10-Q
2012-03-31
false
Voice Assist, Inc.
0001428469
--12-31
Smaller Reporting Company
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<!--egx--><p style="MARGIN:0in 0in 0pt"><b>NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Organization</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">Musician’s Exchange was incorporated under the laws of the State of Nevada on February 4, 2008 and developed an internet destination and marketplace for musicians. On September 28, 2010, Musician’s Exchange amended its articles of incorporation to change its name from Musician’s Exchange to Voice Assist, Inc. (“the Company”).</p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On July 22, 2010, the Company entered into the following:</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">(1) An Agreement of Purchase and Sales of Assets with SpeechPhone, LLC, a Delaware Limited Liability Company (“Speechphone”) to purchase substantially all of the assets of Speechphone in exchange for 10,250,000 shares of common stock and also agreed to issue 2,000,000 shares of convertible preferred stock in exchange for extinguishment of $1,700,000 in debt; </p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">(2) An Agreement of Purchase and Sales of Assets with MDM Intellectual Property, LLC, a California Limited Liability Company (“MDM”) to purchase substantially all of the assets of MDM in exchange for 6,150,000 shares of common stock;</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">(3) An Agreement of Purchase and Sales of Assets with SpeechCard, LLC, a Delaware Limited Liability Company (“SpeechCard”) to purchase substantially all of the assets of SpeechCard in exchange for 1,025,000 shares of common stock;</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">(4) An Agreement of Purchase and Sales of Assets with Voiceassist, a Delaware Limited Liability Company (“Voiceassist”) to purchase substantially all of the assets of Voiceassist in exchange for 2,050,000 shares of common stock; and</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">(5) An agreement to issue 1,025,000 shares to purchase Mr. Michael Metcalf’s concept, Music By Voice and shareholders agreed to cancel a total of 8,400,000 shares upon the close of the transaction.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On September 30, 2010, the transaction was closed and substantially all of the assets and certain liabilities of Speechphone and related entities listed above were acquired by the Company. For accounting purposes, the acquisition of substantially all of the assets and certain liabilities of Speechphone by the Company has been recorded as a reverse acquisition of a public company and recapitalization of Speechphone based on the factors demonstrating that Speechphone represents the accounting acquirer. The historic financial statements of Speechphone and related entities, while historically presented as an LLC equity structure, have been retroactively presented as a corporation for comparability purposes. The Company changed its business direction and is now a voice recognition technology company focused on enabling access to any information through any device using speech technology.</p> <p style="TEXT-AUTOSPACE:ideograph-numeric"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Basis of presentation</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The condensed interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements of the Company for the years ended December 31, 2011 and 2010 and notes thereto included in the Company’s 10-K filed on April 16, 2012. The Company follows the same accounting policies in the preparation of interim reports.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">Results of operations for the interim period are not indicative of annual results.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Use of Estimates</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Generally, matters subject to estimation and judgment include amounts related to asset impairments, useful lives of fixed assets and capitalization of costs for software developed for internal use. Actual results could differ from those estimates.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Cash and Cash Equivalents</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company considers highly liquid investments with insignificant interest rate risk and original maturities of three months or less to be cash equivalents. Cash equivalents consist primarily of interest-bearing bank accounts and money market funds. The Company’s cash positions represent cash on deposit in checking accounts. These assets are generally available on a daily basis and are highly liquid in nature.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Revenue Recognition</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">For recognizing revenue, the Company applies the provisions of the Revenue Recognition Topic of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Revenues are generated from telephony services including activation fees, hardware fees and monthly usage fees. In most cases, the services performed do not require significant production, modification or customization of the Company’s software or services; therefore, revenues for the hardware fees and monthly usage fees are recognized when evidence of a completed transaction exists, when services have been rendered. The Company recognized revenue from sales of $133,643 and $235,049 during the three months ended March 31, 2012 and 2011, respectively.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The activation fees generated from new accounts are recorded as deferred revenue and are amortized over the estimated average customer relationship period. The net unamortized activation fees were $61,354 and $68,134 at March 31, 2012 and December 31, 2011, respectively. The costs associated with these activation fees are recorded as deferred costs and are similarly amortized over the estimated average customer relationship period. The net unamortized costs are $15,338 and $17,033 at March 31, 2012 and December 31, 2011, respectively. For both the activation fees and costs associated therewith, the estimated average customer relationship period was 24 months for the three months ended March 31, 2012.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Software Development Costs</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company has adopted the provisions of the Software Topic of the FASB ASC 350 to account for its internally and externally developed software costs since the Company is dependent on the internal use automated speech recognition software to provide the enhanced services. The capitalization of software development costs begins when a product’s technological feasibility has been established and ends when the product is available for use. Software development costs include direct costs incurred subsequent to establishment of technological feasibility for significant product enhancements. Amortization is computed on an individual project basis using the straight-line method over the estimated economic life of the projected product, generally three to five years.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">As of March 31, 2012, software development costs not yet amortized are $573,092. During the three months ended March 31, 2012 and 2011, amortization was $27,380 and $24,302, respectively. </p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Impairment</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">FASB ASC 360-10-35-21 requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We regularly evaluate whether events or circumstances have occurred that indicate the carrying value of our long-lived assets may not be recoverable. If factors indicate the asset may not be recoverable, we compare the related undiscounted future net cash flows to the carrying value of the asset to determine if impairment exists. If the expected future net cash flows are less than the carrying value, an impairment charge is recognized based on the fair value of the asset. An evaluation of our intangible assets was conducted utilizing the two step impairment analysis. No impairments were indicated or recorded during three months ended March 31, 2012 and 2011.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Stock-based Payments</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company records the stock-based compensation awards issued to non-employees and other external entities for goods and services at either the fair market value of the goods received or services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30 </p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Recent Pronouncements</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.</p>
<!--egx--><p style="TEXT-ALIGN:justify"><b>NOTE 2 – GOING CONCERN</b></p> <p style="TEXT-ALIGN:justify"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The financial statements have been presented on a going concern basis, which contemplates, but does not include adjustments for the realization of assets and satisfaction of liabilities in the normal course of business. The Company has a limited operating history and limited funds. As shown in the financial statements, the Company incurred a net loss of $758,953 and cash used by operations of $121,368 for the three months ended March 31, 2012, and had a working capital deficit of $2,971,227 as of March 31, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company believes that it is appropriate for the financial statements to be prepared on a going concern basis. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company is dependent upon debt and equity financing to continue operations. It is management’s plans to raise necessary funds via private placements of its common stock to satisfy the capital requirements of the Company’s business plan. There is no assurance that the Company will be able to obtain the necessary funds through continuing debt and equity financing to have sufficient operating capital to support a level of operations to obtain a level of cash flow to sustain continuing operations. If the Company is successful in raising the necessary funds, there is no assurance that the Company will successfully implement its business plan. The Company’s continuation as a going concern is dependent on the Company’s ability to raise additional funds through a private placement of its common stock or debt sufficient to meet its obligations on a timely basis and ultimately to attain profitable operations.</p>
<!--egx--><p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><b>NOTE 3 – LOANS PAYABLE – RELATED PARTIES</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company received advances totaling $90,000 during the three months ended March 31, 2012. These advances are due upon demand, unsecured, and carry 0% interest.</p>
<!--egx--><p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><b>NOTE 4 – STOCKHOLDERS’ EQUITY</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Preferred Stock</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company is authorized to issue 10,000,000 shares of its $0.001 par value preferred stock.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On October 4, 2010, the Company’s board of directors authorized Series A Convertible Preferred Stock. The Series A Convertible Preferred stock has a liquidation preference of $1.25 per share and is not entitled to dividends. The Series A Convertible Preferred stock may be converted on a 1:1 basis into shares of common stock at any time at the option of the holder, subject to adjustments for stock dividends, combinations or splits. The Series A Convertible Preferred stock has protective provisions. As long as any Series A Convertible Preferred are outstanding, this Corporation shall not without first obtaining approval of the holders of at least two-thirds of the outstanding Series A Convertible Preferred which is entitled, other than solely by law, to vote with respect to the matter, and which Series Preferred represents at least two-thirds of the voting power of the then outstanding Series A Convertible Preferred: (a) sell, convey or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of; (b) alter or change the rights, preferences or privileges of the Series A Convertible Preferred so as to affect adversely the Series A Convertible Preferred; (c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock; (d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Series A Convertible Preferred with respect to dividends or upon liquidation, or (ii) having rights similar to any of the rights of the Preferred Stock; or amend the Corporation’s Articles of Incorporation or bylaws.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On September 30, 2010, the Company issued 2,000,000 shares of Series A Convertible Preferred stock in exchange for extinguishment of $1,700,000 in debt.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">As of March 31, 2012, there have been no other issuances of preferred stock.</p> <p style="TEXT-ALIGN:justify"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Common Stock</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock. </p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On March 15, 2012, the Company filed an S-8 statement for 3,000,000 shares (“S-8 Shares”) of already authorized common stock to be registered for sale to attorneys, consultants and employees pursuant to the 2012 Non-Qualified Consultant Stock Compensation Plan. </p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">During the three months ended March 31, 2012, the Company issued the following shares of $0.001 par value common stock:</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>150,000 shares for a stock option exercised by a former executive officer valued at $1,500.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>45,250 shares for a stock option exercised by a former officer valued at $453.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>3,500 shares for a stock option exercised by an independent contractor valued at $35.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>500,000 shares to an attorney as payment for accounts payable valued at $60,000. These shares were part of the S-8 shares discussed above. </p> <p style="TEXT-ALIGN:justify"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">During the three months ended March 31, 2012, the Company committed to issue </p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt">$.001 par value common stock as follows:</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>533,333 units consisting of one (1) share of common stock at $0.15 per share and one (1) callable warrant to purchase one share of common stock at $0.50 per share for a period of up to three years.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The value of the shares not yet issued for cash received represent the amount in the “Shares to Be Issued” on the Balance Sheet.</p>
<!--egx--><p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><b>NOTE 5 – WARRANTS AND OPTIONS</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><u>Options Granted</u></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On March 19, 2012, the Company granted an option to purchase 300,000 shares of common stock at $0.25 per share exercisable for three (3) years per an endorsement contract signed on March 19, 2012. The fair value of the stock options are $26,333 and the Company recorded consulting expense.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On March 31, 2012, the Company granted an option to purchase 30,000 shares of common stock at $0.50 per share exercisable for five (5) years to an employee per an employment agreement signed on March 1, 2012. The fair value of the stock options are $1,177 and the Company recorded compensation expense.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The following is a summary of the status of all of the Company’s stock options as of March 31, 2012 and changes during the three months ended on that date:</p> <p style="TEXT-ALIGN:justify"></p> <div align="center"> <table style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="86" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">Number</p> <p style="TEXT-ALIGN:center" align="center">of Stock Options</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="121" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">Weighted-Average</p> <p style="TEXT-ALIGN:center" align="center">Exercise Price</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p>Outstanding at January 1, 2012</p></td> <td width="86" style="BORDER-BOTTOM:medium none; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">4,082,489</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="BORDER-BOTTOM:medium none; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.83</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="MARGIN-LEFT:8.55pt">Granted</p></td> <td width="86" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">370,000</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.24</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="MARGIN-LEFT:8.55pt">Exercised</p></td> <td width="86" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">(198,750)</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.00</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="MARGIN-LEFT:8.55pt">Cancelled</p></td> <td width="86" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">(319,444)</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 1.00</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p>Outstanding at March 31, 2012</p></td> <td width="86" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">3,934,295</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.74</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p>Options exercisable at March 31, 2012</p></td> <td width="86" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:windowtext 1.5pt double; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">3,261,379</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:windowtext 1.5pt double; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.69</p></td></tr></table></div> <p style="TEXT-AUTOSPACE:ideograph-numeric"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">The following table summarizes information about stock options outstanding and exercisable at March 31, 2012:</p> <p style="TEXT-ALIGN:justify"></p> <div align="center"> <table width="644" style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="644" colspan="11" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:483.05pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"><b>STOCK OPTIONS OUTSTANDING AND EXERCISABLE</b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:49pt"> <td width="73" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:54.9pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p> <p style="TEXT-ALIGN:center" align="center"></p> <p></p> <p style="TEXT-ALIGN:center" align="center">Exercise Price</p></td> <td width="20" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:15.15pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="93" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:70.1pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:windowtext 1pt solid; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p> <p style="TEXT-ALIGN:center" align="center">Number of</p> <p style="TEXT-ALIGN:center" align="center">Options</p> <p style="TEXT-ALIGN:center" align="center">Outstanding</p></td> <td width="18" style="BORDER-BOTTOM:medium none; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:windowtext 1pt solid; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="126" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:94.5pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:windowtext 1pt solid; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">Weighted-Average</p> <p style="TEXT-ALIGN:center" align="center">Remaining</p> <p style="TEXT-ALIGN:center" align="center">Contractual</p> <p style="TEXT-ALIGN:center" align="center">Life in Years</p></td> <td width="18" style="BORDER-BOTTOM:medium none; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:windowtext 1pt solid; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="102" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:76.5pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:windowtext 1pt solid; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p> <p style="TEXT-ALIGN:center" align="center">Weighted-</p> <p style="TEXT-ALIGN:center" align="center">Average</p> <p style="TEXT-ALIGN:center" align="center">Exercise Price</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="90" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:67.5pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p> <p style="TEXT-ALIGN:center" align="center">Number of</p> <p style="TEXT-ALIGN:center" align="center">Options</p> <p style="TEXT-ALIGN:center" align="center">Exercisable</p></td> <td width="16" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.8pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="69" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:52.1pt; PADDING-RIGHT:5.4pt; HEIGHT:49pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p> <p style="TEXT-ALIGN:center" align="center"></p> <p style="TEXT-ALIGN:center" align="center">Intrinsic Value</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="73" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:54.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 0.01</p></td> <td width="20" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:15.15pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="93" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:70.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">628,600</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="126" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:94.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">4.25</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"><u><font style="TEXT-DECORATION:none"></font></u></p></td> <td width="102" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:76.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 0.01</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="90" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:67.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">628,600</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.8pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right"></p></td> <td width="69" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:52.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">$62,860</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="73" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:54.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 0.25</p></td> <td width="20" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:15.15pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="93" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:70.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">300,000</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="126" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:94.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">2.96</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"><u><font style="TEXT-DECORATION:none"></font></u></p></td> <td width="102" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:76.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 0.25</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="90" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:67.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">300,000</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.8pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right"></p></td> <td width="69" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:52.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">$0</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="73" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:54.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 0.50</p></td> <td width="20" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:15.15pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="93" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:70.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">30,000</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="126" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:94.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">5.00</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"><u><font style="TEXT-DECORATION:none"></font></u></p></td> <td width="102" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:76.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 0.50</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="90" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:67.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">30,000</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.8pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right"></p></td> <td width="69" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:52.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">$0</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="73" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:54.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 1.00</p></td> <td width="20" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:15.15pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="93" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:70.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">2,975,695</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="126" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:94.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">1.51</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"><u><font style="TEXT-DECORATION:none"></font></u></p></td> <td width="102" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:76.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">$ 1.00</p></td> <td width="18" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:13.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="90" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:67.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">2,302,779</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.8pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right"></p></td> <td width="69" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:52.1pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">$0</p></td></tr></table></div> <p></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">As noted above, warrants were issued as part of Units sold to investors for cash. Thus, there is no compensation expense. The following is a summary of the status of all of the Company’s non-compensation warrants as of March 31, 2012 and the changes during the three months ended on that date:</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <div align="center"> <table style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="86" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">Number</p> <p style="TEXT-ALIGN:center" align="center">of Stock Warrants</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center"></p></td> <td width="121" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center" align="center">Weighted-Average</p> <p style="TEXT-ALIGN:center" align="center">Exercise Price</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p>Outstanding at January 1, 2012</p></td> <td width="86" style="BORDER-BOTTOM:medium none; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">3,048,000</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="BORDER-BOTTOM:medium none; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 1.16</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="MARGIN-LEFT:8.55pt">Granted</p></td> <td width="86" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">533,333</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.50</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="MARGIN-LEFT:8.55pt">Exercised</p></td> <td width="86" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">-</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.00</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="MARGIN-LEFT:8.55pt">Cancelled</p></td> <td width="86" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">-</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:medium none; PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; BORDER-TOP:medium none; BORDER-RIGHT:medium none; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 0.00</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="290" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:217.5pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p>Outstanding at March 31, 2012</p></td> <td width="86" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:0.9in; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right" align="right">3,581,333</p></td> <td width="16" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:11.9pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p></p></td> <td width="121" style="PADDING-BOTTOM:0in; PADDING-LEFT:5.4pt; WIDTH:90.45pt; PADDING-RIGHT:5.4pt; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:right; MARGIN-RIGHT:13.25pt" align="right">$ 1.06</p></td></tr></table></div>
<!--egx--><p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><b>NOTE 6 – EMPLOYMENT CONTRACTS</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On March 1, 2012, the Company signed an employment contract with an employee to serve as Chief Technology Officer at a monthly salary of $15,000 to be payable in options to purchase shares of common stock at $0.50 per share exercisable for five (5) years. Upon sufficient increase in capital resources and/or sales, the employee may begin to receive all or part of the compensation in cash. Upon such occurrence, the option amount for the month shall be reduced by the cash amount paid. The employee is to seek out business contacts for the Company. Should a business relationship between contact and the Company be consummated, the employee will be entitled to 8% commission on revenue generated from the relationship.</p>
<!--egx--><p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><b>NOTE 7 – ENDORSEMENT AGREEMENT</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On March 19, 2012, the Company entered into an endorsement agreement with Frankie Avalon for the exclusive right and license to use the Frankie Avalon Image in connection with the advertisement, promotion and sale of the Company’s products and services that use voice commands from any phone, computer, tablet, and other electronic device and automobiles to make calls, manage emails, and send text messages in a fast, easy and safe way.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">In consideration for the use of the Frankie Avalon Image and for his personal endorsement and agreement to be in one or more television commercials and/or marketing videos, the Company granted an option to purchase up to three hundred thousand (300,000) restricted common shares at $0.25 per share exercisable for three (3) years.</p>
<!--egx--><p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"><b>NOTE 8 – SUBSEQUENT EVENTS</b></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On April 1, 2012, the Company signed an employment contract with an employee to serve as a sales person at a monthly salary of $5,000 to be payable in options to purchase shares of common stock at $0.50 per share exercisable for five (5) years. Upon sufficient increase in capital resources and/or sales, the employee may begin to receive all or part of the compensation in cash. Upon such occurrence, the option amount for the month will be reduced by the cash amount paid. In addition, upon closing any new sales deals personally, the employee will be entitled to 10% commission. </p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On April 5, 2012, a Board of Directors resolution authorized the issuance of 443,201 shares of S-8 common stock to three independent contractors for payment of accounts payable valued at $66,479. These shares were issued on April 17, 2012.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On April 17, 2012, the Company issued the following shares of common stock:</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>1,000,000 shares of common stock as reimbursement to an executive officer for having transferred personal shares to a former executive officer of the Company to settle a liability at $2,000,000</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>100,000 shares to a related party as payment for accounts payable valued at $23,000</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>195,000 shares of common stock to an executive officer in lieu of payment for unpaid compensation valued at $23,400.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>600,000 shares of common stock to a board member for services rendered as a member of the board valued at $54,000</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>533,333 shares of common stock for cash received of $80,000 during the period ended March 31, 2012.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>75,000 shares of common stock to a financial advisory firm per a contract valued at $6,750.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 1in"><font style="FONT-FAMILY:Symbol">·<font style="FONT:7pt 'Times New Roman'"> </font></font>50,000 shares of common stock to general counsel per a contract valued at $4,500.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On April 23, 2012, the Company issued 40,000 shares of common stock per an option exercised by an investment relations firm for cash of $400. The options were granted in July, 2011.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On April 30, 2012, the Company granted an option to purchase 30,000 shares of common stock at $0.50 per share exercisable for five (5) years to an employee per an employment agreement signed on March 1, 2012.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On April 30, 2012, the Company granted an option to purchase 10,000 shares of common stock at $0.50 per share exercisable for five (5) years to an employee per an employment agreement signed on April 1, 2012.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt"></p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">On May 9, 2012, the Company issued 288,846 shares of S-8 registered common stock to an independent contractor in payment for payables valued at $37,550.</p> <p style="TEXT-ALIGN:justify; TEXT-INDENT:0.5in; MARGIN:0in 0in 0pt">From May 3 through May 16, 2012, the Company received funds totaling $745,000 from twelve (12) accredited investors for the purchase of 4,966,667 units which consist of one (1) share of common stock at $0.15 per share and one (1) callable warrant to purchase one (1) share of common stock at $0.50 per share for up to five (5) years. These shares have yet to be issued.</p>
34723353
0001428469
2012-01-01
2012-03-31
0001428469
2012-03-31
0001428469
2011-12-31
0001428469
2011-01-01
2011-03-31
0001428469
2011-03-31
0001428469
2010-12-31
shares
iso4217:USD
iso4217:USD
shares