in expenses related to the private placement expenses of $413,306 and options issued of $626,915 for the nine months ended September 30, 2012 as compared to $-0- and $184,243, respectively, for the nine months ended September 30, 2011.  Major components of general and administrative expenses for the nine months ended September 30, 2012 were professional fees of $144,969, rent expense of $100,127, and salary and wages of $200,185. This compares to professional fees of $118,783, rent expense of $93,594 and salaries and wages of $166,606 for the nine months ended September 30, 2011.   In the nine months ended September 30, 2012 professional fees were higher by approximately $26,186 due to legal costs incurred in connection with the private placement which closed on April 9, 2012. Research and development outlays were increased to $166,070 for the nine months ended September 30, 2012 compared to $100,791 for the nine months ended September 30, 2012 reflecting additional development projects underway.

Our net loss for the nine months ended September 30, 2012 was $1,321,155 ($0.07 per share) compared to a net loss of $286,172 ($0.02 per share) for the nine months ended September 30, 2011. The increased loss was mainly the result of higher General and administrative expenses associated with the private placement in the nine months ended September 30, 2012.

Results for the nine months ended September 30, 2012 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $626,915 and depreciation and amortization of $20,974. For the nine month period a year earlier, non-cash expenses for the value of options and warrants granted were $184,243 and depreciation and amortization of $62,396.

B. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cash Requirements

We believe that we will have sufficient cash from operations to meet our operating requirements for the proximate 12 months.

Liquidity and Capital Resources

Overview

For the nine months ended September 30, 2012 and 2011

At September 30, 2012, our current liabilities totaled $604,776 and our current assets totaled $4,663,046 resulting in positive working capital of $4,058,270 and a current ratio of 8 to1.  During the nine months ended
 
 
 
 
September 30, 2012, we received $5,536,762 of cash from the issuance of common stock and $40,000 from the borrowing of funds. We repaid the $40,000 during the nine months. We believe that through the collection of accounts receivable and the sale of inventory, in the normal course of business, we will meet our obligations on a timely basis and that our liquidity is sufficient for at least the next twelve months.

We have no firm commitments or obligations for capital expenditures. However, substantial discretionary expenditures will be required to enable us to conduct existing and planned product research, design, development, manufacturing, marketing and distribution of our products and Intellectual Property. We may need to raise additional capital to facilitate growth and support our long-term product development, manufacturing, and marketing programs. The Company has no established bank-financing arrangements and until we have sufficient assets, capital, and inventory or accounts receivable, it is not anticipated that we will secure any bank financing in the near future. Therefore, it is likely that we may need to seek additional financing through subsequent future public or private sales of our securities, including equity securities. We may also seek funding for the development, manufacturing, and marketing of our products through strategic partnerships and other arrangements with corporate partners. There can be no assurance, however, that such collaborative arrangements or additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate funds are not available, we may be required to curtail one or more of our research and development programs.

We have historically incurred significant losses which have resulted in a total accumulated deficit of $7,744,857 at September 30, 2012.

Operating Activities

We have realized a negative cash flow from operations of $1,095,270 for the nine months ended September 30, 2012 compared to a negative cash flow of $255,876 during the nine months ended September 30, 2011.

Included in the net loss of $1,321,155 for the nine months ended September 30, 2012 are one-time cash expenses of $413,305 for the private placement and non-cash expenses which are not a drain on our capital resources.  During the nine months ended September 30, 2012, these non-cash expenses include the value of options and warrants granted in the amount of $626,915 and depreciation and amortization of $20,974.  Excluding these non-cash amounts, our EBITDA for the nine months ended September 30, 2012 would have been a loss of $673,266.

Financing Activities

During the nine months ended September 30, 2012, we received proceeds of $5,536,762 of cash from a private placement offering and $40,000 from the borrowing of funds. We repaid the $40,000 during the nine months ended September 30, 2012.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policiesand Estimates

The Company's financial statements are prepared using the accrual method of accounting. 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas where significant estimates are required include the following:

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.
 
 


Inventory is stated at the lower of cost or market. The Company’s inventory consists of finished goods and raw material. The Company identifies items in its inventory that have not been sold in a timely manner. Accordingly, the Company has established an allowance for the cost of such obsolete inventory.

The Company assesses the recoverability of its long lived assets annually and whenever circumstances would indicate that there may be an impairment. The Company compares the estimated undiscounted future cash flows to the carrying value of the long lived assets to determine if an impairment has occurred. In the event that an impairment has occurred, the Company recognizes the impairment immediately.

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. The Company uses historical experience to determine the likely-hood of realization of deferred tax liabilities and assets.

Revenue Recognition

The Company recognizes revenue from the sale of new natural gas engines and components to convert existing diesel engines to natural gas engines. Revenue is recognized upon shipment of the products, and when collection is reasonably assured.

Accounting for Income Taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2012, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2006.

At September 30, 2012, the Company had net operating loss carry forwards of approximately $1,510,000 through 2032. No tax benefit has been reported in the September 30, 2012 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
 
 
 
 
Recently Issued Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.



We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures as of September 30, 2012, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of September 30, 2012, our disclosure controls and procedures were effective.
 
Changes in Internal Controls
 
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


PART II - OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding.  No federal, state or local governmental agency is presently contemplating any proceeding against the Company.  No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.


ITEM 1A.  RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
 
 



None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None


ITEM 5. OTHER INFORMATION
 
None.


ITEM 6. EXHIBITS

 
(a)           Documents filed as part of this Report.
 
1.           Financial Statements.  The unaudited Balance Sheet of Omnitek Engineering Corp. as of September 30, 2012 and the audited balance sheet as of December 31, 2011, the unaudited Statements of Operations for the three months and six-month periods ended September 30, 2012 and 2011, the Consolidated Statements Stockholders’ Equity, and the unaudited Consolidated Statements of Cash Flows for the six-month periods ended September 30, 2012 and 2011, together with the notes thereto, are included in this Quarterly Report on Form 10-Q.

3.           Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.
  
Exhibit
 
Number
Description of Exhibit
31.1
CEO certification pursuant to Section 302 of  The Sarbanes – Oxley Act of 2002 (1)
31.2
CFO certification pursuant to Section 302 of  The Sarbanes – Oxley Act of 2002 (1)
32.1
CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
101
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended S, 2011 formatted in Extensible Business Reporting Language (“XBRL”): (i) the balance sheets (unaudited) ; (ii) the statements of operations (unaudited); (iii) the statements of cash flows (unaudited); and, (iv) related notes. (2)
 
(1)
Filed herewith
 
(2)
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted under Exhibit 101 are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
Omnitek Engineering Corp.
 
       
       
       
       
 
 
 
Dated: November 5, 2012
   
   
By: Werner Funk
 
   
Its: Chief Executive Officer
Principal Executive Officer
 
       


     
       
Dated: November 5, 2012
 
/s/ Janice M. Quigley
 
   
By: Janice M. Quigley
 
   
Its: Chief Financial Officer
Principal Financial Officer
 
       

 
EX-31.1 2 ex311.htm EXHIBIT 31.1 ex311.htm
Exhibit 31.01
 
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

I, Werner Funk, certify that:
  
1. I have reviewed this quarterly report on Form 10-Q of Omnitek Engineering Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have, for the small business issuer and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the smallbusiness issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, asof the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
 
5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability torecord, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

 
       
Date: November 5, 2012
 
  By: Werner Funk  
  Its: President and Secretary  
       

 
 
 

 
EX-31.2 3 ex312.htm EXHIBIT 31.2 ex312.htm
Exhibit 31.02
 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14
 
I, Janice M. Quigley, certify that:
  
1.    I have reviewed this quarterly report on Form 10-Q of Omnitek Engineering Corp.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have, for the small business issuer and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under my supervision, to ensure that material information relating to the smallbusiness issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures andpresented in this report our conclusions about the effectiveness of the disclosure controls and procedures, asof the end of the period covered by this report based on such evaluation; and,

(d)         Disclosed in this report any change in the small business issuer’s internal control over financialreporting that occurred during the small business issuer’s most recent fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and,
 
5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):
 
(a)           All significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the small business issuer’s ability torecord, process, summarize and report financial information; and,
 
(b)         Any fraud, whether or not material, that involves management or other employees who have asignificant role in the small business issuer’s internal control over financial reporting.
 
       
Date: November 5, 2012
/s/ Janice M. Quigley  
  By: Janice M. Quigley  
  Its: Chief Financial Officer  
 
 
 
 
 

 
EX-32.1 4 ex321.htm EXHIBIT 32.1 ex321.htm
Exhibit 32.01

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Omnitek Engineering Corp. (the “Company”) on Form 10-Q for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Werner Funk, Chief Executive Officer and I, Janice M. Quigley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
 
(1)          The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


       
       
 
 
 
Dated: November 5, 2012
   
   
By: Werner Funk
 
   
Its: Chief Executive Officer,
 
   
President and Secretary
 


     
       
Dated: November 5, 2012
 
/s/ Janice M. Quigley
 
   
By: Janice M. Quigley
 
   
Its: Chief Financial Officer
 
       
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 
 
 

 
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22256 2 21082 1 21766 2 -142150 -179475 -1320355 -285372 800 800 -142150 -179475 -1321155 -286172 -0.01 -0.01 -0.07 -0.02 19749582 17055203 18872509 16290048 -1321155 -286172 4596 62396 626915 184243 -204559 -32499 -14161 -11903 -209093 27325 -8116 107733 -399 12583 -102304 -29611 -57992 -2543 -3033 -74237 -35538 -1095270 -255876 1228223 4408 15471 -1232631 -15471 -5536762 -150000 40000 134500 40000 5536762 284500 3208861 13153 31196 34944 3240057 48097 490 800 800 <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>NOTE 1 - CONDENSED FINANCIAL STATEMENTS</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The accompanying financial statements have been prepared by the Company without audit.&#160; In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2012, and for all periods presented herein, have been made.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.&#160; It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2011 audited financial statements.&#160; The results of operations for the periods ended September 30, 2012 and 2011 are not necessarily indicative of the operating results for the full years.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>NOTE 2 &#150; SIGNIFICANT ACCOUNTING POLICIES</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Use of Estimates</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>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 the reported amounts of revenues and expenses during the reporting period.&#160; Actual results could differ from those estimates.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Recent Accounting Pronouncements</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company&#146;s financial position, or statements.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Inventory</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>Inventory is stated at the lower of cost or market.&nbsp;&nbsp;The Company&#146;s inventory consists of finished goods and raw material and is located in San Marcos, California at September 30, 2012 and December 31, 2011 consisted of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr> <td width="348" valign="bottom" style='width:261.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>September 30, 2012</p> </td> <td width="138" valign="bottom" style='width:103.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>December 31, 2011</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Raw materials</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>1,189,455</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$946,762</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Finished goods</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>332,004</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>674,198</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Peru (finished goods)</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>18,454</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>18,454</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>In transit</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>~</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>8,232</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Allowance for obsolete inventory</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(627,529)</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(627,529)</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Total</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><u>912,384</u></p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><u>1,020,117</u></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company has established an allowance for obsolete inventory.&nbsp;&nbsp;Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2012 and December 31, 2011, respectively</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Basic and Diluted Net Income (Loss) Per Share</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company computes net income (loss) per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. As of September 30, 2012, 677,380 warrants and options were excluded from the Diluted EPS calculation as their effect is anti-dilutive.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Income Taxes</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (&quot;Topic 740&quot;), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2012 and December 31, 2011 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2007.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Held to Maturity Investments</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>During the nine months ended September 30, 2012, the Company purchased various corporate bonds. The Company intends to hold the bonds to maturity. Accordingly, the Company has recorded and is amortizing the premium on the bonds over the remaining life. As of September 30, 2012, the Company has amortized $16,378 of the premium leaving amortized cost basis remaining of $1,211,845.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>NOTE 3 - RELATED PARTY TRANSACTIONS</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Accounts Receivable &#150; Related Parties</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>During the years ended December 31, 2007 through 2010, the Company a minority interest in various distributors in exchange for use of the Company&#146;s name and logo. As of December 31, 2011, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd., a 20% interest in Omnitek Peru S.A.C., and a 5% interest in Omnitek Stationary, Inc.&nbsp;&nbsp;As of September 30, 2012 and December 31, 2011, the Company was owed $30,876 and $16,715, respectively, by these related parties for the purchase of products.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Accounts Payable &#150; Related Parties</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company regularly incurs expenses that are paid for by related parties and purchases goods and services from related parties. As of September 30, 2012 and December 31, 2011, the Company owed related parties for such expenses, goods and services in the amounts of $25 and $2,568, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Accrued Expenses &#150; Related Parties</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>During the periods ended September 30, 2012 and December 31, 2011, related parties were due amounts for services performed for the Company.&nbsp;&nbsp;As of September 30, 2012 and December 31, 2011 the related parties&#146; payables consisted of the following:</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:center;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="95%" style='width:95.2%;border-collapse:collapse'> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="24%" style='width:24.26%;background:#CCEEFF;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:center;text-indent:-1.0in;line-height:12.55pt'>September 30, 2012</p> </td> <td width="25%" style='width:25.24%;background:#CCEEFF;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:center;text-indent:-1.0in;line-height:12.55pt'>December 31, 2011</p> </td> </tr> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Amounts due to the president</p> </td> <td width="24%" style='width:24.26%;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>214,628</p> </td> <td width="25%" style='width:25.24%;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>271,253</p> </td> </tr> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:white;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Amounts due to other officers of the company</p> </td> <td width="24%" style='width:24.26%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>62,715</p> </td> <td width="25%" style='width:25.24%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>80,327</p> </td> </tr> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:#CCEEFF;padding:0in 0in 3.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Total</p> </td> <td width="24%" style='width:24.26%;border:none;border-bottom:double black 1.0pt;background:#CCEEFF;padding:0in 0in 3.0pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>277,343</p> </td> <td width="25%" style='width:25.24%;border:none;border-bottom:double black 1.0pt;background:#CCEEFF;padding:0in 0in 3.0pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>351,580</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>NOTE 4 - NOTES PAYABLE</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Line of Credit Payable</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>On February 15, 2012 the Company entered into a revolving line of credit agreement with a shareholder for $50,000 for an initial period of 6 months. During the six months ended September 30, 2012, the Company borrowed a total of $40,000, and accrued interest expense of $490. As of September 30, 2012 the Company has repaid all of the outstanding debt and now owes $-0- under the revolving line of credit. The Company granted 5,000 stock purchase warrants as consideration for the funding of the revolving line of credit resulting in an expense of $15,450.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>NOTE 5 - STOCK OPTIONS AND WARRANTS</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>In April 2007, the Company&#146;s shareholders approved its 2006 Long-Term Incentive Plan (&#147;the Plan&#148;).&#160;&#160; Under the plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion.&#160; As of September 30, 2012 the Company has a total of 5,635,313 options and warrants issued under the plan.&#160; During the nine months ended September 30, 2012 the Company issued an additional amount of 2,810,313 options and warrants.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>During the nine months ended September 30, 2012 and 2011, the Company recognized expense of $626,915 and $126,534, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718.</p> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>A summary of the status of the options and warrants granted at September 30, 2012 and December 31, 2011 and changes during the periods then ended is presented below:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:-23.4pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="28%" colspan="3" valign="bottom" style='width:28.72%;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>2012</p> </td> <td width="2%" valign="bottom" style='width:2.32%;border:none;border-top:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="36%" colspan="3" valign="bottom" style='width:36.48%;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>2011</p> </td> </tr> <tr style='height:60.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>Shares</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-right:-.4pt;text-align:center;layout-grid-mode:char'>Weighted Average Exercise Price</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>Shares</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>Weighted Average Exercise Price</p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Outstanding at beginning of period</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>2,820,000&#160;&#160; </p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$0.73 </p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>5,870,000</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$0.52</p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Granted</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>2,815,313</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>3.29</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>-</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>- </p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Exercised</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>-</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>-</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(1,177,983)</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>0.15</p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Expired or canceled</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>-</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>-</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(1,872,017)</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>0.43</p> </td> </tr> <tr style='height:15.75pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Outstanding at end of period</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>5,635,313</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>2.30 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>2,820,000 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>0.73 </font></p> </td> </tr> <tr style='height:18.9pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Exercisable </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>5,635,313</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>$2.30 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>2,820,000 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>$0.73</font></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>A summary of the status of the options and warrants outstanding at September 30, 2012 is presented below:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:-2.75pt;border-collapse:collapse'> <tr style='height:13.5pt'> <td width="79" valign="bottom" style='width:59.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="213" colspan="2" valign="bottom" style='width:159.75pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Total Outstanding</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Total Exercisable</p> </td> <td width="162" valign="top" style='width:121.75pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border-top:solid black 1.0pt;border-left:solid black 1.0pt;border-bottom:none;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Average</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Weighted</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Number&#160; </p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Remaining</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Number&#160; </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Average</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Range</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>O/S</p> </td> <td width="94" valign="bottom" style='width:70.5pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Life (Yrs)</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Exercisable</p> </td> <td width="162" valign="top" style='width:121.75pt;border-top:none;border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Exercisable</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.01 - 0.50</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>200,000 </p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.03</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>200,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&#160;$0.38 </p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.51 - 0.75</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,580,000</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.35</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,580,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&#160;$0.63 </p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.76 &#150; 1.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,040,000</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.10</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,040,000</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.94</p> </td> </tr> <tr style='height:13.5pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$1.01 &#150; 2.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>90,000</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.69</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>90,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&#160;$0.99 </p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$2.01 &#150; 3.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>5,000 </p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>4.37</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>5,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$2.68</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$3.01 &#150; 4.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2,720,313</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>4.52</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2,720,313</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$3.88</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.01 &#150; 4.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>5,635,313 </p> </td> <td width="94" valign="bottom" style='width:70.5pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>3.24</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>5,635,313</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border-top:none;border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$2.24</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>NOTE 6 - SIGNIFICANT EVENTS</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>On April 9, 2012, the Company closed a private placement (the &#147;Private Placement&#148;) with select accredited investors (the &#147;Investors&#148;) related to the sale and issuance of an aggregate of 2,602,246 shares of common stock (the &#147;Common Stock&#148;) of the Company (the &#147;Shares&#148;) and warrants to purchase an aggregate of 2,602,246 shares of Common Stock (the &#147;Warrants&#148;). The aggregate gross proceeds raised by the Company was $5,516,762 million. Each Share was be sold to the Investors at $2.12 per Share. The Warrants will expire five (5) years from the date of issue and may be exercised at $3.88 per Share, subject to adjustment in certain circumstances.</p> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>In connection with the Private Placement, the Company paid its placement agents (the &#147;Placement Agents&#148;) an aggregate cash commission equal to $386,173.&nbsp;&nbsp;In addition, the Company will reimburse the Placement Agents $23,632 for costs and expenses incurred in connection with the Private Placement, and issue to the Placement Agents five-year warrants to purchase an aggregate of 78,067 shares of common stock, at an exercise price of $3.88 per share, subject to adjustment in certain circumstances (the &#147;Placement Agent Warrants&#148;).&nbsp;&nbsp;The Company also issued to two consultants, five-year warrants to purchase an aggregate of 40,000 shares of common stock, at an exercise price of $3.88 per share. The Company recognized $502,965 of compensation expense for the warrants issued.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>NOTE 7 - SUBSEQUENT EVENTS</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>In accordance with ASC 855-10, the Company&#146;s management has reviewed all material events there are no material subsequent events to report.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Use of Estimates</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>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 the reported amounts of revenues and expenses during the reporting period.&#160; Actual results could differ from those estimates.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Recent Accounting Pronouncements</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company&#146;s financial position, or statements.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Inventory</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>Inventory is stated at the lower of cost or market.&nbsp;&nbsp;The Company&#146;s inventory consists of finished goods and raw material and is located in San Marcos, California at September 30, 2012 and December 31, 2011 consisted of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr> <td width="348" valign="bottom" style='width:261.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>September 30, 2012</p> </td> <td width="138" valign="bottom" style='width:103.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>December 31, 2011</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Raw materials</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>1,189,455</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$946,762</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Finished goods</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>332,004</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>674,198</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Peru (finished goods)</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>18,454</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>18,454</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>In transit</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>~</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>8,232</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Allowance for obsolete inventory</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(627,529)</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(627,529)</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Total</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><u>912,384</u></p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><u>1,020,117</u></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company has established an allowance for obsolete inventory.&nbsp;&nbsp;Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2012 and December 31, 2011, respectively</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Basic and Diluted Net Income (Loss) Per Share</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company computes net income (loss) per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. As of September 30, 2012, 677,380 warrants and options were excluded from the Diluted EPS calculation as their effect is anti-dilutive.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Income Taxes</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (&quot;Topic 740&quot;), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2012 and December 31, 2011 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2007.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'><u>Held to Maturity Investments</u></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;line-height:12.55pt'>During the nine months ended September 30, 2012, the Company purchased various corporate bonds. The Company intends to hold the bonds to maturity. Accordingly, the Company has recorded and is amortizing the premium on the bonds over the remaining life. As of September 30, 2012, the Company has amortized $16,378 of the premium leaving amortized cost basis remaining of $1,211,845.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr> <td width="348" valign="bottom" style='width:261.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>September 30, 2012</p> </td> <td width="138" valign="bottom" style='width:103.5pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>December 31, 2011</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Raw materials</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>1,189,455</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$946,762</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Finished goods</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>332,004</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>674,198</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Peru (finished goods)</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>18,454</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>18,454</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>In transit</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>~</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>8,232</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Allowance for obsolete inventory</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(627,529)</p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(627,529)</p> </td> </tr> <tr> <td width="348" valign="bottom" style='width:261.0pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>Total</p> </td> <td width="114" valign="bottom" style='width:85.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><u>912,384</u></p> </td> <td width="138" valign="bottom" style='width:103.5pt;background:white;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><u>1,020,117</u></p> </td> </tr> </table> <!--egx--><p align="center" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:center;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="95%" style='width:95.2%;border-collapse:collapse'> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="24%" style='width:24.26%;background:#CCEEFF;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:center;text-indent:-1.0in;line-height:12.55pt'>September 30, 2012</p> </td> <td width="25%" style='width:25.24%;background:#CCEEFF;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:center;text-indent:-1.0in;line-height:12.55pt'>December 31, 2011</p> </td> </tr> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:#CCEEFF;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Amounts due to the president</p> </td> <td width="24%" style='width:24.26%;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>214,628</p> </td> <td width="25%" style='width:25.24%;background:#CCEEFF;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>271,253</p> </td> </tr> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:white;padding:0in 0in 1.5pt 0in'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Amounts due to other officers of the company</p> </td> <td width="24%" style='width:24.26%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>62,715</p> </td> <td width="25%" style='width:25.24%;border:none;border-bottom:solid black 1.0pt;background:white;padding:0in 0in 1.5pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>80,327</p> </td> </tr> <tr> <td width="50%" valign="bottom" style='width:50.5%;background:#CCEEFF;padding:0in 0in 3.0pt 0in'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Total</p> </td> <td width="24%" style='width:24.26%;border:none;border-bottom:double black 1.0pt;background:#CCEEFF;padding:0in 0in 3.0pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>277,343</p> </td> <td width="25%" style='width:25.24%;border:none;border-bottom:double black 1.0pt;background:#CCEEFF;padding:0in 0in 3.0pt 0in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:right;text-indent:-1.0in;line-height:12.55pt'>351,580</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="100%" style='width:100.0%;border-collapse:collapse'> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:-23.4pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="28%" colspan="3" valign="bottom" style='width:28.72%;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>2012</p> </td> <td width="2%" valign="bottom" style='width:2.32%;border:none;border-top:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="36%" colspan="3" valign="bottom" style='width:36.48%;border-top:solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>2011</p> </td> </tr> <tr style='height:60.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>Shares</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-right:-.4pt;text-align:center;layout-grid-mode:char'>Weighted Average Exercise Price</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>Shares</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:60.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>Weighted Average Exercise Price</p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Outstanding at beginning of period</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>2,820,000&#160;&#160; </p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$0.73 </p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>5,870,000</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>$0.52</p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Granted</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>2,815,313</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>3.29</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>-</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>- </p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Exercised</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>-</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>-</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(1,177,983)</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>0.15</p> </td> </tr> <tr style='height:15.0pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Expired or canceled</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>-</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>-</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>(1,872,017)</p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>0.43</p> </td> </tr> <tr style='height:15.75pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Outstanding at end of period</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>5,635,313</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>2.30 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>2,820,000 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:15.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>0.73 </font></p> </td> </tr> <tr style='height:18.9pt'> <td width="30%" valign="bottom" style='width:30.16%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>Exercisable </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p style='margin:0in;margin-bottom:.0001pt;layout-grid-mode:char'>&nbsp;</p> </td> <td width="15%" valign="bottom" style='width:15.28%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>5,635,313</font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.12%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>$2.30 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="22%" valign="bottom" style='width:22.32%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>2,820,000 </font></p> </td> <td width="2%" valign="bottom" style='width:2.32%;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'>&nbsp;</p> </td> <td width="11%" valign="bottom" style='width:11.84%;border:none;border-bottom:double black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right;layout-grid-mode:char'><font style='letter-spacing:-.5pt'>$0.73</font></p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:-2.75pt;border-collapse:collapse'> <tr style='height:13.5pt'> <td width="79" valign="bottom" style='width:59.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="213" colspan="2" valign="bottom" style='width:159.75pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Total Outstanding</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Total Exercisable</p> </td> <td width="162" valign="top" style='width:121.75pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border-top:solid black 1.0pt;border-left:solid black 1.0pt;border-bottom:none;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Average</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Weighted</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&nbsp;</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Number&#160; </p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Remaining</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Number&#160; </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Average</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Range</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>O/S</p> </td> <td width="94" valign="bottom" style='width:70.5pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Life (Yrs)</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Exercisable</p> </td> <td width="162" valign="top" style='width:121.75pt;border-top:none;border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>Exercisable</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.01 - 0.50</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>200,000 </p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.03</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>200,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&#160;$0.38 </p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.51 - 0.75</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,580,000</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.35</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,580,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&#160;$0.63 </p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.76 &#150; 1.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,040,000</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.10</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>1,040,000</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.94</p> </td> </tr> <tr style='height:13.5pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$1.01 &#150; 2.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>90,000</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2.69</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>90,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:13.5pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>&#160;$0.99 </p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$2.01 &#150; 3.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>5,000 </p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>4.37</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;line-height:12.55pt'>5,000 </p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$2.68</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$3.01 &#150; 4.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2,720,313</p> </td> <td width="94" valign="bottom" style='width:70.5pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>4.52</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border:none;border-left:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>2,720,313</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border:none;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$3.88</p> </td> </tr> <tr style='height:12.75pt'> <td width="79" valign="bottom" style='width:59.0pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$0.01 &#150; 4.00</p> </td> <td width="119" valign="bottom" style='width:89.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>5,635,313 </p> </td> <td width="94" valign="bottom" style='width:70.5pt;border:none;border-bottom:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>3.24</p> </td> <td width="126" valign="bottom" style='width:94.25pt;border-top:none;border-left:solid black 1.0pt;border-bottom:solid black 1.0pt;border-right:none;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>5,635,313</p> </td> <td width="162" valign="bottom" style='width:121.75pt;border-top:none;border-left:none;border-bottom:solid black 1.0pt;border-right:solid black 1.0pt;padding:0;height:12.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;line-height:12.55pt'>$2.24</p> </td> </tr> </table> 1189455 946762 332004 674198 18454 18454 8232 -627529 -627529 912384 1020117 0 0 677380 16378 1211845 0.1500 0.2000 0.0500 30876 16715 25 2568 214628 271253 62715 80327 277343 351580 50000 40000 490 0 5000 15450 10000000 626915 126534 5870000 0.52 2815313 3.29 -1177983 0.15 -1872017 0.43 5635313 2.30 2820000 0.73 5635313 2.30 2820000 0.73 200000 P2Y11D 200000 0.38 1580000 P2Y4M6D 1580000 0.63 1040000 P2Y1M6D 1040000 0.94 90000 P2Y8M8D 90000 0.99 5000 P4Y4M13D 5000 2.68 2720313 P4Y6M7D 2720313 3.88 5635313 P3Y2M26D 5635313 2.24 2602246 2602246 5516762 2.12 5 3.88 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