NOTE 2 - RESTATEMENT OF FINANCIAL STATEMENTS

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

NOTE – 2 RESTATEMENT OF FINANCIAL STATEMENTS

NOTE – 2 RESTATEMENT OF FINANCIAL STATEMENTS

The Company identified errors related to understatement of option expense for the year ended December 31, 2012. The facts underlying the Company’s original conclusion is that 7.5 million stock options granted to President and CEO of the Company, Thom Kidrin, were only 18 month options and were expiring on March 31, 2014. Such 7.5 million stock options were additionally extended for 2 years with new expiration date on March 31, 2016. In fact they were five (5) year options expiring in September 2017 and no extension was granted. Accordingly, all the financial statements for the year ended December 31, 2012 and for the nine months ended September 30, 2014 are restated.

In addition, the Company identified errors related to understatement of derivative liabilities as of September 30, 2014, and loss on change in the fair value of the derivative liability for the three and nine months ended September 30, 2014. The facts underlying the Company’s original conclusion is that there were no derivative liabilities incurred when 4,535,714 warrants were granted to the investors in connection with the strategic financing agreements entered into in March of 2013. In fact such warrants’ ratchet features triggered derivative liabilities of the Company.

The following table sets forth all the accounts in the original amounts and restated amounts, respectively.

As of September 30, 2014

	Original			Adjustment			Restated
Derivative liability	$	21,160		$	732,367		$	753,527
Additional paid in capital	$	31,370,075		$	39,352		$	31,409,427
Accumulated deficit	$	(35,486,893	)	$	(771,719	)	$	(36,258,612	)

For the nine months ended September 30, 2014

	Original			Adjustment		Restated
Gain (loss) on change in fair value of derivative liability	$	(153,771	)	$	25,937	$	(127,834	)
Net (loss)		(1,058,665	)		25,937		(1,032,728	)

For the three months ended September 30, 2014

	Original			Adjustment		Restated
Gain (loss) on change in fair value of derivative liability	$	4,433		$	29,400	$	33,833
Net (loss)		(193,560	)		29,400		(164,160	)

Statement of Equity as of January 1, 2014

	Original			Adjustment			Restated
Additional paid in capital	$	30,078,730		$	208,682		$	30,287,412
Accumulated deficit	$	(34,258,898	)	$	(966,986	)	$	(35,225,884	)