0001308411-13-000109.txt : 20130506
0001308411-13-000109.hdr.sgml : 20130506
20130503191637
ACCESSION NUMBER: 0001308411-13-000109
CONFORMED SUBMISSION TYPE: 10-Q/A
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 20130131
FILED AS OF DATE: 20130506
DATE AS OF CHANGE: 20130503
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Tamir Biotechnology, Inc.
CENTRAL INDEX KEY: 0000708717
STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
IRS NUMBER: 222369085
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-11088
FILM NUMBER: 13814162
BUSINESS ADDRESS:
STREET 1: 300 ATRIUM DRIVE
CITY: SOMERSET
STATE: NJ
ZIP: 08873
BUSINESS PHONE: 732-652-4525
MAIL ADDRESS:
STREET 1: 300 ATRIUM DRIVE
CITY: SOMERSET
STATE: NJ
ZIP: 08873
FORMER COMPANY:
FORMER CONFORMED NAME: ALFACELL CORP
DATE OF NAME CHANGE: 19920703
10-Q/A
1
acel10qa1130131.htm
TAMIR BIOTECHNOLOGY, INC. FORM 10/A NO. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
S QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended January
31, 2013
Or
£ TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-11088
TAMIR BIOTECHNOLGY, INC.
(Exact name of registrant as specified
in its charter)
Delaware
(State or Other Jurisdiction of Incorporation
or Organization)
22-2369085
(IRS Employer Identification No.)
5825 Oberlin Drive, San Diego,
CA 92121
(Address of principal executive offices,
zip code)
Registrant's telephone number (including
area code): (732) 823-1003
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES £ NO S
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 the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
Large Accelerated Filer £ Accelerated Filer £
Non-accelerated Filer £ Smaller reporting company S
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No S
Indicate the number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at May 3, 2013
Common Stock, $.001 par value
217,364,331
EXPLANATORY NOTE
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A
is being filed solely to furnish the Interactive Data files as Exhibit 101, in accordance with Rule 405 of Regulation S-T. No other
changes have been made to the Form 10-Q, as originally filed on May 3, 2013.
-2-
Item
6. Exhibits
101.INS* XBRL Instance Document
101.SCH* XBRL Schema Document
101.CAL* XBRL Calculation Linkbase Document
101.DEF* XBRL Definition Linkbase Document
101.LAB* XBRL Label Linkbase Document
101.PRE* XBRL Presentation Linkbase Document
* Pursuant to Rule 406T of Regulation S-T, the interactive
data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections
11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, and otherwise are not subject to liability under those sections.
-3-
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TAMIR
BIOTECHNOLOGY, INC.
Date: May 4, 2013
By:
/s/ Jamie Sulley
Jamie Sulley
President
(Principal Executive Officer)
Date: May 4, 2013
By:
/s/ Joanne Barsa
Joanne Barsa
Chief Financial Officer and Secretary
(Principal Financial Officer and Chief Accounting Officer)
EX-101.INS
2
acel-20130131.xml
XBRL INSTANCE FILE
00007087172012-08-012013-01-3100007087172013-05-0200007087172012-07-3100007087172011-08-012012-01-3100007087172004-07-3100007087171997-07-3100007087172013-01-3100007087172012-11-012013-01-3100007087172011-11-012012-01-3100007087172012-01-3100007087172011-07-3100007087172010-08-012011-07-3100007087172011-08-012012-07-31iso4217:USDxbrli:sharesiso4217:USDxbrli:sharesutr:Yxbrli:pure2404178257431806735419897464510645169839062002048507985884964158361066628821307922549212564255902384548342367941644442234442232312502312506158896746963701053824217364100874628100902579-107007490-107878418-6079038-66199967985884964110000001000000010000250000000250000000538258802173643310000117234119224669814865324157717611014212453174358811295334209105101827-358811-295334-209105-101827-36459592057571-3749498-281127-64939-99069-16432-494870100-8709281098678-497110-7146870000-8709281098678-497110-714687-.02.02-.03-.01-.02.02-.03-.0119297321349823330139149333498233303118362577393917722644691773939177100003624491824190750126712354018302700920-30963645959-205757126712341435-35360165548267878575632-905180405000-271467-361310000103000000103000002600758533-361312009150011382113822982877044743201896624308694512154<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 1 - Business Description</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Tamir Biotechnology, Inc. (formerly
known as Alfacell Corporation) (“Tamir”, “Company”, “we”, “us”, “our”,
“our company”) is a Delaware corporation incorporated on August 24, 1981. We are a biopharmaceutical company primarily
engaged in the discovery, development, and licensing of a new class of antiviral therapeutic drugs for the treatment of pathological
conditions. Our proprietary drug discovery and development program consists of novel therapeutics which are being developed from
amphibian ribonucleases (RNases). Since 2011, Tamir’s focus has been its antiviral therapeutic drug development strategy
and plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company is engaged in the research,
development, licensing and commercialization of drugs for the treatment of various life threatening diseases. As of January 31,
2013, the Company is pursuing various available strategic alternatives to raise additional funds. The Company plans to continue
the further development and licensing of its drug product candidates, which requires capital for research, product development,
and market development activities. Future product development will require clinical testing, regulatory approval, and substantial
additional investment prior to commercialization. The future success of the Company is dependent on its ability to make progress
in the development of its drug product candidates and, ultimately, to attain future profitable operations through manufacturing
and marketing of those drug product candidates. There can be no assurance that the Company will be able to obtain the necessary
financing or regulatory approvals to be able to successfully develop, manufacture, and market its products, or attain successful
future operations. Accordingly, the Company’s future success is uncertain.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is no longer a development stage
enterprise as it has started generating revenue from licensing, resulting from its past and ongoing research and development activities.
Management expects to generate such revenue, as well as revenue from product sales, on an ongoing basis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In addition, uncertainty exists as to
the Company’s ability to protect its rights to patents and its proprietary information. There can also be no assurance that
research and discoveries by others will not render some or all of the Company’s technology or drug product candidates noncompetitive
or obsolete, nor can there be any assurance that unforeseen problems will not develop with the Company’s technologies or
applications, or that the Company will be able to address successful technological challenges it encounters in its research and
development programs. While the Company maintains insurance to cover the use of its drug product candidates in clinical trials,
it does not maintain insurance covering the sale of its products nor is there any assurance that it will be able to obtain or maintain
such insurance on acceptable terms or with adequate coverage against potential liabilities.</p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 2 -<b> </b>Summary of Significant
Accounting Policies</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Going concern</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The accompanying financial statements
were prepared assuming we will continue as a going concern. The Company had net loss of $870,928 and net income of $1,098,678 for
the six months ended January 31, 2013 and 2012, respectively. As of January 31, 2013, the Company had a negative working capital
of $5,955,102 and an accumulated deficit of $107,878,418. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary
should the Company be unable to continue its existence. The recovery of the Company’s assets is dependent upon continued
operations of the Company and future events, the outcome of which is unknowable. The Company intends to continue to attempt to
raise additional capital, but there can be no certainty that such efforts will be successful.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Use of Estimates</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The preparation of financial statements
in conformity with U.S. generally accepted accounting principles (“US GAAP”) 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 revenue and expense during the reporting period. Actual results
could differ from those estimates.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Reclassifications</i></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Certain prior period amounts were
reclassified to conform to the presentation in the current period. The reclassifications did not have an effect on the results
of operations or the cash flow.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Cash and Equivalents</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be cash equivalents. The carrying value of these investments
approximates their fair value due to their short maturity and liquidity. The Company maintains cash deposits with banks that at
times exceed applicable insurance limits.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Property and Equipment</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Property and equipment is recorded at
cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and
repairs that do not extend the life of assets are expensed when incurred. When assets are retired or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations
for the period in which the transaction takes place.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted cash flows
expected to be generated by the asset. If the carrying amount exceeds its estimated future cash flows, an impairment charge is
recognized in the amount by which the carrying amount exceeds the fair value of the asset.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Derivative Instrument Liability</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company accounts for derivative
instruments in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 815, <i>“Derivatives and Hedging”,</i> which establishes accounting and reporting standards for derivative instruments
and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires
recognition of all derivatives on the balance sheet at fair value, regardless of the hedging relationship designation. Accounting
for changes in the fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and
the types of relationships designated are based on the exposures hedged.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Accounting For Warrants Issued
With Convertible Debt</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for the intrinsic value
of beneficial conversion rights arising from the issuance of convertible debt instruments with non-detachable conversion rights
that are in-the-money at the commitment date pursuant to the consensuses of ASC 470-20, <i>“Debt: Debt With Conversion and
Other Options”.</i> Such value is allocated to additional paid–in capital and the resulting debt discount is charged
to interest expense over the terms of the notes payable. Such value is determined after first allocating a portion of the proceeds
received to warrants or any other detachable instruments included in the exchange.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Fair Value Measurements</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company adopted ASC Topic 820, <i>“Fair
Value Measurement”,</i> which defines fair value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value
under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported
balances.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">ASC 820 emphasizes that fair value is
a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based
on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant
assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant
assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified
within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable
inputs classified within Level 3 of the hierarchy).</p>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 11pt; margin-bottom: 0px; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.55in"> </td>
<td style="width: 0.25in; font-size: 10pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 11pt; margin-bottom: 0px; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.55in"> </td>
<td style="width: 0.25in; font-size: 10pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 11pt; margin-bottom: 0px; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.55in"> </td>
<td style="width: 0.25in; font-size: 10pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.8in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In instances where the determination
of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair
value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment, and considers factors specific to the asset or liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Income Taxes</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Income taxes are accounted for under
the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. Management provides valuation allowances against the deferred tax assets for amounts which are not considered “more
likely than not” to be realized.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Revenue Recognition</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company recognizes revenue in accordance
with the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “<i>Revenue
Recognition</i>” issued by the staff of the SEC. Under SAB No. 104, revenue is recognized when persuasive evidence of an
arrangement exists, delivery has occurred and/or services have been rendered, the sales price is fixed or determinable, and collectability
is reasonably assured.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company enters into marketing and
distribution agreements, which contain multiple deliverables. Under the provisions of ASC Topic 605, <i>“Revenue Recognition
- Multiple Deliverable Revenue Arrangements”,</i> the Company evaluates whether these deliverables constitute separate units
of accounting to which total arrangement consideration is allocated. A deliverable qualifies as a separate unit of accounting when
the item delivered to the customer has standalone value, there is objective and reliable evidence of fair value of items that have
not been delivered to the customer, and, if there is a general right of return for the items delivered to the customer, delivery
or performance of the undelivered items is considered probable and substantially in the control of the Company. Arrangement consideration
is allocated to units of accounting on a relative fair-value basis or the residual method if the Company is unable to determine
the fair value of all deliverables in the arrangement. Consideration allocated to a unit of accounting is limited to the amount
that is not contingent upon future performance by the Company. Upon determination of separate units of accounting and allocated
consideration, the general criteria for revenue recognition are applied to each unit of accounting. Up-front nonrefundable fee
received by the Company for substantive milestones are recognized upon achievement of the milestones. Any amounts receive prior
to satisfying our revenue recognition criteria are recorded as deferred in the accompanying balance sheets.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Research and Development </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Research and development costs are expensed
as incurred. These costs include, among other things, consulting fees and costs related to the conduct of human clinical trials.
The Company also allocates indirect costs, consisting primarily of operational costs for administering research and development
activities to research and development expenses.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Share-Based Compensation</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company accounts for its share-based
compensation in accordance with ASC Topic 718, <i>“Compensation – Stock Compensation”,</i> which establishes
accounting for equity instruments exchanged for employee services and ASC Subtopic 505-50, <i>“Equity-Based Payments to Non-Employees”,
</i>which establishes accounting for equity-based payments to non-employees. Under the provisions of ASC 718, share-based compensation
is measured at the grant date, based upon the fair value of the award, and is recognized as an expense over the option holders’
requisite service period (generally the vesting period of the equity grant). The Company is required to record compensation cost
for all share-based payments granted to employees based upon the grant date fair value, estimated in accordance with the provisions
of ASC 718. Under the provisions of ASC 505-50, measurement of compensation cost related to common shares issued to non-employees
for services is based on the value of the services provided or the fair value of the shares issued. The measurement of non-employee
stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The fair value of the stock options
at the grant date was estimated using the Black-Scholes option pricing mode. The risk-free interest rate for periods approximating
the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected stock price
volatility is based on historical volatility of the Company’s stock price. For post July 31, 2005 grants, the expected term
until exercise is derived using the “simplified” method as allowed under the provisions of the SEC’s SAB No.
110, “<i>Disclosures about Fair Value of Financial Instruments</i>” and represents the period of time that options
granted are expected to be outstanding.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Contingencies</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Liabilities for loss contingencies arising
from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the liability can be reasonably estimated. Recoveries from other parties are recorded when
realized.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Recently Issued Accounting Pronouncements
</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 27, 2012, the FASB issued ASU 2012-02,
Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The ASU provides entities
an option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not
that the indefinite-lived intangible asset is impaired. If an entity concludes it is more than 50% likely that an indefinite-lived
intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required
to determine the fair value of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently
required under US GAAP. The ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning
after September 15, 2012. Early adoption is permitted. The adoption of this pronouncement will not have a material impact on these
financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company has implemented all new
accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements
unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been
issued that might have a material impact on its financial position or results of operations.</p>
<p style="margin: 0pt"></p><p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Going concern</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The accompanying financial statements
were prepared assuming we will continue as a going concern. The Company had net loss of $870,928 and net income of $1,098,678 for
the six months ended January 31, 2013 and 2012, respectively. As of January 31, 2013, the Company had a negative working capital
of $5,955,102 and an accumulated deficit of $107,878,418. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary
should the Company be unable to continue its existence. The recovery of the Company’s assets is dependent upon continued
operations of the Company and future events, the outcome of which is unknowable. The Company intends to continue to attempt to
raise additional capital, but there can be no certainty that such efforts will be successful.</p>
<p style="margin: 0pt"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Use of Estimates</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The preparation of financial statements
in conformity with U.S. generally accepted accounting principles (“US GAAP”) 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 revenue and expense during the reporting period. Actual results
could differ from those estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Reclassifications</i></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Certain prior period amounts were
reclassified to conform to the presentation in the current period. The reclassifications did not have an effect on the results
of operations or the cash flow.</p>
<p style="margin: 0pt"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Cash and Equivalents</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be cash equivalents. The carrying value of these investments
approximates their fair value due to their short maturity and liquidity. The Company maintains cash deposits with banks that at
times exceed applicable insurance limits.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Property and Equipment</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Property and equipment is recorded at
cost and is depreciated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and
repairs that do not extend the life of assets are expensed when incurred. When assets are retired or otherwise disposed of, the
cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations
for the period in which the transaction takes place.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted cash flows
expected to be generated by the asset. If the carrying amount exceeds its estimated future cash flows, an impairment charge is
recognized in the amount by which the carrying amount exceeds the fair value of the asset.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Derivative Instrument Liability</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company accounts for derivative
instruments in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 815, <i>“Derivatives and Hedging”,</i> which establishes accounting and reporting standards for derivative instruments
and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires
recognition of all derivatives on the balance sheet at fair value, regardless of the hedging relationship designation. Accounting
for changes in the fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and
the types of relationships designated are based on the exposures hedged.</p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Accounting For Warrants Issued
With Convertible Debt</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for the intrinsic value
of beneficial conversion rights arising from the issuance of convertible debt instruments with non-detachable conversion rights
that are in-the-money at the commitment date pursuant to the consensuses of ASC 470-20, <i>“Debt: Debt With Conversion and
Other Options”.</i> Such value is allocated to additional paid–in capital and the resulting debt discount is charged
to interest expense over the terms of the notes payable. Such value is determined after first allocating a portion of the proceeds
received to warrants or any other detachable instruments included in the exchange.</p>
<p style="margin: 0pt"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Fair Value Measurements</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company adopted ASC Topic 820, <i>“Fair
Value Measurement”,</i> which defines fair value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value
under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported
balances.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">ASC 820 emphasizes that fair value is
a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based
on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant
assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant
assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified
within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable
inputs classified within Level 3 of the hierarchy).</p>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 11pt; margin-bottom: 0px; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.55in"> </td>
<td style="width: 0.25in; font-size: 10pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 11pt; margin-bottom: 0px; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.55in"> </td>
<td style="width: 0.25in; font-size: 10pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="margin-top: 0px; font-size: 11pt; margin-bottom: 0px; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.55in"> </td>
<td style="width: 0.25in; font-size: 10pt"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.8in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In instances where the determination
of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair
value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment, and considers factors specific to the asset or liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Income Taxes</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Income taxes are accounted for under
the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. Management provides valuation allowances against the deferred tax assets for amounts which are not considered “more
likely than not” to be realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Revenue Recognition</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company recognizes revenue in accordance
with the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “<i>Revenue
Recognition</i>” issued by the staff of the SEC. Under SAB No. 104, revenue is recognized when persuasive evidence of an
arrangement exists, delivery has occurred and/or services have been rendered, the sales price is fixed or determinable, and collectability
is reasonably assured.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company enters into marketing and
distribution agreements, which contain multiple deliverables. Under the provisions of ASC Topic 605, <i>“Revenue Recognition
- Multiple Deliverable Revenue Arrangements”,</i> the Company evaluates whether these deliverables constitute separate units
of accounting to which total arrangement consideration is allocated. A deliverable qualifies as a separate unit of accounting when
the item delivered to the customer has standalone value, there is objective and reliable evidence of fair value of items that have
not been delivered to the customer, and, if there is a general right of return for the items delivered to the customer, delivery
or performance of the undelivered items is considered probable and substantially in the control of the Company. Arrangement consideration
is allocated to units of accounting on a relative fair-value basis or the residual method if the Company is unable to determine
the fair value of all deliverables in the arrangement. Consideration allocated to a unit of accounting is limited to the amount
that is not contingent upon future performance by the Company. Upon determination of separate units of accounting and allocated
consideration, the general criteria for revenue recognition are applied to each unit of accounting. Up-front nonrefundable fee
received by the Company for substantive milestones are recognized upon achievement of the milestones. Any amounts receive prior
to satisfying our revenue recognition criteria are recorded as deferred in the accompanying balance sheets.</p>
<p style="margin: 0pt"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Research and Development </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Research and development costs are expensed
as incurred. These costs include, among other things, consulting fees and costs related to the conduct of human clinical trials.
The Company also allocates indirect costs, consisting primarily of operational costs for administering research and development
activities to research and development expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Share-Based Compensation</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company accounts for its share-based
compensation in accordance with ASC Topic 718, <i>“Compensation – Stock Compensation”,</i> which establishes
accounting for equity instruments exchanged for employee services and ASC Subtopic 505-50, <i>“Equity-Based Payments to Non-Employees”,
</i>which establishes accounting for equity-based payments to non-employees. Under the provisions of ASC 718, share-based compensation
is measured at the grant date, based upon the fair value of the award, and is recognized as an expense over the option holders’
requisite service period (generally the vesting period of the equity grant). The Company is required to record compensation cost
for all share-based payments granted to employees based upon the grant date fair value, estimated in accordance with the provisions
of ASC 718. Under the provisions of ASC 505-50, measurement of compensation cost related to common shares issued to non-employees
for services is based on the value of the services provided or the fair value of the shares issued. The measurement of non-employee
stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The fair value of the stock options
at the grant date was estimated using the Black-Scholes option pricing mode. The risk-free interest rate for periods approximating
the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected stock price
volatility is based on historical volatility of the Company’s stock price. For post July 31, 2005 grants, the expected term
until exercise is derived using the “simplified” method as allowed under the provisions of the SEC’s SAB No.
110, “<i>Disclosures about Fair Value of Financial Instruments</i>” and represents the period of time that options
granted are expected to be outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><i>Contingencies</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Liabilities for loss contingencies arising
from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the liability can be reasonably estimated. Recoveries from other parties are recorded when
realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>NOTE 3 - Net Income (Loss) Per Common
Share</u></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table sets forth the computation
of basic and diluted net income (loss) per common share:</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three Months Ended</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>January 31<font style="color: black">,</font></b></p></td><td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Six Months Ended </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>January 31<font style="color: black">,</font></b></p></td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-left: 5.4pt">Numerator:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 40%; font-family: Times New Roman, Times, Serif; color: black; text-align: justify; padding-bottom: 2.5pt; padding-left: 5.4pt">     Net income (loss)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(497,110</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(714,687</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(870,928</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">1,098,678</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: justify; padding-left: 5.4pt">Denominator:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: justify; text-indent: 13.5pt; padding-left: 5.4pt">Weighted average number of common</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt; text-indent: 0.25in; padding-left: 5.4pt">shares outstanding</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">139,149,333</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">49,823,330</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">192,973,213</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">49,823,330</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-left: 5.4pt">Income (Loss) per common share:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-indent: 13.5pt; padding-left: 5.4pt">Basic</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.01</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">0.02</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-indent: 13.5pt; padding-left: 5.4pt">Diluted</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.01</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">0.02</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; text-align: justify; padding-left: 5.4pt">Potentially dilutive securities:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-left: 5.4pt">     Warrants</td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">150,428,504</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">150,428,504</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">45,833,328</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">45,833,328</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left; text-indent: -4.5pt; padding-left: 0.25in">Convertible notes (principal & interest)</td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">—  </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">—  </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">24,916,667</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">24,916,667</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">     Stock options</td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">5,273,667</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">5,273,667</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">3,704,267</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">3,704,267</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Total potentially dilutive securities</td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">155,702,171</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">155,702,171</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">74,454,262</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">74,454,262</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As the Company had incurred a net loss for
the three and six months ending January 31, 2013 and the three months ending January 31, 2012, basic and diluted per common share
amounts are the same, as the inclusion of all potentially dilutive securities would be anti-dilutive. For the six months ended
January 31, 2012 basic and diluted earnings are the same because of anti-dilution.</p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three Months Ended</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>January 31<font style="color: black">,</font></b></p></td><td style="font-family: Times New Roman, Times, Serif; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="7" style="font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Six Months Ended </b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>January 31<font style="color: black">,</font></b></p></td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2013</td><td style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-family: Times New Roman, Times, Serif; color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-left: 5.4pt">Numerator:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 40%; font-family: Times New Roman, Times, Serif; color: black; text-align: justify; padding-bottom: 2.5pt; padding-left: 5.4pt">     Net income (loss)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(497,110</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(714,687</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(870,928</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="width: 3%; font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 10%; border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">1,098,678</td><td style="width: 1%; padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: justify; padding-left: 5.4pt">Denominator:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: justify; text-indent: 13.5pt; padding-left: 5.4pt">Weighted average number of common</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt; text-indent: 0.25in; padding-left: 5.4pt">shares outstanding</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">139,149,333</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">49,823,330</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">192,973,213</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">49,823,330</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-left: 5.4pt">Income (Loss) per common share:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-indent: 13.5pt; padding-left: 5.4pt">Basic</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.01</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">0.02</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-indent: 13.5pt; padding-left: 5.4pt">Diluted</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.01</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">(0.00</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left">)</td><td style="font-family: Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; text-align: right">0.02</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; text-align: justify; padding-left: 5.4pt">Potentially dilutive securities:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; padding-left: 5.4pt">     Warrants</td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">150,428,504</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">150,428,504</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">45,833,328</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">45,833,328</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left; text-indent: -4.5pt; padding-left: 0.25in">Convertible notes (principal & interest)</td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">—  </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">—  </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">24,916,667</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black"> </td>
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: right">24,916,667</td><td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">     Stock options</td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">5,273,667</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">5,273,667</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">3,704,267</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-family: Times New Roman, Times, Serif; color: black; text-align: right">3,704,267</td><td style="padding-bottom: 1pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-family: Times New Roman, Times, Serif; color: black; text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Total potentially dilutive securities</td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">155,702,171</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">155,702,171</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">74,454,262</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="font-family: Times New Roman, Times, Serif; color: black; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font-family: Times New Roman, Times, Serif; color: black; text-align: right">74,454,262</td><td style="padding-bottom: 2.5pt; font-family: Times New Roman, Times, Serif; color: black; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 5.4pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt 0.3in; text-align: justify; text-indent: -0.3in"><u>NOTE
4 - Property and Equipment</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property and equipment, at cost, consists of
the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">January 31, 2013</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">July 31, 2012</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; text-indent: -11pt; padding-left: 22pt; width: 60%">Laboratory equipment</td>
<td style="width: 3%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 15%">276,202</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 13%">276,202</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: -11pt; padding-left: 22pt">Office equipment</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">125,869</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">125,869</td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -11pt; padding-left: 11pt">Less accumulated depreciation</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(391,492</td>
<td style="text-align: left; padding-bottom: 1pt">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(387,867</td>
<td style="text-align: left; padding-bottom: 1pt">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Property and equipment, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">10,579</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">14,204</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Depreciation was $1,812 and $3,624
for the three months ended January 31, 2013 and 2012, and $2,417 and $4,918 for the six months ended January 31, 2013 and 2012,
respectively.</p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">January 31, 2013</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">July 31, 2012</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; text-indent: -11pt; padding-left: 22pt; width: 60%">Laboratory equipment</td>
<td style="width: 3%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 15%">276,202</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 13%">276,202</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: -11pt; padding-left: 22pt">Office equipment</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">125,869</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">125,869</td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt; text-indent: -11pt; padding-left: 11pt">Less accumulated depreciation</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(391,492</td>
<td style="text-align: left; padding-bottom: 1pt">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(387,867</td>
<td style="text-align: left; padding-bottom: 1pt">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Property and equipment, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">10,579</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">14,204</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>2417491818123624<p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 6 - Convertible Notes and
Warrants</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 19, 2009, the Company completed
a sale of 65 units (the “Units”) in a private placement (the “Offering”) to certain investors pursuant
to a securities purchase agreement (the “Securities Purchase Agreement”). Each Unit consists of (i) $50,000 principal
amount of 5% Senior Secured Convertible Promissory Notes (collectively, the “Notes”) convertible into shares of the
Company’s common stock, par value $.001 per share (“Common Stock”), (ii) Series A Common Stock Purchase Warrants
(the “Series A Warrants”) to purchase that number of shares of Common Stock initially issuable upon conversion of the
Notes issued as part of the Unit, at $0.15 per share with a three year term and (iii) Series B Common Stock Purchase Warrants (the
“Series B Warrants”, together with the Series A Warrants, the “Warrants”) to purchase that number of shares
of Common Stock initially issuable upon conversion of the aggregate amount of Notes issued as part of the Unit, at $0.25 per share
with a five year term. The closing of the Offering occurred on October 19, 2009 (the “Closing”) and the Company received
$3,250,000 in gross proceeds. On October 18, 2012, by action of a majority of the holders (the “Required Holders”)
of the Tamir Biotechnology, Inc. 5% Senior Secured Convertible Promissory Notes (the “Notes”), the maturity date of
the Notes was changed from October 19, 2012 to February 16, 2013 or such earlier date on which demand is made by the Required Holders.
No other changes were made to the Notes with this amendment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2011, the Company completed the sale
of 2,500,000 shares of its common stock and the issuance of warrants to purchase 2,500,000 common shares pursuant to an agreement
with Unilab LP (“2011 warrants). The company received proceeds of $500,000. The warrants have a 5-year term and a purchase
price of $0.50 per share. At April 2011 the fair value of the warrant liability was $0.2 million. These warrants have standard antidilutive provisions, as such, they were classified as equity instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">On December 14, 2012, the Company completed
a private placement of 10 Units at $100,000 per Unit, for $1 million pursuant to the Purchase Agreement. Each Unit consisted of
(i) 13,846,945 shares of Common Stock, (ii) 1,000 Preferred Shares, each such Preferred Share being initially convertible into
17,718.52 shares of Common Stock, and (iii) Warrants to purchase 12,626,184 shares of Common Stock at $0.003168 per share. In connection
with the Offering, and as a condition precedent thereto under the Purchase Agreement, the Requisite Holders of the Company’s
outstanding Notes, entered into a Consent and Waiver under which (i) the Notes were amended to provide for the automatic conversion
of the outstanding principal and interest of all of the Notes upon the election of the Requisite Holders, (ii) the Requisite Holders
elected to convert all outstanding principal and interest under the Notes, of $3,891,838, into shares of Common Stock at $0.15
per share (the conversion price under the Notes), and (iii) the exercise price of the Series B Warrants held by the holders of
the Notes were reduced from $0.25 to $0.01 per share.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At January 31, 2013 the Company accounted for
the warrant liabilities issued on October 19, 2009 (“Series B Warrants”) using the fair value method, with the resultant
gain recognition recorded in the statement of operations. At January 31, 2013, the fair value of the Series B warrant liability
was $0.9 million. The fair value of the Series B warrant was $6.1 million at the closing for the Offering and $2.0 million at July
31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The warrants were accounted as a liability
because the Company did not have enough authorized common stock shares. The Company accounted for warrant liabilities issued at
December 14, 2012 (“2012 warrant”) using the fair value method, with the resultant loss recognition recorded in the
statement of income. The fair value was $5.0 million at January 31, 2013 and $1.3 million at December 14, 2012. The excess of the
fair value of the derivative securities over the proceeds of $1.0 million was expensed.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preferred stock issued in connection with
the December 14, 2012 offering have the following characteristics:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font-size: 10pt">Preferred stock have voting rights</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font-size: 10pt">Preferred stock participate for dividends if declared for common
stock</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font-size: 10pt">Liquidation preference</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font-size: 10pt">Automatic converted to common stock upon increase in authorized shares</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 11pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font-size: 10pt">Not redeemable </font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The 2009 and 2012 warrant liabilities were
valued at January 31, 2013 and July 31, 2012 using the Black-Scholes valuation model and the following assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="7" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">2012 Warrants</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="7" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Series B Warrants</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">January 31, 2013</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">December 14, 2012</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">January 31, 2013</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">July 31, 2012</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: justify; padding-left: 5.4pt; width: 44%">Volatility</td>
<td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 10%">215,10</td>
<td style="text-align: left; width: 1%">%</td>
<td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 10%">191.29</td>
<td style="text-align: left; width: 1%">% </td>
<td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 10%">325.06</td>
<td style="text-align: left; width: 1%">%</td>
<td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 10%">190.38</td>
<td style="text-align: left; width: 1%">%</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt">Risk-free interest rate</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.99</td>
<td style="text-align: left">%</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.72</td>
<td style="text-align: left">% </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.24</td>
<td style="text-align: left">%</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.27</td>
<td style="text-align: left">%</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt">Remaining contractual life (years)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">9.87</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">10</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.71</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.22</td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt">Dividend rate</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</td>
<td style="text-align: left">%</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">-%</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 0 22.5pt; text-align: justify"> </p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 7 - Stockholders' Equity</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">During the fiscal year ended
July 31, 2011, the Company issued 430,000 stock options to the independent members of its Board of Directors with an exercise price
of $0.12 per share and a 67 month exercise term. The aggregate grant date fair market value of these options of $40,850 is being
amortized over the seven-month vesting period. The Company recognized compensation expense of $11,438 for the fiscal year ended
July 31, 2011. The Company issued 90,000 stock options to a non-employee consultant for services rendered. The options vested immediately,
have an exercise price of $0.34 per share and a five-year exercise term. The aggregate grant date fair market value of these options,
$25,380, was recognized as an expense by the Company during the fiscal year ended July 31, 2011. During the fiscal year ended July
31, 2011, the Company issued 10,000 shares of its common stock upon the exercise of stock options by an employee at per share exercise
prices of $0.26. The Company realized aggregate gross proceeds of $2,600 from this exercise.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">On December 14, 2012, we completed a
private placement of 10 “Units” at $100,000 per Unit, for gross consideration of $1 million (the “Offering”),
pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) dated as of December 11, 2012. Each Unit consisted
of (i) 13,846,945 shares of the Company’s common stock, par value $.001 per share (“Common Stock”), (ii) 1,000
shares of Series A Convertible Preferred Stock of the Company (the “Preferred Shares”), each such Preferred Share being
initially convertible into 17,718.52 shares of Common Stock, and (iii) 10-year Common Stock Purchase Warrants (the “Warrants”),
to purchase 12,626,184 shares of Common Stock at $0.003168 per share. Upon completion of Offering, there were issued and outstanding
approximately 577,000,000 shares of Common Stock on a fully-diluted basis, of which 315,654,607 (or 70%) were issued in the Offering.
The Company’s Certificate of Incorporation only authorizes the issuance of 250,000,000 shares of Common Stock. The Preferred
Shares issued in the Offering, which are convertible into 177,185,153 shares of Common Stock, will automatically convert into shares
of the Common Stock on the date the Company files an amendment to its Certificate of Incorporation increasing the authorized number
of shares of Common Stock and/or effecting a reverse stock split so that the Company has a sufficient number of authorized and
unissued shares of Common Stock so as to permit the conversion of all outstanding Preferred Shares and all other convertible securities
of the Company.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">In connection with the Offering, and
as a condition precedent thereto under the Purchase Agreement, the holders of a majority in principal amount (the “Requisite
Holders”) of the Company’s outstanding 5% Senior Secured Convertible Promissory Notes (the “Notes”), entered
into a Consent and Waiver (the “Consent”) under which (i) the Notes were amended to provide for the automatic conversion
of the outstanding principal and interest of all of the Notes upon the election of the Requisite Holders, (ii) the Requisite Holders
elected to convert all outstanding principal and interest under the Notes into shares of
Common Stock at a price $0.15 per share (the conversion price under the Notes. In connection with the Offering, the Company also
entered into a Third Amendment to Investor Rights Agreement (the “Investor Rights Agreement Amendment”) with the purchasers
of the Units and the Requisite Holders under which the Company has provided registration rights with respect to the Common Stock
issued in the Offering and the shares of Common Stock issuable upon conversion of the Preferred Shares and exercise of the Warrants.</p>
<p style="margin: 0pt"></p>5200006.7368182500000<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="3"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Warrants</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Exercise Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Expiration</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 24%; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Outstanding at July 31, 2011</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 19%">45,833,328</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 19%; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">$0.15 - $0.50</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 19%; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/12 to 4/7/16</font></td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Expired</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Issued </font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Outstanding at July 31, 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">45,833,328</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">$0.15-$0.50</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/12 to 4/7/16</font></td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Expired</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(21,666,664</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">$ 0.15</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/12</font></td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Issued </font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">126,261,840</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">$ 0.003168</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">12/14/22</font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Outstanding at January 31, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">150,428,504</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">$0.003168 - $0.50</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/14 to 12/14/22</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 9 - Stock Options</u></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>2004 Stock Incentive Plan</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company's stockholders approved
the 2004 Stock Incentive Plan (the “2004 Plan”) for the issuance of up to 8,500,000 shares, which provides that common
stock and stock options may be granted to employees, directors and consultants. The 2004 Plan provides for the granting of stock
options, stock appreciation rights, restricted shares, or other share based awards to eligible employees and directors, as defined
in the 2004 Plan. Options granted under the 2004 Plan will have an exercise price equal to the market value of the Company’s
common stock on the date of the grant. The term, vesting period and time and method of exercise of options granted under the 2004
Plan are fixed by the Board of Directors or a committee thereof.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>1997 Stock Option Plan</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The Company’s stockholders approved
the 1997 stock option plan for the issuance of options for up to 2,000,000 shares, which provides that options may be granted to
employees, directors and consultants. Options are granted at market value on the date of the grant and generally are exercisable
in 20% increments annually over five years starting one year after the date of grant and terminate five years from their initial
exercise date. This plan expired in May 2007 except to the extent there are outstanding options.</p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>Option Activity </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The following table summarizes stock
option activity for the period July 31, 2012 through January 31, 2013:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td colspan="3" style="text-align: center"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Shares Available for Grant</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Options Outstanding</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Weighted Average Exercise Price Per Share</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Weighted Average Remaining Contractual Term</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Aggregate Intrinsic Value</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 18%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance July 31, 2012</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">3,065,333</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">5,414,267</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> $</td>
<td style="text-align: right; width: 13%">0.80</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">4.71</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 13%">20,985</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Cancelled/Expired</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">20,000</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(140,600</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.58</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Exercised</font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance January 31, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">3,085,333</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">5,273,667</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt">0.73</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt">4.29</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt">—</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable at January 31, 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 0; text-align: right"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 0; text-align: right"> </p></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4,073,667</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">0.45</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4.03</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt 22.5pt; text-align: justify"> </p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td colspan="3" style="text-align: center"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Shares Available for Grant</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Options Outstanding</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Weighted Average Exercise Price Per Share</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Weighted Average Remaining Contractual Term</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Aggregate Intrinsic Value</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 18%; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance July 31, 2012</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">3,065,333</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">5,414,267</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">0.80</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 13%">4.71</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 13%">20,985</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Cancelled/Expired</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">20,000</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(140,600</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.58</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Exercised</font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Balance January 31, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">3,085,333</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">5,273,667</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt">0.73</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt">4.29</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt">—</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable at January 31, 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 0; text-align: right"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 5.05pt 0 0; text-align: right"> </p></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4,073,667</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">0.45</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4.03</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt 22.5pt; text-align: justify"> </p>
<p style="margin: 0pt"></p>85000002000000<p style="margin: 0pt"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 10 - Subsequent
Events</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">On February 5, 2013, Charles Muniz was
removed as a director on the Company’s Board of Directors (“BOD”) pursuant to an action by written consent of
the stockholders constituting over a majority of the outstanding capital stock entitled to vote at an election of directors in
accordance with Article II, Section 10 and Article III, Section 14 of the By-Laws. In addition, Fred Knoll, Patrick Ostronic and
Ms. Sulley were elected by the requisite stockholders’ vote to the Company’s BOD to fill the existing vacancies on
the BOD and to serve in such positions until the next annual meeting of stockholders or until their earlier removal or resignation.
Dr. David Sidransky will remain the Chairman of the BOD of the Company. Fred Knoll is the principal of Knoll Capital and an affiliate
of one of the principal stockholders, Europa International, Inc. Patrick Ostronic is affiliated with Unilab LP, another principal
stockholder.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 25, 2013, the SEC has commenced
an administrative proceeding against the Company alleging that the Company is delinquent in filing its periodic filings with the
SEC since the Company has not filed any of its periodic reports since the quarterly report on Form 10-Q filed for the period ended
January 31, 2011. The purpose of the hearing is to determine whether it is appropriate for the SEC to suspend for a period of up
to 12 months or to permanently revoke the registration of the Company’s common stock pursuant to Section 12 of the Securities
Exchange Act of 1934. This action was instituted concurrently with a temporary suspension of trading of the common stock ordered
by the SEC from January 25, 2013 through February 7, 2013. The Company has responded to SEC motion and is attempting to become
current. The Company has filed its two delinquent Form 10-Ks for the years ending July 31, 2012 and 2011 and is in the processes
of filings its delinquent Form 10-Qs.</p>
<p style="margin: 0pt"></p><p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 4.3pt; text-align: justify; text-indent: -4.3pt"><u>NOTE 8
- Common Stock Warrants </u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">The following table summarizes the activity
of common stock warrants issued in fiscal 2012 and the six months ended January 31, 2013:</p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="3"> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Warrants</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Exercise Price</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">Expiration</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 24%; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Outstanding at July 31, 2011</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 19%">45,833,328</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 19%; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">$0.15 - $0.50</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 19%; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/12 to 4/7/16</font></td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Expired</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Issued </font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">—</td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Outstanding at July 31, 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">45,833,328</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">$0.15-$0.50</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/12 to 4/7/16</font></td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Expired</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(21,666,664</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">$ 0.15</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/12</font></td>
<td style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Issued </font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">126,261,840</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt">$ 0.003168</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="text-align: right; padding-bottom: 1pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">12/14/22</font></td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">Outstanding at January 31, 2013</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">150,428,504</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">$0.003168 - $0.50</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="text-align: right; padding-bottom: 2.5pt; font-size: 10pt"><font style="font: 10pt/115% Times New Roman, Times, Serif">10/19/14 to 12/14/22</font></td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"> </p>
<p style="margin: 0pt"></p>14204105792762022762021258691258693878673914920.340.1220985000.263065333306533354142675273667.8.734.714.29-140600.58200004073667.4504.0337606540013846920485540183<p style="margin: 0pt"></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify"><u>NOTE 5 – Accrued Expenses</u></p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify">Accrued expenses consisted of the
following:</p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">January 31, 2013</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">July 31, 2012</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 60%">Accrued compensation expenses</td>
<td style="width: 2%"> </td>
<td style="text-align: left; width: 2%">$</td>
<td style="text-align: right; width: 15%">86,780</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 3%">$</td>
<td style="text-align: right; width: 11%">84,343</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">Other</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">138,712</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">128,736</td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 11pt">Total accrued expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">225,492</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">213,079</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0pt"></p><table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">January 31, 2013</td>
<td style="padding-bottom: 1pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center; font-weight: bold">July 31, 2012</td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-left: 5.4pt; width: 60%">Accrued compensation expenses</td>
<td style="width: 2%"> </td>
<td style="text-align: left; width: 2%">$</td>
<td style="text-align: right; width: 15%">86,780</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 5%"> </td>
<td style="text-align: left; width: 3%">$</td>
<td style="text-align: right; width: 11%">84,343</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">Other</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">138,712</td>
<td style="text-align: left; padding-bottom: 1pt"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">128,736</td>
<td style="text-align: left; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 11pt">Total accrued expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">225,492</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">213,079</td>
<td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>-59551024583382815042850445833328-216666640.1501262618400.003168049.54348487034848700-34848700Tamir Biotechnology, Inc.000070871710-Q2013-01-31true--07-31NoNoNoNon-accelerated Filer64689430217364331Q22013include xbrlEX-101.SCH
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This element represents the amount of recognized equity-based compensation related to stock options during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 18
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 19
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
The cash inflow associated with the amount received from holders exercising their stock options. This item inherently excludes any excess tax benefit, which the entity may have realized and reported separately.
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph i
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 18
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 19
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
The weighted average price at which option holders acquired shares when converting their stock options into shares under the plan during the reporting period.
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(e)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
The weighted average price as of the balance sheet date at which grantees can acquire the shares reserved for issuance on stock options awarded under the plan during the reporting period.
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(d)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
The addition or reduction in the number of reserved shares that could potentially be issued under the option plan attributable to reasons other than grants, exercises, forfeitures, and expirations during the reporting period.
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
The total dollar difference between fair values of the underlying shares reserved for issuance and exercise prices pertaining to options outstanding under the plan as of the balance sheet date.
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph d(1)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
The weighted-average period between the balance sheet date and expiration date for fully vested and expected to vest options outstanding, which may be expressed in a decimal value for number of years.
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph d(1)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
Property and equipment, at cost, consists of
the following:
January 31, 2013
July 31, 2012
Laboratory equipment
$
276,202
$
276,202
Office equipment
125,869
125,869
Less accumulated depreciation
(391,492
)
(387,867
)
Property and equipment, net
$
10,579
$
14,204
Depreciation was $1,812 and $3,624
for the three months ended January 31, 2013 and 2012, and $2,417 and $4,918 for the six months ended January 31, 2013 and 2012,
respectively.
The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.