0001019687-11-001222.txt : 20110415 0001019687-11-001222.hdr.sgml : 20110415 20110415171402 ACCESSION NUMBER: 0001019687-11-001222 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20101231 FILED AS OF DATE: 20110415 DATE AS OF CHANGE: 20110415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL DETECTION TECHNOLOGY CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09327 FILM NUMBER: 11763651 BUSINESS ADDRESS: STREET 1: 9595 WILSHIRE BOULEVARD, SUITE 700 CITY: BEVERLY HILLS STATE: CA ZIP: 90212 BUSINESS PHONE: 3102483655 MAIL ADDRESS: STREET 1: 9595 WILSHIRE BOULEVARD, SUITE 700 CITY: BEVERLY HILLS STATE: CA ZIP: 90212 FORMER COMPANY: FORMER CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 10-K 1 udt_10k-123110.htm FORM 10-K udt_10k-123110.htm



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

FORM 10-K
(Mark One):

ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
o
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 001-09327

UNIVERSAL DETECTION TECHNOLOGY
 (Exact name of registrant as specified in its charter)
California
 
95-2746949
(State or other jurisdiction
 of incorporation or organization)
 
(I.R.S. Employer
 Identification No.)

340 North Camden Drive, Beverly Hills, CA
 
90210
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (310) 248-3655

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes  o    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes  o    No  þ

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  þ     No   o

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

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 o
Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)
Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No þ
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value of the common stock held by non-affiliates as of June 30, 2010 was $2,448,864. As of April 15, 2011, there were 3,587,599,829 shares of the registrant’s common stock outstanding.
 
 



 
 

 

PART 1
 
FORWARD-LOOKING STATEMENTS
 
This annual report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this annual report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management's beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this annual report. Factors that can cause or contribute to these differences include those described under the headings "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations."
 
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this annual report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this annual report which would cause actual results to differ before making an investment decision. We are under no duty to update any of the forward-looking statements after the date of this annual report or to conform these statements to actual results.
 
ITEM 1. DESCRIPTION OF BUSINESS
 
OVERVIEW
 
Universal Detection Technology (the "Company," “UDT” or "We") is engaged in the marketing and resale of detection devices for chemical, biological, radiological, nuclear, and explosive (CBRNE) threats. Through agreements with various third parties we supply bioterrorism detection kits capable of detecting anthrax, ricin, botulinum, plague, and SEBs, mold detection kits, chemical detection equipment, radiation detection systems, and counter-terrorism training references.
 
We have entered into supply and distribution agreements with four parties enabling us to supply a host of products and services for detection of hazardous materials and training references. By combining our in-house experience and knowledge and outside expertise offered by various consultants and third parties, we have added threat evaluation and consulting services, and training courses to our services.  We sell and market security and counter-terrorism products including bioterrorism detection kits, chemical detectors, radiation detection systems, and training references. Some of the products and services we offer have not been sold to date and there is no guarantee that any of them will be demanded and sold in the market in the future. We plan to continue expanding our product base and intend to sell products to more users inside and outside the U.S. Our strategy is to generate sales by enhancing our web presence and marketing the Company as a supplier of complete CBRNE detection equipment. We plan to attend various industry trade shows and to offer products in certain training scenarios so that first responders can become more familiar with our products.  Our target customer markets primarily consist of first responders with some emphasis on the bioterror and military defense market. Our geographical customer focus is on the U.S., Europe, and Asia. There is no guarantee that we will succeed in implementing this strategy or if implemented, that this strategy will be successful.
 
In 2010 we realized revenues of $5,368 from sales. We have incurred losses for the fiscal years ended December 31, 2010 and 2009 in the approximate amounts of $2.2 and$4.6 million, respectively, and have an accumulated deficit of $45.4 million as of December 31, 2010. At December 31, 2010, we were in default on certain debt obligations totaling approximately $428,240, in addition to accumulated interest of approximately $652,920. We require approximately $1.2million in the next 12 months to repay debt obligations. We do not anticipate that our cash on hand is adequate to meet our operating expenses over the next 12 months. In addition, we do not have adequate capital to repay all of our debt currently due and becoming due in the next 12 months. We principally expect to raise funds through the sale of equity or debt securities. During the past 12 months, management spent the substantial majority of its time on sales and marketing of Company’s products and services. These activities diverted management from capital raising activities. We will actively continue to pursue additional equity or debt financing in the coming months, but cannot provide any assurances that it will be successful or on terms that are acceptable to us. If we are unable to pay our debts as they become due and are unable to obtain financing on terms acceptable to us, or at all, we will not be able to accomplish any or all of our initiatives and will be forced to consider other alternatives including suspending our business operations.


 
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INDUSTRY BACKGROUND
 
The tragic events of September 11, 2001 redefined a new age of public safety and security, not only for the United States, but also for the entire world. In the wake of the tragedy, the world was shocked to learn of another nontraditional, deadly asymmetric weapon was being deployed: lethal bioagents. A week after 9/11, envelopes containing anthrax, delivered by the U.S. Postal Service, were sent to five news media outlets, and on October 9th, two U.S. Senate offices.
 
By November 2001, 22 people in four states and the District of Columbia contracted anthrax, many of them through the tainting of letters via the postal sorting machines. In all, the bioterrorism attacks claimed six lives.
 
The Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism, led by an independent U.S. congressional committee, asserts that a large scale biological attack, expected to hit somewhere in the world by the end of 2013, has yet to be seen.
 
Along with the grave predictions in the December 2008 report, World at Risk, the Commission listed recommendations on how the government can reduce the risk of a biological attack. In January 2010, the commission issued a report card following up on those recommendations. For its efforts to “enhance the nation’s capabilities for rapid response to prevent biological attacks from inflicting mass casualties,” the government received an “F” letter grade.
 
The United States Department of Homeland Security was formed  to consolidate the federal government's efforts to secure the U.S. homeland, with the primary goal being an America that is stronger, safer, and more secure. The private sector also has responded to the need for preparedness against bioterrorism by developing numerous anti-terror products and services. As a result a market for anti-terror products and counter-attack products in the bioagent, nuclear,  physical and radiological spheres has developed and continues to expand.
 
OUR SOLUTIONS

Universal Detection Technology is a supplier of equipment and services used for detection of:

 
·
Chemical threats
 
·
Biological threats
 
·
Radiological and Nuclear threats
 
·
Explosives
 
·
Mold

The chemical detection kits offered by Universal Detection Technology serve to equip first responders and military personnel  with tools that rapidly identify the presence of a chemical agent threat, such as extreme levels of acidity or basicity, chlorine/fluoride, hydrogen sulfide and sulfur dioxide. Designed for use in the field for first responders or military personnel, the "Chameleon" detection system offers hands-free detection for harmful chemical agents and eliminates the need for a liquid sample. Users wear a portable chemical detection kit on their forearm. Each armband has a cassette holder containing up to ten (10) small cassettes, each of which can detect a unique chemical agent and identify its presence through a clear color-changing indicator. The Chameleon armband is fully functioning in extreme temperatures (-30 C to 50 C or -22 F to 122 F), and can operate while fully immersed in water.  The Chameleon  armband is a hand-held chemical detection device which we market and sell to first responders. We purchase and distribute the Chameleon device from Morphix Technologies under an open-ended supply and distribution agreement. To date, we have sold a nominal number of such units resulting in insignificant revenue amounts.  We have no exclusive rights under the distribution agreement and the agreement may be terminated upon 30 days prior notice by either party, or immediately upon a breach of the agreement.  Under the terms of the Agreement, we are permitted to sell these products within the United States only.

The Company’s biological detection equipment gives first responders the ability to immediately identify the presence of deadly agents in a sample. These biological detection kits are handheld assays capable of detecting anthrax, ricin toxin, botulinum, plague, SEBs, and tularemia. The Company is in the process of adding more biological agents to the list of the threats that these handheld kits can identify. The detection kits are sold as TS-10-5, TS-10-T-5, ANT-12, RIC-12, BOT-12, PLA-12, SEB-12, TUL-12. We purchase and distribute these kits from Advnt Biotechnologies, LLC under a one year VAR and distribution agreement. During 2010, we have sold approximately 80 of such units. A majority of our revenues in 2010 were derived from the sales of these units. We have no exclusive rights under the distribution agreement. The agreement may be terminated by either party upon 60 days prior notice by either party or immediately upon a breach of the agreement.  Under the terms of the agreement, we are permitted to sell these products throughout the world with no geographic restrictions.


 
3

 

In February 2011, The Company entered into a reseller agreement with Mirion Technologies Inc. Through the agreement, the Company offers nuclear detection and monitoring devices created and made by Mirion that include electronic dosimetry and teledosimetry devices. We have no exclusive rights under the distribution agreement.  Under the terms of the original agreement, we are permitted to sell these products in the United States only. However, we have amended the agreement via various items of correspondence with Mirion such that we can sell these products in other parts of the world, including Japan. In addition to electronic dosimetry and teledosimetry, other best-in-breed solutions include contamination and clearance applications, personnel and vehicle/cargo gateway monitors and portable survey meters. The Company, under its agreement with Mirion, also provides innovative passive dosimetry systems for measurement of cumulative radiation exposures. Radiation detection product lines include:

 
·
Active Dosimetry, Teledosimetry and Portable Instruments
 
·
Contamination and Clearance
 
·
Passive Dosimetry Systems

UDT’s Mold detection kit utilizes a highly accurate testing technology called immunochromatographic assay, also known as a rapid test or Hand-Held Assay (HHA). These devices have been used for over 30 years in the medical field for detecting disease, fertility, drugs of abuse and respiratory disorders. Designed to rapidly detect the presence of specific substances in field-collected samples, HHA’s have proven to be an indispensable tool for saving countless lives while reducing the time it takes to acquire results. Unlike the ATP test which detects any and all living cells, regardless of what those cells are, UDT’s kits detect only specific species of Aspergillus, Penicillium and Stachybotrys such as Stachybotrys chlorohalonata, Stachybotrys microspora, Stachybotrys echinata and Stachybotrys chartarum, in addition to certain Aspergillus and Penicillium sub-species. Each kit is individually packaged and includes everything necessary to run the test. No additional collection kits, readers or electronics are required. The Mold detection kit is sold as the MDK-2. We purchase and distribute MDK-2 from Advnt Biotechnologies LLC under the agreement described above. During 2010, we did not sell any MDK-2 units.
 
Universal Detection Technology has also situated itself to provide various counter-terrorism services. Such services include training courses for first responders, event security, threat evaluation & consulting, and DVDs aimed at providing information and training regarding combating terrorism and managing emergency situations. Through a reseller agreement with Detrick Lawrence Corporation and its division, the Emergency Film Group, we market and sell a series of DVD’s related to combating terrorism and handling emergency situations and first response. To date, we have sold only a nominal amount of these services and products and the resulting revenue for 2010 was insignificant.
 
MARKETING AND SALES
 
Our sales and marketing plan includes strategic partnership agreements and retention of our in-house staff and outside consultants. The Company has retained the services of consultants to market its products in the United States and internationally. In the United States, we plan to continue presenting our technologies at industry events and trade shows. We also retain domestic distributors and consultants to arrange meetings with and presentations to building owners and operators, government officials in charge of decisions for safety and security of government and private venues and buildings, homeland security officials, and security companies. In 2010 we continued to aggressively use the internet to market and promote Universal Detection Technology and its products and services to the public. This strategy includes creation of an interactive and informational presence through our website and use of various third parties to bring traffic to our website. We have hired an outside consultant to help expedite the changes and enhancements to our website. We have been successful in generating  traffic to the Universal Detection website. We intend to do more internet marketing and search engine optimization activities in 2011.
 
We also plan to develop brand recognition for our Company and for our product through attendance at national and international defense related exhibitions, use of print and video promotional materials, and by granting interviews to national and international news media.
 
In October 2010, we registered as supplier in Raytheon Corporation's supplier network database.  That registration allows us to post, in that database, a selection of the products we are authorized to resell.  To date, we have generated no purchase orders from this data base registration and we can make no assurance that any sales will be generated through this database listing.

 
4

 
 
In September of 2010, we sold approximately $2,000 of biological weapons detection kits and training test kits to Boeing Corporation under a stand-alone purchase order. The order was for 10 training test kits and 20 five-agent biological weapons detection kits. To date, Boeing has not ordered any other product form us and we can make no assurances that Boeing will ever order additional product from us in the future.
 
We currently sell and plan to sell our products through a combination of unsolicited telephone orders, electronically generated sales via our website and in follow up to customer meetings or tradeshows.
 
MANUFACTURING
 
Currently, we do not have any manufacturing capabilities. In the past we have used original equipment manufacturers to manufacture our products. In addition to our own brands we also market third party brands that are related to our field of business. We are not obligated to continue to work with any of our current suppliers. As such, we may choose to work with other suppliers in the future.  Should any of our supply and distribution agreements be terminated, we believe we can source adequate replacement supply parties and products without causing any material disruption to our business.
 
EMPLOYEES
 
As of December 31, 2010, we had a total of three employees. We also employ outside consultants from time to time to provide various services. None of our employees are represented by a labor union. We consider our employee relations to be good.
 
COMPETITION

We face intense competition from a number of companies that offer products in our targeted application areas. Our competitors may offer or be developing products superior to ours. Our competitors may be significantly better financed than us. There are various technological approaches available to our competitors and us that may be applicable to the detection of pathogens in the air or on surfaces, and the feasibility and effectiveness of these techniques has yet to be fully evaluated or demonstrated. Several companies provide or are in the process of developing instruments for detection of bioterrorism agents. Such technologies include a diverse range of products from PCR and DNA analyzers to handheld immunoassay technologies. For example, Northrup Grumman supplies a system called the BDS, which is a large machine that collects air samples from areas that are being monitored and after performing DNA amplification tests for the DNA of the anthrax bacteria. The  bio-detection kits we sell, on the other hand, are small handheld assays that work based on sandwich immunoassay technology.

We also expect to encounter intense competition from a number of new development-stage companies that continue to  enter the bioterrorism detection device market. Our competitors may succeed in developing or marketing technologies and products that are more effective or commercially attractive than our potential products or that render our technologies and potential products obsolete. As these companies develop their technologies, they may develop proprietary positions that prevent us from successfully commercializing
our products.

INTELLECTUAL PROPERTY

The Company does not own any intellectual property rights with respect to the products it markets and sells. As such, the Company may be at a competitive disadvantage with respect to protecting its ability to continue to market and sell any particular device, even if such device is in high demand. In contrast, many of the Company's competitors develop proprietary technologies and devices which compete with the products marketed by and sold by the Company.  As such, such competitors can control the marketing, sales and further development of their product offerings in a manner that the Company cannot.  Because the Company is a re-seller of products developed by other parties, it cannot control its product offerings as well as its competitors may be able to.

GENERAL

The Company was formed on December 24, 1971 in the State of California under the name Pollution Research and Control Corporation. It has operated continuously since that date. In August, 2003 the Company changed its name to Universal Detection Technology.


 
5

 

ITEM 1A. RISK FACTORS
 
YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL REPORT. SOME OF THE INFORMATION CONTAINED IN THIS DISCUSSION AND ANALYSIS OR SET FORTH ELSEWHERE IN THIS ANNUAL REPORT, INCLUDING INFORMATION WITH RESPECT TO OUR PLANS AND STRATEGIES FOR OUR BUSINESS, INCLUDES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. YOU SHOULD REVIEW THE "RISK FACTORS" SECTION OF THIS REPORT FOR A DISCUSSION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE RESULTS DESCRIBED IN OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD SUFFER.
 
OUR INDEPENDENT AUDITORS' REPORT EXPRESSES DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Our independent auditors' report, dated April 15, 2011 includes an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern, due to our working capital deficit at December 31, 2010. We have experienced operating losses since the date of the auditors' report. Our auditor's opinion may impede our ability to raise additional capital on terms acceptable to us. If we are unable to obtain financing on terms acceptable to us, or at all, we will not be able to accomplish any or all of our initiatives and will be forced to consider steps that would protect our assets against our creditors. If we are unable to continue as a going concern, your entire investment in us could be lost.
 
WE ARE IN DEFAULT OF A SUBSTANTIAL PORTION OF OUR DEBT AND DO NOT HAVE ADEQUATE CASH TO FUND OUR WORKING CAPITAL NEEDS. OUR FAILURE TIMELY TO PAY OUR INDEBTEDNESS MAY REQUIRE US TO CONSIDER STEPS THAT WOULD PROTECT OUR ASSETS AGAINST OUR CREDITORS.
 
If we cannot raise additional capital, we will not be able to repay our debt or pursue our business strategies as scheduled, or at all, and we may cease operations. We have been unable to pay all of our creditors and certain other obligations in accordance with their terms, and as a result, at December 31, 2010 we are in default on a portion of our debt totaling approximately $428,240 excluding accumulated interest of approximately $652,920. In the aggregate, as of December 31, 2010, we have approximately $1.9 million in debt obligations, including interest, owing within the next 12 months. We cannot assure you that any of these note-holders will agree to extend payment of these debt obligations or ultimately agree to revise the terms of this debt to allow us to make scheduled payments over an extended period of time.
 
We have nominal cash on hand and short-term investments and we do not expect to generate material cash from operations within the next 12 months. We have attempted to raise additional capital through debt or equity financings and to date have had limited success. The downtrend in the financial markets has made it extremely difficult for us to raise additional capital. If we are unable to raise capital successfully, or reduce our debt through other means, we may be unable to continue operations.
 
THE COMPANY DOES NOT OWN ANY PROPRIETARY OR INTELLECTUAL PROPERTY RIGHTS IN THE PRODUCTS IT MARKETS AND SELLS
 
The Company does not own any intellectual property rights with respect to the products it markets and sells. The Company is a "reseller" of products available to it under supply and distribution agreements. As such, the Company may be at a competitive disadvantage with respect to protecting its ability to continue to market and sell any particular device, even if such device is in high demand. The Company cannot assure the availability of the products it sells or any improvements on such products.  In addition, should such products become the subject of infringement claims by third parties, the Company may be unable to continue selling such products while such claims are unresolved.   The Company would be forced to rely on the efforts of the owners of the products and underlying technologies to defend such suits should they arise.  Such legal challenges, should they arise, would be detrimental to our operations. The Company believes it could source other suppliers of products should any of its suppliers become unable to sell product for any reason, however there can be no assurance that such replacement suppliers can be found timely or upon terms acceptable to the Company, if at all.

 
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WE HAVE NO ABILITY TO FINANCE SIGNFICANT ORDERS OF OUR PRODUCTS OR TO PREPAY FOR ORDERS THAT MAY REQUIRE SUCH PAYMENT; WE MAY BE UNABLE TO TIMELY FULFILL ORDERS, IF AT ALL
 
The Company is a "reseller" of products available to it under supply and distribution agreements.When we obtain products for resale to our customers, we must be able to finance the purchase of such products. When the quantities and/or unit prices are low or nominal, we can finance that acquisition through existing cash, or require pre-payment from our customers, or request that the supply invoices be payable at a point in the future subsequent to the collection of the purchase price from our customers.  The products we offer vary in price from several hundred dollars per unit to several thousand dollars per unit. From time to time, our management has made loans to the Company the proceeds of which are used for general operations including the acquisition of limited amount of product for demonstration and resale.  Currently, we believe that none of our accounts receivable would be attractive to commercial finance lenders or factors as a means to finance product acquisition.  Should we be successful in generating significant purchase requests for the products we market and sell, we may be unable to process those orders due to a lack of financing opportunities and  a lack of cash on hand. While we may attempt to structure such orders, should they arise, in a way that provides for payment in advance from customers, or payment of invoices after customer collection, or upon a factoring or other finance arrangement, there can be no assurance that we can structure the financing terms in a manner that supports product acquisition in large quantities, if at all.  In addition, we have no control over how quickly our suppliers will make product available to us. Even assuming we can finance orders of all sizes, we must rely upon our suppliers to provide product and ship product in a timely manner. However, we cannot control the timing and shipment of the products that we resell.  If we are able to generate purchase orders, we may be unable to fulfill them timely and upon financing terms acceptable to us or our suppliers and customers, which would be detrimental to our operations.
 
THE SECRETARY OF STATE OF CALIFORNIA HAS ASSIGNED A "SUSPENDED" STATUS TO OUR CORPORATE ENTITY WHICH MAKES US VULNERABLE TO CHALLENGE AND UNABLE TO TAKE ACTIONS THAT CORPORATIONS IN GOOD STANDING MAY TAKE
 
Due to a failure to timely file certain state and franchise tax returns in the State of California, the Secretary of State of California has suspended our corporate status.  We have since made all filings required by the Franchise Tax Board in the State of California, together with all fees, taxes and penalties due.  We fully expect the status of the corporation to be restored to "active" and for the Company to be in good standing in the State of California. Until restored we have limited abilities to function as a corporation under the laws of the State of California and we are vulnerable to suit and challenge of our activities since our suspended status became effective. We if are unable to promptly restore our good standing, our operations will be adversely affected, which would be detrimental to our shareholders.
 
WE HAVE A HISTORY OF LOSSES AND WE DO NOT ANTICIPATE THAT WE WILL BE PROFITABLE IN FISCAL 2011.
 
We do not anticipate generating significant sales. We have not been profitable in the past years and had an accumulated deficit of approximately $45.4million at December 31, 2010. We have had little revenues from sales of our products since the beginning of fiscal 2002, the commencement of our entry in the counter terrorism market. During the fiscal years ended December 31, 2010 and 2009, we had losses of $2.2 and$4.6 million, respectively. During fiscal 2010, we had gross revenues of $5,368. Achieving profitability depends upon numerous factors, including our ability to develop, market, and sell commercially accepted products timely and cost-efficiently. We do not anticipate that we will be profitable in fiscal 2011.
 
IF WE OBTAIN FINANCING, EXISTING SHAREHOLDER INTERESTS MAY BE DILUTED.
 
If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our shareholders will be diluted. In addition, any convertible securities issued may not contain a minimum conversion price, which may make it more difficult for us to raise financing and may cause the market price of our common stock to decline because of the indeterminable overhang that is created by the discount to market conversion feature. In addition, any new securities could have rights, preferences and privileges senior to those of our common stock. Furthermore, we cannot assure you that additional financing will be available when and to the extent we require or that, if available, it will be on acceptable terms.

 
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MANAGEMENT HAS LLIMITED EXPERIENCE IN SALES AND  DISTRIBUTION. WE MAY NOT BE ABLE TO MARKET AND DISTRIBUTE PRODUCTS  EFFECTIVELY, WHICH COULD HARM OUR FUTURE PROSPECTS.
 
If we are unable to establish a successful sales, marketing, and distribution operation, we will not be able to generate sufficient revenue in order to maintain operations. We have limited  experience in marketing or distributing new products. We have limited  experience in developing, training, or managing a sales force. If we choose to establish a direct sales force, we will incur substantial additional expense. We may not be able to build a sales force on a cost effective basis or at all. Any direct or internet marketing and sales efforts may prove to be unsuccessful. In addition, our marketing and sales efforts may be unable to compete with the extensive and well-funded marketing and sales operations of some of our competitors. We also may be unable to engage qualified distributors. Even if engaged, they may fail to satisfy financial or contractual obligations to us, or adequately market our products.
 
OUR PRODUCTS MAY NOT BE COMMERCIALLY ACCEPTED WHICH WILL ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY.
 
Our ability to enter into the bioterrorism detection device market, establish brand recognition and compete effectively depends upon many factors, including broad commercial acceptance of our products. If our products are not commercially accepted, we will not recognize meaningful revenue and may not continue to operate. The success of our products will depend in large part on the breadth of information these products capture and the timeliness of delivery of that information. The commercial success of our products also depends upon the quality and acceptance of other competing products, general economic and political conditions and other factors, all of which can change and cannot be predicted with certainty. We cannot assure you that our new products will achieve market acceptance or will generate significant revenue.
 
EXISTING AND DEVELOPING TECHNOLOGIES MAY ADVERSELY AFFECT THE DEMAND FOR OUR PRODUCTS.
 
Our industry is subject to rapid and substantial technological change. Developments by others may render our technologies and planned products noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Competition from other companies, universities, governmental research organizations and others diversifying into our field is intense and is expected to increase.
 
SHARES ISSUED UPON THE EXERCISE OF OUR OUTSTANDING OPTIONS AND WARRANTS, OR UPON THE CONVERSION OF PROMISSORY NOTES, MAY DILUTE YOUR STOCK HOLDINGS AND ADVERSELY AFFECT OUR STOCK PRICE.
 
If exercised, our outstanding options and warrants will cause immediate and substantial dilution to our stockholders. We have issued options and warrants to acquire our common stock to our employees, consultants, and investors at various prices, some of which are or may in the future be below the market price of our stock. As of December 31, 2010, we had outstanding options and warrants to purchase a total of 539,750shares of common stock. Of these options and warrants, all have exercise prices at or above the recent market price of $0.001 per share (as of April 8, 2011) and none have exercise prices at or below this price.  In addition, because of our financial condition and substantial indebtedness and our need to raise capital, from time to time we have converted outstanding debt obligations into common stock. During 2010, we converted debt at conversion prices ranging from $.006  to $.0038 per share.  Our conversion of outstanding debt obligations to common stock, as well as the exercise of outstanding options and warrants to purchase common stock, which the Board of Directors may authorize and undertake from time to time, may dilute the stockholdings of current shareholders.
 
THE LOSS OF OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER WOULD DISRUPT OUR BUSINESS.
 
Our success depends in substantial part upon the services of Jacques Tizabi, our President, Chief Executive Officer and Chairman of the Board of Directors. The loss of or the failure to retain the services of Mr. Tizabi would adversely affect the development of our business and our ability to realize profitable operations. We do not maintain key-man life insurance on Mr. Tizabi and have no present plans to obtain this insurance.

 
8

 

 
WE MAY BE SUED BY THIRD PARTIES WHO CLAIM THE PRODUCTS WE SELL INFRINGE ON THEIR INTELLECTUAL PROPERTY RIGHTS. DEFENDING AN INFRINGEMENT LAWSUIT IS COSTLY AND WE MAY NOT HAVE ADEQUATE RESOURCES TO DEFEND OURSELVES.
 
We may be exposed to future litigation by third parties based on claims that the products we sell  infringe on the intellectual property rights of others or that we have misappropriated the trade secrets of others. This may be true even if we do not own the technologies embedded in the products we sell. This risk is compounded by the fact that the validity and breadth of claims covered in technology patents in general and the breadth and scope of trade secret protection involves complex legal and factual questions for which important legal principles are unresolved. Any litigation or claims against us, whether or not valid, could result in substantial costs, could place a significant strain on our financial and managerial resources, and could harm our reputation.

WE HAVE NOT PAID ANY CASH DIVIDENDS AND NO CASH DIVIDENDS WILL BE PAID IN THE FORESEEABLE FUTURE.

We do not anticipate paying cash dividends on our common stock in the foreseeable future, and we cannot assure an investor that funds will be legally available to pay a dividend or that even if the funds are legally available, that a dividend will be paid.

THE APPLICATION OF THE “PENNY STOCK” RULES COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK AND INCREASE YOUR TRANSACTION COSTS TO SELL THOSE STOCK.

As long as the trading price of our common stock is below $5 per share, the open-market trading of our common stock will be subject to the “penny stock” rules. The “penny stock” rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common stock, and may result in decreased liquidity for our common stock and increased transaction costs for sales and purchases of our common stock as compared to other securities.
 
OUR STOCK PRICE IS VOLATILE.
 
The trading price of our common stock fluctuates widely and in the future may be subject to similar fluctuations in response to quarter-to-quarter variations in our operating results, announcements of technological innovations or new products by us or our competitors, general conditions in the terrorism detection device industry in which we compete and other events or factors. In addition, in recent years, broad stock market indices, in general, and the securities of technology companies, in particular, have experienced substantial price fluctuations. These broad market fluctuations also may adversely affect the future trading price of our common stock.

 
9

 

 
OUR STOCK HISTORICALLY FLUCTUATES WIDELY IN TRADING VOLUME AND PRICE. THEREFORE, SHAREHOLDERS MAY NOT BE ABLE TO SELL THEIR SHARES FREELY OR AT PRICES AND AT TIMES THAT THEY DESIRE TO SELL SHARES.
 
The volume of trading in our common stock historically has fluctuated and a limited market presently exists for the shares. We have no analyst coverage of our securities. The lack of analyst reports about our stock may make it difficult for potential investors to make decisions about whether to purchase our stock and may make it less likely that investors will purchase our stock. Our stock trades in a wide fluctuation of volume that we cannot predict or control.  We cannot assure you that our trading volume will increase, or that our historically light trading volume or any trading volume whatsoever will be sustained in the future. Therefore, we cannot assure you that our shareholders will be able to sell their shares of our common stock at the time or at the price that they desire, or at all.
 
POTENTIAL ANTI-TAKEOVER TACTICS AND RIGHTS AND PREFERENCES GRANTED THROUGH THE ISSUANCE OF PREFERRED STOCK RIGHTS MAY BE DETRIMENTAL TO COMMON SHAREHOLDERS.

We are authorized to issue up to 20,000,000 shares of preferred stock. The issuance of preferred stock does not require approval by the shareholders of our common stock. Our Board of Directors, in its sole discretion, has the power to issue preferred stock in one or more series and establish the dividend rates and preferences, liquidation preferences, voting rights, redemption and conversion terms and conditions and any other relative rights and preferences with respect to any series of preferred stock. Holders of preferred stock may have the right to receive dividends, certain preferences in liquidation and conversion and other rights, any of which rights and preferences may operate to the detriment of the shareholders of our common stock. Further, the issuance of any preferred stock having rights superior to those of our common stock may result in a decrease in the market price of the common stock and, additionally, could be used by our Board of Directors as an anti-takeover measure or device to prevent a change in our control.

WE ARE SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT.  IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Management, including our Chief Executive Officer ("CEO"), who is also our acting Chief Financial Officer ("CFO"), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of a date (the "Evaluation Date") as of the end of the reporting period covered by  the Company's Annual Report on Form 10-K, December 31, 2010. The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
Our management performed such an evaluation and based on such evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


 
10

 

INTERNAL CONTROL OVER FINANCIAL REPORTING

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal  executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to  provide reasonable assurance regarding the reliability of financial  reporting and the preparation of financial statements for external  purposes in accordance with accounting principles generally accepted in the United  States of America and includes those policies and procedures that:

     *    Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
     *    Provide reasonable assurance that transactions are recorded  as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
     *    Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
 
As of December 31, 2010 Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such  assessments. Based on that evaluation,  they concluded that, as of the end of the period covered by this report, such  internal controls over financial reporting were not effective to control deficiencies that constituted material weaknesses.   A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.

Our failure to maintain adequate disclosure controls and procedures and internal control over financial reporting may mean that prospective investors and partners will lack confidence in our financial statements, which could cause us to lose financing opportunities or business opportunities, each of which could have a material adverse effect on our business and on our stock price and trading.  While our management is working to remedy the material weaknesses there can be no assurance that such actions will be successfully implemented or that we will be able to fully overcome such material weaknesses.

OUR ISSUANCE OF ADDITIONAL COMMON STOCK, OR OPTIONS TO PURCHASE OUR STOCK, WOULD DILUTE YOUR PROPORTIONATE OWNERSHIP AND VOTING RIGHTS.

We are entitled under our articles of incorporation to issue up to 20,020,000,000 shares of capital stock which includes 20,000,000,000 shares of common stock, 20,000,000 shares of Preferred Stock. Our Preferred Stock may be designated in a senior position to our common stock. After taking into consideration our outstanding common stock at April 15, 2011 of 3,587,599,829 shares, we will be entitled to issue up to 16,412,400,171 additional shares of common stock and 20,000,000 of Preferred Stock. Our board of directors may generally issue stock, or options or warrants to purchase those shares, without further approval by our stockholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital to further our development or convert outstanding indebtedness to equity. It is also likely that we will be required to issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans. We cannot give you any assurance that we will not issue additional common stock, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.
 
Item 1B.  UNRESOLVED STAFF COMMENTS
 
Not applicable for Smaller Reporting Companies.

 
11

 
 
ITEM 2. DESCRIPTION OF PROPERTY
 
We currently do not own any real property. As of June 2009, we moved our corporate headquarters to 340 N. Camden Drive, Suite 302, Beverly Hills, CA 90210, USA. Our offices are still at this address. Our lease for this premises expires on June 1, 2012. The base monthly rent is $6,896. We believe this operating space is adequate for the Company's needs for the foreseeable future.
 
ITEM 3. LEGAL PROCEEDINGS

On May 15, 2002, Walt Disney World Co. commenced action in the Los Angeles Superior Court  against the Company and a former wholly-owned subsidiary (WALT DISNEY WORLD CO. V. POLLUTION RESEARCH AND CONTROL CORP. AND DASIBI ENVIRONMENTAL CORP.  (Case No. BC 274013 Los Angeles Superior Court) for amounts due in connection with unpaid rent. A judgment was entered for $411,500. No amounts have been paid in connection with the judgment.  As of December 31, 2010, $411,500 has been accrued.
 
On or about April 16, 2004, Plaintiffs A. Sean Rose, Claire F. Rose, and Mark Rose commenced an action in the Los Angeles Superior Court against the Company (A. SEAN ROSE, CLAIRE F. ROSE AND MARK ROSE V. UNIVERSAL DETECTION TECHNOLOGY, FKA POLLUTION RESEARCH AND CONTROL CORPORATION) for amounts allegedly due pursuant to four unpaid promissory notes. On August 2, 2004, the parties executed a Confidential Settlement Agreement and Mutual Releases (the “Agreement”). On December 30, 2005, Plaintiffs commenced an action against the Company, alleging the Company breached the Agreement and sought approximately $205,000 in damages. A judgment was entered on April 11, 2006 for $209,277.58. The Company has previously accrued for this settlement. As of December 31, 2010, we have accrued $559,303 for this settlement including principal and interest.

On June 2, 2006, Plaintiff Trilogy Capital Partners instituted an action in the Los Angeles Superior Court (TRILOGY CAPITAL PARTNERS V. UNIVERSAL DETECTION TECHNOLOGY, ET. AL., Case No. SC089929) against the Company. Plaintiff's Complaint alleged damages against UDT for breach of an engagement letter in the amount of $93,448.54. Also, Plaintiff alleged that UDT had failed to issue warrants to it pursuant to a written agreement. After completing the initial stages of litigation and conducting extensive mediation, Plaintiff and UDT reached a settlement wherein commencing December 15, 2006, UDT would make monthly payments to Plaintiff of $2,000 until a debt of $90,000 plus accrued interest at six percent per annum was fully paid. In exchange, Plaintiff would release all of its claims against UDT. UDT has not been current on all of its agreed payments to Plaintiff.  As of December 31 2010, $28,098 was due under the agreement.

On November 15, 2006, Plaintiff NBGI, Inc. instituted an action in the Los Angeles Superior Court (NBGI, Inc. v. Universal Detection Technology, et. al., Case No. BC361979) against UDT. NBGI, Inc.'s Complaint alleged breach of contract, and requested damages in the amount of $111,014.34 plus interest at the legal rate and for costs of suit. A Motion for Summary Judgment was set for September 11, 2007. The Summary Judgment was granted in NBGI’s favor and judgment has been entered. No payments have been made on this judgment and no actions to enforce the judgment have been taken against UDT.
 
On November 1, 2010 the accounting firm of A.J. Robbins, P.C. filed a lawsuit in the District Court, City and County of Denver, Colorado, seeking recovery of fees allegedly owed for accounting services performed during 2004 to 2008.  The claims have been asserted against UDT and our CEO, Jacques Tizabi, as a result of a personal guarantee. UDT and our CEO dispute that the fees are owed and intends to oppose the suit.On December 15, 2010, Defendants filed an Answer which asserts several defenses. The parties have exchanged initial disclosures, and the matter has been set for trial commencing on December 5, 2011.  Formal discovery has not yet commenced.
 
ITEM 4.                      REMOVED AND RESERVED

 
12

 
 
PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the OTC Bulletin Board under the symbol “UNDT.”  The following table sets forth the high and low bid information of our common stock on the OTC Bulletin Board for each quarter during the last two fiscal years, as reported by the OTC Bulletin Board.  This information reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
 
           
Year
 
Period
 
High Bid
   
Low Bid
 
                 
2009
 
First Quarter
    0.01       0.0033  
   
Second Quarter
    0.01       0.0024  
   
Third Quarter
    0.015       0.0021  
   
Fourth Quarter
    0.0098       0.0023  
                     
2010
 
First Quarter
    0.0035       0.0022  
   
Second Quarter
    0.0048       0.0017  
   
Third Quarter
    0.0038       0.0005  
   
Fourth Quarter
    0.0011       0.0003  
 
HOLDERS OF RECORD
 
As of April 15, 2011, we had 1,321 shareholders of record of our common stock.  Our Transfer Agent is OTR located at 1001 SW Fifth Avenue, Suite 1550, Portland, OR  97204-1143. OTR's phone number is (503) 225-0375.
 
DIVIDEND POLICY
 
We do not currently pay any dividends on our common stock, and we currently intend to retain any future earnings for use in our business. Any future determination as to the payment of dividends on our common stock will be at the discretion of our Board of Directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our Board of Directors including the General Corporation Law of the State of California, which provides that dividends are only payable out of retained earnings or if certain minimum ratios of assets to liabilities are satisfied. The declaration of dividends on our common stock also may be restricted by the provisions of credit agreements that we may enter into from time to time.


 
13

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
 
Set forth in the table below is information regarding awards made through equity compensation plans through December 31, 2010.
 
Plan Category
 
Number of
securities to be
issued upon
exercises of
outstanding options, warrants, and rights
(a)
Weighted-average exercise
price of outstanding options, warrants, and rights
(b)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
Equity compensation plans approved by security holders
N/A
N/A
N/A
       
Equity compensation plans not approved by security holders (1)
     
2006 Stock Compensation Plan
37,500 (2)
N/A
0
2006 Consultant Stock Plan
125,000 (2)
N/A
0
2006-II Consultant Stock Plan
187,500 (2)
N/A
0
2007 Consultant Stock Plan
375,000
N/A
0
2007 Equity Incentive Plan II&III
295,000 (2)(3)
N/A
0
2007 Equity Incentive Plan IV
450,000
N/A
31
2007 Equity Incentive Plan V & VI
1,350,000(4)
N/A
16,109
2008 Equity Incentive Plan
1,500,000
N/A
45
2008 Equity Incentive Plan II
1,650,000
N/A
15,730
2008 Equity Incentive Plan III
2,500,000
N/A
0
2008 Equity Incentive Plan IV
3,800,000
N/A
0
2009 Equity Incentive Plan
10,000,000
N/A
0
2009 Equity Incentive Plan II
60,000,000
N/A
394,588
2009 Equity Incentive Plan III
200,000,000
N/A
0
 

 
(1)
The Company has individual compensation arrangements with Messrs. Amir Ettehadieh and Nima Montazeri. Under these arrangements Messrs. Ettehadieh and Montazeri help the company with matters related to research, business development, and administration. For their services, Messrs. Ettehadieh and Montazeri receive the equivalent of $7,000 worth of common shares of the Company per month, which shares are issued under the then-current equity incentive plan, including those plans listed above.
 
(2)
Represents total number of shares of common stock originally authorized for stock grants.  Stock option grants were not authorized.
 
(3)
Consists of the second and third plans.
 
(4)
Consists of the fifth and sixth plans.

On February 13, 2006, our Board of Directors adopted the 2006 Stock Compensation Plan (the "Plan"). The Plan authorizes common stock grants to our non-executive employees, professional advisors and consultants. We reserved 7,500,000 shares of our common stock for awards to be made under the Plan. The Plan is to be administered by our Board of Directors, or by any committee to which such duties are delegated by the Board.

On June 29, 2006, our Board of Directors adopted the 2006 Consultant Stock Plan (the "2006 Plan"). The 2006 Plan authorizes common stock grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. We reserved 25,000,000 shares of our common stock for awards to be made under the 2006 Plan. The 2006 Plan is to be administered by a committee of one or more members of our Board of Directors.

 
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On November 22, 2006, our Board of Directors adopted the 2006-II Consultant Stock Plan (the "2006-II Plan"). The 2006-II Plan authorizes common stock grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. We reserved 37,500,000 shares of our common stock for awards to be made under the 2006-II Plan. The 2006-II Plan is to be administered by a committee of two or more members of our Board of Directors.

On April 17, 2007, the Board of Directors adopted the 2007 Consultant Stock Plan (the “2007 Plan”).  The 2007 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  We reserved 375,000 shares of our common stock for awards to be made under the 2007 Plan.  The 2007 Plan is to be administered by a committee of two or more members of our Board of Directors.

On June 5, 2007, the Board of Directors adopted the 2007 Equity Incentive Plan (the “2007-II Plan”). The 2007-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 150,000 shares of its common stock for awards to be made under the 2007-II Plan. The 2007-II Plan is to be administered by a committee of two or members of the Board of Directors.

On June 27, 2007, the Board of Directors adopted the 2007 Equity Incentive Plan (the “2007-III Plan”). The 2007-III Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 145,000 shares of its common stock for awards to be made under the 2007-III Plan. The 2007-III Plan is to be administered by a committee of two or members of the Board of Directors.

On July 13, 2007, the Board of Directors adopted the 2007-2 Equity Incentive Plan (the “2007-IV Plan”). The 2007-IV Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 450,000 shares of our common stock for awards to be made under the 2007-IV Plan.  The 2007-IV Plan is to be administered by a committee of two or more members of the Board of Directors.
 
On October 10, 2007, the Board of Directors adopted the 2007-3 Equity Incentive Plan (the “2007-V Plan”).  The 2007-V Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 600,000 shares of common stock for awards to be made under the 2007-V Plan.  The 2007-V Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On November 1, 2007, the Board of Directors adopted the 2007-4 Equity Incentive Plan (the “2007-VI Plan”).  The 2007-VI Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 750,000 shares of common stock for awards to be made under the 2007-VI Plan.  The 2007-VI Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On February 11, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan (the “2008 Plan”).  The 2008 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 1,500,000 shares of common stock for awards to be made under the 2008 Plan.  The 2008 Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On April 29, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan II (the “2008-II Plan”).  The 2008-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 1,650,000 shares of common stock for awards to be made under the 2008-III Plan.  The 2008-II Plan is to be administered by a committee of two or more members of our Board of Directors.
 

 
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On July 1, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan III (the “2008-III Plan”).  The 2008-III Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 2,500,000 shares of common stock for awards to be made under the 2008-III Plan.  The 2008-III Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On September 2, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan IV (the “2008-IV Plan”).  The 2008-IV Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 3,800,000 shares of common stock for awards to be made under the 2008-IV Plan.  The 2008-IV Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On February 22, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan (the “2009 Plan”).  The 2009 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 10,000,000 shares of common stock for awards to be made under the 2009 Plan.  The 2009 Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On May 14, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan II (the “2009-II Plan”).  The 2009-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 60,000,000 shares of common stock for awards to be made under the 2009-II Plan.  The 2009-II Plan is to be administered by a committee of two or more members of our Board of Directors.
 
On November 5, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan III (the “2009-III Plan”).  The 2009-III Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 200,000,000 shares of common stock for awards to be made under the 2009-III Plan.  The 2009-III Plan is to be administered by a committee of two or more members of our Board of Directors.
 
With respect to each of the above Plans, and subject to the provisions of each Plan, the Board and/or committee shall have authority to (a) grant, in its discretion, stock awards; (b) determine in good faith the fair market value of the stock covered by any grant; (c) determine which eligible persons shall receive grants and the number of shares, restrictions, terms and conditions to be included in such grants; (d) construe and interpret the Plans; (e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies in the Plans or any grants; (f) consistent with the Plans and with the consent of the participant, amend any outstanding grant; and (g) make all other determinations necessary or advisable for the Plans’ administration. The interpretation and construction by the Board of any provisions of the Plans shall be conclusive and final.
 
SALES OF UNREGISTERED SECURITIES
 
During fiscal 2010, we issued the following securities which were not registered under the Securities Act.  We did not employ any form of general solicitation or advertising in connection with the issuance of the securities described below.  In addition, we believe the purchasers and recipients of the securities are “Accredited Investors” for the purpose of Rule 501 of the Securities Act. For these reasons, among others, the offer and sale of the following securities were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act or Regulation D promulgated by the SEC under the Securities Act:
 

 
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·
During 2010, we issued 996,977,751 shares of common stock to various note holders to convert outstanding debt obligations valued at approximately $1,289,370 as follows:
 
 
On January 27, 2010, we issued  50,053,381 shares of common stock to convert outstanding debt obligations valued at $150,160.
On March 24, 2010, we issued  24,380,000 shares of common stock to convert outstanding debt obligations valued at $56,074.
On March 24, 2010, we issued  28,750,000 shares of common stock to convert outstanding debt obligations valued at $66,125.
On March 22, 2010, we issued  48,887,490 shares of common stock to convert outstanding debt obligations valued at $112,441.
On April 09, 2010, we issued  44,075,000 shares of common stock to convert outstanding debt obligations valued at $167,485.
On April 09, 2010, we issued  18,671,500 shares of common stock to convert outstanding debt obligations valued at $70,952.
On May 19, 2010, we issued  30,510,000 shares of common stock to convert outstanding debt obligations valued at $67,122.
On May 19, 2010, we issued  25,000,000 shares of common stock to convert outstanding debt obligations valued at $55,000.
On May 19, 2010, we issued  3,155,620 shares of common stock to convert outstanding debt obligations valued at $6,942.
On May 19, 2010, we issued  3,360,000 shares of common stock to convert outstanding debt obligations valued at $7,392.
On May 19, 2010, we issued  734,770 shares of common stock to convert outstanding debt obligations valued at $1,616.
On August 25, 2010, we issued  67,260,000 shares of common stock to convert outstanding debt obligations valued at $53,808.
On September 13, 2010, we issued  75,000,000 shares of common stock to convert outstanding debt obligations valued at $75,000.
On October 19, 2010, we issued  32,372,093 shares of common stock to convert outstanding debt obligations valued at $29,135.
On October 19, 2010, we issued  38,025,000 shares of common stock to convert outstanding debt obligations valued at $34,223.
On November 01, 2010, we issued  81,000,000 shares of common stock to convert outstanding debt obligations valued at $64,800.
On November 10, 2010, we issued  80,505,000 shares of common stock to convert outstanding debt obligations valued at $48,303.
On November 15, 2010, we issued  79,560,000 shares of common stock to convert outstanding debt obligations valued at $55,692.
On November.15, 2010, we issued  76,931,050 shares of common stock to convert outstanding debt obligations valued at $53,852.
On November 30, 2010, we issued  89,354,486 shares of common stock to convert outstanding debt obligations valued at $53,613.
On December 20, 2010, we issued  99,392,361 shares of common stock to convert outstanding debt obligations valued at $59,635.
 
ITEM 6. SELECTED FINANCIAL DATA
 
Not applicable for Smaller Reporting Companies.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion should be read in conjunction with our consolidated financial statements provided in this annual report on Form 10-K. Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed more fully herein.
 
The forward-looking information set forth in this annual report is as of the date of this filing, and we undertake no duty to update this information. More information about potential factors that could affect our business and financial results is included in the section of this annual report entitled "Risk Factors."
 
OVERVIEW
 
Universal Detection Technology (the "Company," “UDT” or "We") is engaged in the marketing and resale of detection devices for chemical, biological, radiological, nuclear, and explosive (CBRNE) threats. Through agreements with various third parties we supply bioterrorism detection kits capable of detecting anthrax, ricin, botulinum, plague, and SEBs, mold detection kits, chemical detection equipment, radiation detection systems, and counter-terrorism training references.
 

 
17

 

We have entered into supply and distribution agreements with four parties enabling us to supply a host of products and services for detection of hazardous materials. By combining our in-house experience and knowledge and outside expertise offered by various consultants and third parties, we have added threat evaluation and consulting services, and training courses to our services.  We sell and market security and counter-terrorism products including bioterrorism detection kits, chemical detectors, radiation detection systems, and training references. Some of the  products and services we offer have not been sold to date and there is no guarantee that any of them will be demanded and sold in the market in the future. We plan to continue expanding our product base and intend to sell products to more users inside and outside the U.S. Our strategy is to generate sales by enhancing our web presence and marketing the Company as a supplier of complete CBRNE detection equipment. We plan to attend various industry trade shows and to offer products in certain training scenarios so that first responders can become more familiar with our products.  Our target customer markets primarily consist of first responders with some emphasis on the bioterror and military defense market. Our geographical customer focus is on the U.S., Europe, and Asia. There is no guarantee that we will succeed in implementing this strategy or if implemented, that this strategy will be successful.

Universal Detection Technology has also situated itself to provide various counter-terrorism services. Such services include training courses for first responders, event security, threat evaluation & consulting, and DVDs aimed at providing information and training regarding combating terrorism and managing emergency situations. To date, we have sold only a nominal amount of these services and products and the resulting revenue for 2010 was insignificant.

Our business operations are more fully described under "Description Business" in Item 1 of Part I of this Report.

Results of Operations

The following discussion is included to describe our consolidated financial position and results of operations.  The audited consolidated financial statements and notes thereto contain detailed information that should be referred to in conjunction with this discussion.

Revenue – Total revenue for the year ended December 31, 2010 was $5,368 as compared to $19,467 the prior fiscal year, a decrease of $14,099.  The decrease is primarily due to a reduced number of detection unit sales.

Operating Expenses –Total operating expenses for the year ended December 31, 2010 were $1,289,287. Total operating expenses for the year ended December 31, 2009 was $2,485,754 representing a decrease of $1,196,467(48%).  The decrease is primarily attributable to a decrease in marketing expense current year and the impairment of patent prior year.

Other income(expense). Other income (expense) amounted to ($907,740) for the year ended December 31, 2010 as compared to ($2,148,913)for the year ended December 31, 2009  The change is principally related to the loss recognized on the settlement of shares issued for debt.

Net loss.  Net loss for the year ended December 31, 2010 was $2,196,195, as compared to a net loss of $4,626,644 for the same period in the prior fiscal year, representing a decreased loss of $2,430,449.  The primary reason for this is a decrease in loss recognized on settlement of shares issued for debt and a decrease in marketing expense.
 
PLAN OF OPERATION

In 2010 we have continued to diversify our activities. We plan to engage more in value added services to complement our bioterrorism detection technologies. We supply chemical, biological, radiological, nuclear, explosive  (CBRNE), and mold detection equipment.

We plan to continue expanding our product base and to sell our products to more users inside and outside the U.S. There is no guarantee that we will succeed in implementing this strategy or if implemented, that this strategy will be successful.

 
18

 
 
LIQUIDITY AND CAPITAL RESOURCES

We require approximately $4.5 million in the next 12 months to repay debt obligations and execute our business plan. We do not anticipate that our cash on hand is adequate to meet our operating expenses over the next 12 months. Also, we do not believe we have adequate capital to repay all of our debt currently due and becoming due in the next 12 months. We anticipate that our uses of capital during the next 12 months principally will be for:

 
·
administrative expenses, including salaries of officers and other employees we plan to hire;
 
·
repayment of debt;
 
·
sales and marketing;
 
·
product testing or manufacturing; and
 
·
expenses of professionals, including accountants and attorneys.

Our working capital deficit at December 31, 2010 was $4,546,133.  Our independent auditors' report includes an explanatory paragraph relating to substantial doubt as to our ability to continue as a going concern, due to our working capital deficit at December 31, 2010. We require approximately $1.9 million to repay indebtedness including interest in the next 12 months. The following provides the principal terms of our outstanding debt as of December 31, 2010:

o One loan from three unaffiliated parties, each of whom is an unaffiliated party, evidenced by four promissory notes in the aggregate principal amounts of $100,000, $50,000, $50,000, and $100,000, each due June 24, 2001 with interest rates ranging from 11% to 12%. We entered into a settlement agreement in the third quarter of 2004 with each of these parties. Pursuant to this agreement, at June 30, 2005, we were required to pay an additional $80,000 as full payment of our obligations. We did not make this payment and are in default of these notes.  As of December 31, 2010, we have $559,303 accrued for including interest relating to this matter.

o One loan from an unaffiliated party in the aggregate principal amount of $195,000 with interest at a rate of 12% per annum. Pursuant to a letter agreement dated as of August 10, 2004, we entered into a settlement with this party and agreed to pay a total of $261,000 pursuant to a scheduled payment plan through July 2005. Additionally, the Company, in September 2004, issued 206,250 shares of common stock upon the conversion of unpaid interest in the aggregate amount of $33,000. At December 31, 2010, there was $161,000 principal amount (and $96,147 in interest) remaining on this note. We did not make our scheduled payment under this note in July 2005, and are in default of this note.

o One loan from an unaffiliated party in the aggregate principal amount of $98,500, due July 31, 2005, with interest at the rate of 9% per annum. Pursuant to a letter agreement dated August 10, 2004, between us and this third party, we agreed to pay a total of $130,800 pursuant to a scheduled payment plan through July 2005. At December 31, 2010, there was $71,500 principal amount (and $34,709 in interest) remaining on this note. We did not make our scheduled payment under this note in July 2005, and are in default of this note.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $100,000 due on March 31, 2006 with an interest rate of 12% per annum.  As of December 31, 2010 we owed $58,500 in interest.  We did not make our scheduled payment on March 31, 2006. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,500 due on June 27, 2007 with an interest rate of 12.5% per annum.  As of December 31, 2010 we owed $672 in interest.  We did not make our scheduled payment on June 27, 2007. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $4,000 due on January 9, 2010 with an interest rate of 12% per annum.  As of December 31, 2010 we owed $960 in interest.  We did not make our scheduled payment on January 9, 2010. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.
 
 
19

 
 
o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $8,000 due on January 13, 2010 with an interest rate of 12% per annum.  As of December 31, 2010 we owed  $8,000 in principal and $1,920 in interest.  We did not make our scheduled payment on January 13, 2010. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of  $5,000 due on January 16, 2010 with an interest rate of 12% per annum.  As of December 31, 2010 we owed $1,200 in interest. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of  $13,000 due on February 11, 2010 with an interest rate of 12% per annum.  As of December 31, 2010 we paid the principal balance in full, and we owed $390 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $12,000 due on February 20, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $360 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $17,000 due on February 11, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $510 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $9,940 due on March 31, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $2,087 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,638 due on March 31,2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $344 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,420 due on March 31, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $298 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.
 
o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $12,500 due on April 16, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $375 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $4,475 due on April 23, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $134 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $9,000 due on May 1, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $1,800 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $40,000 due on May 6, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we paid in the principal balance in full, and we owed $75 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $13,677 due on June 16, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we paid in the principal balance in full, and we owed $410 in interest.
 
 
20

 
 
o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $18,940 due on June 06,2011 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $3,599 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $30,000 due on August 24, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $900 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $40,000 due on September 10, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $6,263 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $10,000 due on September 15, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $300 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $29,920 due on August 12, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we paid the principal balance in full, and we owed $898 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $25,940 due on July 23, 2011 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $4,410 in interest.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $776 due on September 3, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $124 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $45,000 due on November 2, 2009 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $6,750 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $20,000 due on October 15, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $2,900 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $50,000 due on November 27, 2009 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $7,000 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $90,000 due on December 23, 2009 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $11,700 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.
 
o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $25,000 due on January 16, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $3,125 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $23,000 due on May 4, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $2,530 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.
 
 
21

 

 
 
o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $30,000 due on March 26, 2010 with an interest rate of 12% per annum.  As of December 31, 2010, we owed $3,000 in interest.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $31,000 due on May 17, 2010 with a late charge of 15%.  As of December 31, 2010, we owed $2,000 in principal and $4,650 in late charge.  We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

o One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $35,000 due on May 12, 2011.  As of December 31, 2010, we owed $2,450 in interest.

Management continues to take steps to address the Company's liquidity needs. Management continues to seek extensions with respect to debt past due. Management also may seek additional extensions with respect to these notes and the Company's debt as it becomes due. In addition, management may continue to convert some portion of the principal amount and interest on our debt into shares of common stock.   During 2010, the Company issued 996,977,751 shares of its common stock for an aggregate value of $1,289,370 to satisfy outstanding debt and accrued interest.

Historically, we have financed operations through private debt and equity financings. In recent years, financial institutions have been unwilling to lend to us and the cost of obtaining working capital from investors has been expensive. We principally expect to raise funds through the sale of equity or debt securities. During the years ended December 31, 2010 and 2009, the Company received gross proceeds of approximately $0.1 million and $0.6 million, respectively, from the sale of equity and debt securities. The Company actively continues to pursue additional equity or debt financings, but cannot provide any assurance that it will be successful. If we are unable to pay our debt as it becomes due and are unable to obtain financing on terms acceptable to us, or at all, we will not be able to accomplish any or all of our initiatives and will be forced to consider steps that would protect our assets against our creditors.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, and that would be considered material to investors.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable for Smaller Reporting Companies.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Our financial statements and related notes are set forth at pages F-1 through F-24.

 
22

 

INDEX TO FINANCIAL STATEMENTS
 
 

Report of Independent Registered Public Accounting Firm
F-2
   
Consolidated Balance Sheets
F-3
   
Consolidated Statements of Operations
F-4
   
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
F-5
   
Consolidated Statements of Cash Flows
F-6
   
Notes to Consolidated Financial Statements
F-7



 


 
F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders
Universal Detection Technology and Subsidiaries

We have audited the accompanying consolidated balance sheets of Universal Detection Technology and Subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Universal Detection Technology and Subsidiaries as of December 31, 2010 and 2009, and the results of its consolidated statements of operations, stockholders' equity, and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s significant operating losses and insufficient capital raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ KABANI & COMPANY, INC.

CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California

Date: April 15, 2011


 
F-2

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
As at
 
   
December 31, 2010
   
December 31, 2009
 
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 987     $ 1,367  
Accounts Receivable,net
    1,099       3,626  
Inventory
    936       4,117  
Prepaid expenses
    -       7,678  
                 
Total current assets
    3,022       16,788  
                 
Deposits
    21,300       21,300  
Equipment, net
    5,451       13,376  
                 
Total assets
  $ 29,773     $ 51,464  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES:
               
Accounts payable, trade
  $ 1,189,824     $ 1,035,204  
Accrued liabilities
    635,761       547,502  
Accrued payroll - officers
    783,410       548,126  
Notes payable - related party
    340,074       64,612  
Notes payable
    874,394       888,843  
Accrued interest expense
    725,692       629,149  
                 
Total current liabilities
    4,549,155       3,713,436  
                 
Long term notes payable
    -       354,826  
                 
Total liabilities
    4,549,155       4,068,262  
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS' DEFICIT:
               
                 
Preferred stock, $.01 par value, 20,000,000 shares
authorized, -0- issued and outstanding
    -       -  
Common stock, no par value, 20,000,000,000 shares authorized, 2,253,029,102 and 1,020,051,351 shares issued and outstanding
as of December 31, 2010 and December 31, 2009, respectively
    35,601,080       33,907,469  
Additional paid-in-capital
    5,313,089       5,313,089  
Accumulated deficit
    (45,433,551 )     (43,237,356 )
                 
Total stockholders' deficit
    (4,519,382 )     (4,016,798 )
                 
Total liabilities and stockholders' deficit
  $ 29,773     $ 51,464  
 
See accompanying notes to consolidated financial statements.
 

 
F-3

 
 
UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

   
For the years ended December
 
   
2010
   
2009
 
             
REVENUE, NET
  $ 5,368     $ 19,467  
COST OF GOODS SOLD
    4,536       11,444  
                 
GROSS PROFIT
    832       8,023  
                 
OPERATING EXPENSES:
               
Selling, general and administrative
    1,138,902       1,230,864  
Marketing
    139,447       1,151,312  
Impairment of patent
    -       78,573  
Depreciation and amortization
    10,938       25,005  
                 
Total expenses
    1,289,287       2,485,754  
                 
LOSS FROM OPERATIONS
    (1,288,455 )     (2,477,731 )
                 
OTHER INCOME (EXPENSE):
               
Interest income (expense)
    (154,664 )     (118,079 )
Other income
    11,250       8,750  
Loss on settlement of debt
    (764,326 )     (2,039,584 )
                 
Total other expenses
    (907,740 )     (2,148,913 )
                 
NET LOSS
  $ (2,196,195 )   $ (4,626,644 )
                 
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
  $ (0.00 )   $ (0.01 )
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    1,461,711,527       476,000,298  
                 
Weighted average number of dilutive securities has not been calculated as the effect of dilutive securities would be anti-dilutive
 
 
See accompanying notes to consolidated financial statements.
 
 
 
F-4

 
 
 
UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 
                                       
Total
 
   
Preferred Stock
   
Common Stock
         
Additional
   
Accumulated
   
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Paid-in-Capital
   
Deficit
   
Deficit
 
                                           
BALANCE, DECEMBER 31, 2008
    -     $ -       35,286,671     $ 28,823,641     $ 5,313,089     $ (38,610,712 )   $ (4,473,982 )
                                                         
Stock issued for conversion of debt
    -       -       691,572,602       3,312,396       -       -       3,312,396  
Stock issued for services
    -       -       293,192,078       1,771,432       -       -       1,771,432  
Net loss for the year
                                            (4,626,644 )     (4,626,644 )
                                                         
BALANCE, DECEMBER 31, 2009
    -       -       1,020,051,351       33,907,469       5,313,089       (43,237,356 )     (4,016,798 )
                                                         
Stock issued for conversion of debt
    -       -       996,977,751       1,289,370                       1,289,370  
Stock issued for services
    -       -       236,000,000       404,241                       404,241  
Net loss for the year
    -       -                               (2,196,195 )     (2,196,195 )
                                                         
BALANCE, DECEMBER 31, 2010
    -     $ -       2,253,029,102     $ 35,601,080     $ 5,313,089     $ (45,433,551 )   $ (4,519,382 )
 
 
See accompanying notes to consolidated financial statements.
 
 
 
F-5

 
 
UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2010 AND 2009
 
   
2010
   
2009
 
CASH FLOWS FROM OPERATING ACTIVITIES:
       
Net loss
  $ (2,196,195 )   $ (4,626,644 )
Adjustments to reconcile net loss to net cash used in operations:
 
Stocks issued for services
    404,241       1,771,432  
Loss on settlement of debt
    764,326       2,039,584  
Impairment of patent
    -       78,573  
Depreciation and amortization
    10,938       25,005  
Changes in operating assets and liabilities:
               
Inventory
    3,181       (4,117 )
Accounts receivable
    2,527       (2,568 )
Prepaid expenses
    7,678       (4,012 )
Deposits
    -       (11,074 )
Accounts payable and accrued liabilities
    595,935       (71,202 )
                 
Net cash used in operating activities
    (407,369 )     (805,023 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
         
Purchase of equipment
    (3,013 )     -  
Decrease (increase) in restricted cash
    -       10,477  
                 
Net cash (used) provided by investing activities
    (3,013 )     10,477  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
         
Proceeds from notes payable-related party
    318,828       121,539  
Proceeds from notes payable
    112,000       739,716  
Payments on notes payable - related party
    (20,826 )     (67,252 )
                 
Net cash provided by financing activities
    410,002       794,003  
                 
                 
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (380 )     (543 )
                 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    1,367       1,910  
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 987     $ 1,367  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
                 
Income tax
  $ -     $ -  
Interest Paid
  $ 526     $ -  
                 
SUPPLEMENTAL DISCLOSURES FOR NON CASH INVESTING AND
 
FINANCING ACTIVITIES:
               
                 
Shares issued for settlement of debt and accrued interest
  $ 1,289,370     $ 3,312,396  
 
See accompanying notes to consolidated financial statements.
 

 
F-6

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 1 - BUSINESS ACTIVITY

Universal Detection Technology, a California corporation, primarily designs, manufactures and markets air pollution monitoring instruments. Beginning in 2002, the Company has focused its research and development efforts in developing a real time biological weapon detection device. To accelerate development of its initial biological weapon detection device, the Company has developed and is implementing a collaborative partnering strategy. Under this strategy, the Company identifies and partners with researchers and developers.  The Company has expanded its services to include security related consulting, event security and counterterrorism training.

The Company is a reseller of a range of products, which include rapid anthrax detection test kits, training courses for first responders, event security, threat evaluation and consulting, radiation detection systems, anti-microbial products, and DVDs aimed at providing information and training regarding combating terrorism and managing emergency situations.

GOING CONCERN AND MANAGEMENT'S PLANS

As of December 31, 2010, the Company had a working capital deficit of $4,546,133. During the year ended December 31, 2010, the Company incurred net losses of $2,196,195 and had an accumulated deficit of $45,433,551 as of December 31, 2010.  These conditions raise substantial doubt about its ability to continue as a going concern. Its ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and ultimately achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Management has taken certain steps to provide the Company with necessary capital to continue its operations. These steps include: 1) actively seeking additional funding in the form of unsecured indebtedness and 2) seeking to increase revenues from product sales.

During 2009 and 2010, the Company entered into various agreements to sell shares of its common stock to third parties in order to convert the Company's debts to the respective parties.  In 2009, 691,572,602 shares were issued in the aggregate amount of $3,312,396.  In 2010, 996,977,751 shares were issued in the aggregate amount of $1,289,370.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Universal Detection Technology and its wholly-owned subsidiaries Nutek, Inc. (“Nutek”) and Logan Medical Devices, Inc. (“Logan”).  The two subsidiaries are currently inactive.  All significant intercompany balances and transactions have been eliminated in consolidation.


 
F-7

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

REVENUE RECOGNITION
The Company’s revenue recognition policies are in compliance with ASC 605 (previously Staff accounting bulletin 104). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Service revenue is recognized when services are performed and amounts are due.
 
The Company receives rent under a month to month sublease agreement with a third party.  The Company recognized $11,250 and $8,750 in Other Revenue under this agreement in 2010 and 2009, respectively.
 
INVENTORIES
Inventories, consisting of finished goods, are stated at the lower of cost (first-in first-out) basis or market.

RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the current year’s presentation, none of which had an impact on total assets, stockholders’ equity (deficit), net loss, or net loss per share.

ADVERTISING EXPENSES
The Company expenses advertising costs as incurred. During the years ended December 31, 2010 and 2009, the Company did not have significant advertising costs.

PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment, consisting of office furniture and equipment, leasehold improvements and lab testing equipment, is recorded at cost less accumulated depreciation. Depreciation and amortization is provided for on the straight-line method over the estimated useful lives of the assets, generally three to five years or over the term of the lease.

   
2010
   
2009
 
             
Equipment
  $ 55,012     $ 51,998  
Furniture
    64,669       64,669  
Leasehold Improvements
    25,444       25,444  
      145,125       142,111  
Accumulated Depreciation
    (139,674 )     (128,735 )
Fixed Assets, Net of Depreciation
  $ 5,451     $ 13,376  

Total depreciation expense was $10,938 and $19,571 for the years ended December 31, 2010 and 2009, respectively.


 
F-8

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

STOCK BASED COMPENSATION TO OTHER THAN EMPLOYEES
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 718 (previously Statement of Financial Accounting Standards No. 123), “Accounting for Stock-Based Compensation,” and the conclusions reached by the ASC 505-50 (previously Emerging Issues Task Force in Issue No. 96- 18), “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services” (“ASC 505-50”). Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably determinable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by ASC 505-50 (previously EITF 96-18). In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
 
EARNINGS PER COMMON SHARE
The Company computes earnings per common share in accordance with ASC 260-10-45 (previously Statement of Financial Accounting Standards No. 128), "Earnings per Share". The Statement requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted loss per share is similar to the basic loss per share computation except the denominator is increased to include the number of additional shares that would have been outstanding if the dilutive potential common shares had been issued. In addition, the numerator is adjusted for any changes in income or loss that would result from the assumed conversions of those potential shares. However, such presentation is not required if the effect is antidilutive. Accordingly, the diluted per share amounts do not reflect the impact of warrants and options or convertible debt outstanding for -539,750 and 539,750 shares at December 31, 2010 and 2009, respectively, because the effect of each is antidilutive.

CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers all short term, interest bearing deposits with original maturities of three months or less to be cash equivalents.

IMPAIRMENT OF PATENTS AND LONG-LIVED ASSETS
Patents and other intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. In accordance with ASC 350 (previously Statement of Financial Accounting Standard No. 142), goodwill and other intangible assets ("ASC 350"), the company periodically evaluates its long-lived assets by measuring the carrying amounts of assets against the estimated undiscounted future cash flows associated with them. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144 (ASC 360). SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.


 
F-9

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

As per the Statement of Financial Accounting Standards (“SFAS”) No. 142 (ASC 350), “Goodwill and Other Intangible Assets (“SFAS 142”) (ASC 350),” the Company assess finite-lived intangible assets and other long-lived assets, excluding goodwill, for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable through the estimated undiscounted future cash flows resulting from the use of the assets. If it is determined that the carrying value of intangible assets or other long-lived assets may not be recoverable, the impairment is measured by using the projected discounted cash-flow method. Based upon the future cash flow, the Company recorded $78,573 in impairment of patent as of December 31, 2009.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, notes receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the short maturity of these items.

INCOME TAXES
Deferred income taxes are recorded to reflect the tax consequences in future years of temporary differences between the tax basis of the assets and liabilities and their financial statement amounts at the end of each reporting period. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the current period and the change during the period in deferred tax assets and liabilities. The deferred tax assets and liabilities have been netted to reflect the tax impact of temporary differences. At December 31, 2010, a full valuation allowance has been established for the deferred tax asset as management believes that it is more likely than not that a tax benefit will not be realized.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates.  Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

CONCENTRATION OF CREDIT RISK
Generally, the Company required no collateral when it extends credit to its customers. The Company's credit losses in the aggregate have not exceeded managements' expectations. The Company maintains all cash in bank accounts, which at times may exceed federally insured limits. The Company has not experienced a loss in such accounts.

SEGMENT REPORTING
ASC 280 (previously SFAS No. 131), Disclosures about segments of an enterprise and related information, which superseded statement of financial accounting standards No. 14, Financial reporting for segments of a business enterprise, establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of  selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers.  ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances.  In 2010 and 2009, the Company operated in one segment.


 
F-10

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2010, the FASB issued amended guidance related to Business Combinations. The amendments affect any public entity that enters into business combinations that are material on an individual or aggregate basis. The amendments specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company will assess the impact of these amendments on its consolidated financial statements if and when an acquisition occurs.
 
In December 2010, the FASB issued amended guidance related to intangibles—goodwill and other. The amendments modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not believe that this guidance will have a material impact on its consolidated financial statements.
 
The FASB has issued amended guidance for subsequent events. The amendment removes the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. The FASB also clarified that if the financial statements have been revised, then an entity that is not an SEC filer should disclose both the date that the financial statements were issued or available to be issued and the date the revised financial statements were issued or available to be issued. The FASB believes these amendments remove potential conflicts with the SEC's literature. All of the amendments were effective upon issuance (February 24, 2010). The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
 

 
F-11

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 3 – PATENTS  

As of December 31, 2009, the patent value is as follows:
 
   
2009
 
Patent Costs
  $ 117,341  
Accumulated Amortization
    (38,768 )
Impairment of patent
    (78,573 )
Patent, Net
  $ -  
 
Total amortization expense was $5,435 for the year ended December 31, 2009.  There were no additional patent costs for the year ended December 31, 2010.
 
NOTE 4 – ACCRUED LIABILITIES

The accrued liabilities consist of the following at December 31, 2010 and 2009:
 
      2010       2009  
Loan Fees Payable
  $ 68,600     $ 68,600  
Deferred Rent
    8,608       1,379  
Accrued expenses
    147,053       66,023  
Accrued Settlement (Refer to Note 10)
    411,500       411,500  
TOTAL ACCRUED LIABILITIES
  $ 635,761     $ 547,502  

The loan fees payable $68,600 as of December 31, 2010 and 2009  is the value of 300,000 shares payable to third parties in connection with certain loan fees. In 2004 a judgment was entered against the Company for $411,500 in connection with a lawsuit against a former wholly-owned subsidiary.  The lawsuit was filed to collect past due rent.  The Company has accrued $411,500 in connection with this matter.

NOTE 5 – ACCRUED PAYROLL – OFFICERS

Accrued payroll – officers as of December 31, 2010 and 2009 is comprised of accrued payroll to the officer of the company amounting to $783,410 and $548,126, respectively.  This payable is interest free, unsecured and due on demand.


 
F-12

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 6 - NOTES PAYABLE, RELATED PARTY

During the year ended December 31, 2010, the Company borrowed a total of $318,828 from its president and chief executive officer under various written and oral agreements by the Company.  The loans have interest rates ranging from 0% to 15%.  The Company repaid notes totaling $20,826 and interest of $526. As of December 31, 2010, $340,075 in principal and $639 in interest was due.

During the year ended December 31, 2009, the Company borrowed a total of $77,082 from its president and chief executive officer under promissory notes executed by the Company.  The notes had interest rates ranging from 12% to 12.5%.  The Company repaid notes totaling $62,709 and interest of $363.  As of December 31, 2009, $15,523 in principal and $1,685 in interest was due.

NOTE 7 – NOTES PAYABLE

Notes payable consisted of the following at December 31, 2010:

Notes payable to individuals, subject to contingent settlement agreement and summary judgment, interest at 11.67% per annum, principal and interest due January 1, 2006, in default, unsecured
  $ 95,740  
         
Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due July 2005, in default, unsecured
    161,000  
         
Note payable, subject to settlement agreement, interest at 9.17% per annum, principal and interest due July 2005, unsecured
    71,500  
         
Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due December 2005, unsecured
    100,000  
         
Note payable, interest at 12.5%, due June 2007, verbally extended, unsecured
    1,500  
         
Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured
    4,000  
         
Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured
    8,000  
         
Note payable, interest at 12% per annum, due January 2010, verbally extended,  unsecured
    5,000  
         
Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured
    9,940  
         
Note payable, interest at 12% per annum, due March 2010, verbally extended,  unsecured
    1,638  
         
Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured
    1,420  
 
 
F-13

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 
Note payable, interest at 12% per annum, due May 2011, unsecured
    9,000  
         
Note payable, interest at 12% per annum, due June 2011, unsecured
    18,940  
         
Note payable, interest at 12% per annum, due September 2011, unsecured
    40,000  
         
Note payable, interest at 12% per annum, due July 2011, unsecured
    25,940  
         
Note payable, interest at 12% per annum, due September 2010, verbally extended, unsecured
    776  
         
Note payable, interest at 12% per annum, due November 2009 and verbally extended, unsecured
    45,000  
         
Note payable, interest at 12% per annum, due October 2010, verbally extended,  unsecured
    20,000  
         
Note payable, interest at 12% per annum, due November 2009 and verbally extended, unsecured
    50,000  
         
Note payable, interest at 12% per annum, due December 2009 and verbally extended, unsecured
    90,000  
         
Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured
    25,000  
         
Note payable, interest at 12% per annum, due May 2010, verbally extended,  unsecured
    23,000  
         
Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured
    30,000  
         
Note payable, late charge at 15%, due May 2010, verbally extended, unsecured
    2,000  
         
Note payable, interest at 12% per annum, due May 2011, unsecured
    35,000  
         
Total Notes Payable - Current
  $ 874,394  

 
F-14

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

Notes payable consisted of the following at December 31, 2009:

Notes payable to individuals, subject to contingent settlement agreement and summary judgement, interest at 11.67% per annum, princpal and interest due January 1, 2006, in default, unsecured
  $ 95,740  
         
Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due July 2005, in default, unsecured
    161,000  
         
Note payable, subject to settlement agreement, interest at 9.17% per annum, principal and interest due July 2005, unsecured
    71,500  
         
Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due December 2005, unsecured
    100,000  
         
Note payable, interest at 12.5% per annum, due November 2007 and verbally extended, unsecured
    2,970  
         
Note payable, interest at 12% per annum, due January 2008 and verbally extended, unsecured
    3,000  
         
Note payable, interest at 12.5% per annum, due July 2008 and verbally extended, unsecured
    20,000  
         
Note payable, interest at 12% per annum, due August 2008 and verbally extended, unsecured
    712  
         
Note payable, interest at 12% per annum, due December 2009 and verbally extended, unsecured
    27,000  
         
Note payable, interest at 12% per annum, due October 2009 and verbally extended, unsecured
    25,000  
         
Note payable, interest at 12% per annum, due January 2010, unsecured
    4,000  
         
Note payable, interest at 12% per annum, due January 2010, unsecured
    8,000  
         
Note payable, interest at 12% per annum, due January 2010, unsecured
    5,000  
         
Note payable, interest at 12% per annum, due January 2010, unsecured
    33,000  
         
Note payable, interest at 12% per annum, due February 2010, unsecured
    13,000  
         
Note payable, interest at 12% per annum, due February 2010, unsecured
    12,000  
         
Note payable, interest at 12% per annum, due February 2010, unsecured
    17,000  
         
Note payable, interest at 12% per annum, due April 2011, unsecured
    12,500  
         
Note payable, interest at 12% per annum, due April 2011, unsecured
    4,475  
 
 
 
F-15

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 
Note payable, interest at 12% per annum, due May 2011, unsecured
    9,000  
         
Note payable, interest at 12% per annum, due May 2011, unsecured
    40,000  
         
Note payable, interest at 12% per annum, due May 2011,  unsecured
    41,000  
         
Note payable, interest at 12% per annum, due May 2011, unsecured
    52,941  
         
Note payable, interest at 12% per annum, due June 2011, unsecured
    17,450  
         
Note payable, interest at 12% per annum, due June 2011, unsecured
    13,677  
         
Note payable, interest at 12% per annum, due June 2011, unsecured
    23,000  
         
Note payable, interest at 12% per annum, due June 2011, unsecured
    18,940  
         
Note payable, interest at 12% per annum, dueJune 2011, unsecured
    45,904  
         
Note payable, interest at 12% per annum, due August 2010, unsecured
    30,000  
         
Note payable, interest at 12% per annum, due September 2011, unsecured
    40,000  
         
Note payable, interest at 12% per annum, due September 2011, unsecured
    10,000  
         
Note payable, interest at 12% per annum, due August 2010, unsecured
    29,920  
         
Note payable, interest at 12% per annum, due July 2011, unsecured
    25,940  
         
Note payable, interest at 12% per annum, due November 2009 and verbally extended, unsecured
    45,000  
         
Note payable, interest at 12% per annum, due October 2010, unsecured
    20,000  
         
Note payable, interest at 12% per annum, due November 2009 and verbally extended, unsecured
    50,000  
         
Note payable, interest at 12% per annum, due December 2009 and verbally extended, unsecured
    90,000  
         
Note payable, interest at 12% per annum, due January 2010, unsecured
    25,000  
         
Total notes payable
  $ 1,243,669  
         
Less: Long-term portion
    354,826  
         
Current Notes Payable
  $ 888,843  
 
 
F-16

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

The interest expense for the years ended December 31, 2010 and December 31, 2009 is $154,664 and  $118,079, respectively.

The Company entered into a contingent settlement agreement on July 26, 2004 related to $440,765 of notes payable to individuals and related accrued interest. In July 2004, the Company paid a total of $73,333 towards the debt and agreed to pay a total of $298,667, including interest through January 2006 in full payment. The Settlement Agreement provides for an accelerated payment schedule at the Company's option, which would reduce the total payment made by the Company by approximately $12,000. The Company defaulted on the two remaining payments totaling $80,000 at which time the entire remaining balance became due, including default interest and legal fees.  The Company currently has accrued $463,563 for interest and legal fees (included in the accrued interest of $725,692 as of December 31, 2010) in addition to the $95,740 principal balance (included in the notes payable of $874,394 as of December 31, 2010).

During August 2004, the Company entered into an agreement to settle a note payable in the amount of $200,000 plus accrued interest. The parties agreed to settle the debt for $261,000 payable as follows: Twelve consecutive payments of $12,500 payable monthly commencing August 31, 2004 and ending July 31, 2005; a lump-sum payment of $95,000 payable on July 31, 2005; and a one-time interest payment of $16,000 on July 31, 2005. This agreement includes an additional $7,500 as inducement to the note holder to enter into the extended agreement, which was amortized as a loan fee over the term of the agreement.  Scheduled payments were not made on the note and the company is currently in default.   The Company currently has accrued $96,147 for interest (included in the accrued interest of $725,692 as of December 31, 2010) in addition to the $161,000 principal balance (included in the notes payable of $874,394 as of December 31, 2010).

During August 2004, the Company entered into an agreement to settle a note payable in the amount of $100,000 plus accrued interest. The parties agreed to settle the debt for $130,800 payable as follows: Twelve consecutive payments of $6,000 payable monthly commencing August 31, 2004 and ending July 31, 2005; a lump-sum payment of $50,500 payable on July 31, 2005; and a one-time interest payment of $8,300 on July 31, 2005. The Company has recognized a $38,610 gain on forgiveness of accrued interest related to this transaction.  Scheduled payments were not made on the note and the company is currently in default.  The Company currently has accrued $34,709 for interest (included in the accrued interest of $725,692 as of December 31, 2010) in addition to the $71,500 principal balance (included in the notes payable of $874,394 as of December 31, 2010).

NOTE 8-STOCKHOLDERS' EQUITY

PREFERRED STOCK
The Company is authorized to issue up to 20,000,000 shares of preferred stock, $.01 par value per share in series to be designated by the Board of Directors.

COMMON STOCK


 
F-17

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

CONVERSION OF DEBT
During 2010, the Company entered into various agreements to convert $474,549 of principal and $50,495 of accrued interest into 996,977,751 shares of common stock.  The fair market value of the stock on the dates of agreement and issuance was $1,289,370.  The Company recorded a loss on settlement of debt of $764,326.

During 2009, the Company entered into various agreements to convert $1,123,789 of principal and $145,691 of accrued interest into 691,572,602 shares of common stock.  The fair market value of the stock on the dates of agreement and issuance was $3,312,396.  The Company recorded a loss on settlement of debt of $2,039,584.

STOCK ISSUED FOR SERVICES
During the year ended December 31, 2010, the Company issued an aggregate of 145,777,780 shares of its common stock to various employees of the Company as compensation.  The shares were valued at a total of $243,266.

During the year ended December 31, 2010, the Company entered into various agreements for strategic business planning, financial advisory, investor relations, professional and public relations services.  As compensation for the services rendered, the Company issued 90,222,220 shares of common stock, valued at $160,976, the fair market value of the stock on the day of issuance.

During the year ended December 31, 2009, the Company issued an aggregate of 172,471,654 shares of its common stock to various employees of the Company as compensation.  The shares were valued at a total of $779,052

During the year ended December 31, 2009, the Company entered into various agreements for strategic business planning, financial advisory, investor relations, professional and public relations services.  As compensation for the services rendered, the Company issued 120,720,424 shares of common stock, valued at $992,380, the fair market value of the stock on the day of issuance.

STOCK OPTION PLAN
On February 11, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan (“the Plan”).  The Plan provides for the granting of  Nonqualified  Stock Options,  Incentive  Stock Options,  Stock  Appreciation Rights (or SARs),  Restricted Stock,  Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 3,000,000 shares of common stock for awards to be made under the Plan.  299,991,072 shares reserved under this plan have been issued.
 
On April 29, 2008, the Board of Directors adopted the 2008-2 Equity Incentive Plan (“the Plan”).  The Plan provides for the granting of  Nonqualified  Stock Options,  Incentive  Stock Options,  Stock  Appreciation Rights (or SARs),  Restricted Stock,  Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 330,000,000 shares of common stock for awards to be made under the Plan.  326,854,165 of the shares reserved under this plan have been issued.
 
 
F-18

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

On July 1, 2008, the Board of Directors adopted the 2008-3 Equity Incentive Plan (“the Plan”).  The Plan provides for the granting of  Nonqualified  Stock Options,  Incentive  Stock Options,  Stock  Appreciation Rights (or SARs),  Restricted Stock,  Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 2,500,000 shares of common stock for awards to be made under the Plan.  2,500,000 of the shares reserved under this plan have been issued.
 
On September 2, 2008, the Board of Directors adopted the 2008-4 Equity Incentive Plan (“the Plan”).  The Plan provides for the granting of  Nonqualified  Stock Options,  Incentive  Stock Options,  Stock  Appreciation Rights (or SARs),  Restricted Stock,  Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction.  The Company reserved 3,800,000 shares of common stock for awards to be made under the Plan.   3,800,000 of the shares reserved under this plan have been issued.
 
On February 15, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan (the “Plan.”)  The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs),  Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are no it connection with the offer and sale of securities in a capital raising transactions.  The company initially reserved 10,000,000 shares of its common stock for awards to be made under the Plan.  10,000,000 of the shares reserved under this plan have been issued.
 
On May 15, 2009, the Board of Directors adopted the 2009-2 Equity Incentive Plan (The “Plan”.)  The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs),  Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital raising transaction.  The Company initially reserved 60,000,000 shares of its common stock for awards to be made under the Plan.  59,605,412 of the shares under this plan have been issued.
 
On November 6, 2009, the Board of Directors adopted the 2009-3 Equity Incentive Plan (The “Plan”.)  The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs),  Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital raising transaction.  The Company initially reserved 200,000,000 shares of its common stock for awards to be made under the Plan.  200,000,000 of the shares under this plan have been issued.
 
The company granted 44,000 restricted shares during the year ended December 31, 2010 vesting over a six month period.  The Company recognized marketing expenses over a straight-line basis over the vesting periods based on the market price of their stock at grant date.
 
The Company granted 100,800,000 restricted shares during the year ended December 31, 2009. Of the shares granted, 100,000,000 shares vested immediately and 800,000 shares vest over a six-month period.  The Company recognized marketing expense on a straight-line basis over the vesting periods based on the market price of their stock on the grant date.  The Company recognized $0 and $898,429 in marketing expense during the years ended December 31, 2010 and 2009 respectively, due to the restricted shares.
 


 
F-19

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

WARRANTS

There were no warrants granted during 2010 and 2009.

The following table summarizes the activity of options and warrants under all agreements and plans for the two years ended December 31, 2010 and 2009:


               
Weighted
       
               
Average
   
Aggregate
 
   
Number of
   
Exercise
   
Intrinsic
 
   
Options
   
Warrants
   
Price
   
Value
 
Outstanding, December 31,
                       
2008
    539,750       53,000       15          
                                 
Granted
    -       -       -          
Exercised
    -       -       -          
Expired/cancelled
    -       (53,000 )     102          
                                 
Outstanding, December 31,
                               
2009
    539,750       -       7          
                                 
Granted
    -       -       -          
Exercised
    -       -       -          
Expired/cancelled
    -       -       -          
                                 
Outstanding, December 31,
                               
2010
    539,750       -       7       -  
 
Options:

The Company adopted ASC 718 (previously SFAS No. 123-R) effective July 1, 2006 using the modified prospective method. Under this transition method, stock compensation expense recognized in the year ended December 31, 2010 includes compensation expense for all stock-based compensation awards vested during year ended December 31, 2010 based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R. As there were no options granted or vested since the implementation of ASC 718, no expense has been recorded during the year ended December 31, 2010.

Methods of estimating fair value:

Under ASC 718 (previously SFAS No. 123-R), the fair value of stock options is determined using the Black-Scholes model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

 
 
F-20

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

The following table summarizes information about stock options and warrants outstanding at December 31, 2010:

OPTIONS AND WARRANTS
           
 
OUTSTANDING
   
EXERCISABLE
 
   
WEIGHTED
     
   
AVERAGE
WEIGHTED
 
WEIGHTED
RANGE OF
 
REMAINING
AVERAGE
 
AVERAGE
EXERCISE
NUMBER
CONTRACTUAL
EXERCISE
NUMBER
EXERCISE
PRICES
OUTSTANDING
LIFE-YEARS
PRICE
EXERCISABLE
PRICE
           
2 to $66
             539,750
0.39
6.6
             539,750
6.6
  -        -  
 
             539,750
0.39
6.6
             539,750
6.6

NOTE 9 - INCOME TAXES

The income tax provision (benefit) for the years ended December 31, 2010 and     2009 differs from the computed expected provision (benefit) at the federal statutory rate for the following reasons:

             
   
2010
   
2009
 
             
Computed expected income tax provision (benefit)
  $ (698,838 )   $ (1,573,059 )
Increase in allowance for doubtful accounts
    -       -  
Net operating loss carryforward
    793,726       1,668,542  
Increased
               
Accrued liabilities
    (98,398 )     (99,139 )
Stock-based expenses
          -  
Non-deductible meals & entertainment
    815       596  
Depreciation
    2,695       3,060  
                 
Income tax provision (benefit)
  $ -     $ -  

 
F-21

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
 
The components of the deferred tax assets and (liabilities) as of December 31, 2010 and 2009 were as follows:
 
   
2010
   
2009
 
Deferred tax assets:
           
Temporary differences:
           
Depreciation
  $ (2,180 )   $ (5,350 )
Accrued liabilities
    (871     (116,634
Allowance for bad debt
    (21,200 )     (21,200 )
Net operating loss carryforward
    14,499,564       13,565,769  
Valuation allowance
    (14,475,313 )     (13,422,585 )
                 
Net long-term deferred tax asset
  $ -     $ -  

The components of the deferred tax (expense) benefit were as follows for the years ended December 31, 2010 and 2009:

   
2010
   
2009
 
Deferred tax assets:
           
Accrued expenses
  $ 115,762     $ (2,008 )
Allowance for bad debt
    -       -  
Accumulated Depreciation
    3,170       6,920  
                 
Increase in net operating loss carryforward
    933,795       1,962,990  
Change in valuation allowance
    (1,052,727 )     (1,967,902 )
    $ -     $ -  

As of December 31, 2010, the Company has net operating losses carryforwards of approximately $ 33,600,000 expiring in 2011 through 2025.

NOTE 10- COMMITMENTS AND CONTINGENCIES

LITIGATION

a) 
On May 15, 2002, Walt Disney World Co. commenced action in the Los Angeles Superior Court  against the Company and a former wholly-owned subsidiary (WALT DISNEY WORLD CO. V. POLLUTION RESEARCH AND CONTROL CORP. AND DASIBI ENVIRONMENTAL CORP.  (Case No. BC 274013 Los Angeles Superior Court) for amounts due in connection with unpaid rent. A judgment was entered for $411,500. No amounts have been paid in connection with the judgment.  As of December 31, 2010, $411,500 has been accrued.

 

 
F-22

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

 
b)
A. Sean Rose, Claire F. Rose and Mark Rose v. Universal Detection Technology, Pollution Research and Control Corporation (Superior Court of the State of California for the County of Los Angeles, North Central District, Case No. EC042040)

On or about April 16, 2004, Plaintiffs commenced an action against the Company (Case No. EC 038824) for amounts allegedly due pursuant to four unpaid promissory notes.  On August 2, 2004, the parties executed a Confidential Settlement Agreement and Mutual Releases (the “Agreement”).  On December 30, 2005, Plaintiffs commenced the above-referenced action against the Company, alleging the Company breached the Agreement and seeking approximately $205,000 in damages. A judgment was entered on April 11, 2006.  The Company has accrued for this settlement.  The Company entered into a settlement agreement in the third quarter of 2004 with each of these three parties.  Pursuant to this agreement, at June 30, 2005, the Company was required to pay an additional $80,000 as full payment of our obligations.  The Company did not make this payment and are in default of these notes.  As of December 31, 2010, The Company has $559,303 accrued for including interest relating to this matter which is part of notes payable and accrued interest in the accompanying balance sheet as of December 31, 2010.
 
c)
On June 2, 2006, Plaintiff Trilogy Capital Partners instituted an action in the Los Angeles Superior Court (Trilogy Capital Partners v. Universal Detection Technology, et. al., Case No. SC089929) against the Company. Plaintiff’s Complaint alleged damages against UDT for breach of an engagement letter in the amount of $93,449.  Also, Plaintiff alleged that UDT had failed to issue warrants to it pursuant to a written agreement. After completing the initial stages of litigation and conducting extensive mediation, Plaintiff and UDT reached a settlement wherein commencing December 15, 2006, UDT would make monthly payments to Plaintiff of $2,000 until a debt of $90,000 plus accrued interest at six percent per annum was fully paid.  In exchange, Plaintiff would release all of its claims against UDT. UDT has been current on all of its agreed payments to Plaintiff.  As of December 31, 2010, $28,098 was due under the agreement which is included in the accounts payable in the accompanying balance sheet as of December 31, 2010.
 
d)
On November 15, 2006, Plaintiff NBGI, Inc. instituted an action in the Los Angeles Superior Court (NBGI, Inc.  v. Universal Detection Technology, et. al., Case No. BC361979) against the Company. NBGI, Inc.’s Complaint alleged breach of contract, and requested damages in the amount of $111,014 plus interest at the legal rate and for costs of suit.  A Summary Judgment was granted in NBGI’s favor and Judgment has been entered.  No payments have been made on this judgment and no actions to enforce the judgment have been taken against UDT.
 
e)
On November 1, 2010 the accounting firm of A.J. Robbins, P.C. filed a lawsuit in the District Court, City and County of Denver, Colorado, seeking recovery of fees allegedly owed for accounting services performed during 2004 to 2008.  The claims have been asserted against UDT and our CEO, Jacques Tizabi, as a result of a personal guarantee. UDT and our CEO dispute that the fees are owed and intends to oppose the suit.On December 15, 2010, Defendants filed an Answer which asserts several defenses. The parties have exchanged initial disclosures, and the matter has been set for trial commencing on December 5, 2011.  Formal discovery has not yet commenced.
 
From time to time, the Company is a party to a number of lawsuits arising in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's operations, cash flows or financial position.
 
EMPLOYMENT AGREEMENTS

In September 2001, the Company entered into an employment agreement with its President and Chief Executive Officer.  Under the agreement, base salary is $250,000 to be adjusted on an annual basis.  The Company granted options to purchase 5,750 shares of its common stock exercisable at $60 per share.

On August 23, 2004, the Company entered into an amendment of the employment agreement with its President and Chief Executive Officer. The amendment provides that $100,000 of the Officer's annual salary shall be accrued as payable until such time as the Company has the financial resources to pay any or all of the accrued amount. The agreement also provides for salary increases of 5% per year commencing January 1, 2006, and an extension of the term of the agreement until December 31, 2011. In addition, automobile cost is limited to a maximum of $2,500 per month and the Company will reimburse the officer for individual life insurance premiums up to $1,000 per month and for health insurance premiums and related expenses.


 
F-23

 

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

The Company is obligated to make certain minimum salary payments as follows:

YEAR ENDING DECEMBER 31,

2011
  $ 319,070  
         
    $ 319,070  

LICENSE AGREEMENT

On September 30, 2003, the Company entered into a license agreement with CalTech whereby CalTech granted the Company an exclusive, royalty-bearing license to make, use, and sell all products that incorporate the technology that was developed under the Technology Affiliates Agreement with JPL and is covered by related patents. In addition, the grant includes a nonexclusive, royalty-bearing license to make derivative works of the technology. The Company is required to make quarterly royalty payments to CalTech, ranging from 2% to 4% of net revenues for each licensed product made, sold, licensed, distributed, or used by the Company and 35% of net revenues that the Company receives from sublicensing the licensed products. A minimum annual royalty of $10,000 was due and paid to CalTech on August 1, 2005 and each anniversary thereof. The minimum royalty will be offset by the above mentioned royalty payments, if any.

To maintain its license with Cal Tech, a minimum annual royalty of $10,000 was due Caltech on August 1, 2005, and is due on each anniversary thereof, regardless of product sales.  Any royalties paid from product sales for the 12-month period preceding the date of payment of the minimum royalty will be credited against the annual minimum.  Pursuant to the terms of the license, the Company must pay four percent royalties on product sales in countries where a patent is issued and two percent royalties on product sales in countries where a patent is not issued, as well as 35 percent of net revenues received from sub-licensees.  As of the date of this report the Company has not paid the $10,000 royalty due Caltech on August 1, 2007.  The Company and Caltech entered into a second amendment to the Company’s license agreement, dated December 1, 2006, and which provides that the overdue amounts shall be paid to Caltech in ten monthly installments of $8,632.  To date, the Company has made four of the monthly installments called for in the second amendment to its license agreement with Caltech. On June 23, 2009, Caltech sent a letter to the Company asserting certain breaches by the Company of the License Agreement between Caltech and the Company and attempting to terminate the Agreement. The Company disagrees with the various assertions made by Caltech in the letter and has requested that Caltech submit to arbitration all matters in dispute. To date, no further action has been taken and the Company does not continue to perform under the License Agreement.

OPERATING LEASES

On June 1, 2009, the Company entered into a lease agreement to lease office space commencing June 1, 2009 through May, 31, 2012.

Minimum annual lease payments under this lease are as follows:

2011
  $ 81,746  
2012
    34,479  
         
    $ 116,225  

Rent expense was $87,024 and $87,204 for 2010 and 2009, respectively.

NOTE 11 SUBSEQUENT EVENTS

During the first quarter of 2011, the Company entered into agreements converting $196,833 in principal and accrued interest into 1,437,180,095 shares of its common stock.  During the first quarter of 2011, the Company issued 1,334,580,095 of the shares valued at $671,475.  102,600,000 shares valued at $30,780 are still pending.

 
 
F-24

 
 
 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Management, including our Chief Executive Officer ("CEO"), who is also our acting Chief Financial Officer ("CFO"), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of a date (the "Evaluation Date") as of the end of the reporting period covered by  the Company's Annual Report on Form 10-K, December 31, 2010. For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on such evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Management’s Report on Internal Control over Financial Reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal  executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to  provide reasonable assurance regarding the reliability of financial  reporting and the preparation of financial statements for external  purposes in accordance with accounting principles generally accepted in the United  States of America and includes those policies and procedures that:
     *    Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
     *    Provide reasonable assurance that transactions are recorded  as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
     *    Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.  However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of December 31, 2010 Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such  assessments. Based on that evaluation, they concluded that, as of the end of the period covered by this report, such  internal controls over financial reporting were not effective to control deficiencies that constituted material weaknesses.  This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affect our internal controls and that may be considered to be a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.
 
 
 
23

 

 
The matters involving internal controls over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board included the lack of a fully functioning audit committee resulting in ineffective oversight in the establishment and monitoring of required internal controls over financial reporting. In addition, our Chief Executive Officer and Acting Chief Financial Officer identified a lack of sufficient internal accounting and book keeping staff and accountability. Because of the Company's severe cash constraints, there are no employees or contractors dedicated solely to the functions of book keeping or accounting.  In addition, the Company's current personnel lack sufficient skills, training and experience in the review process in order to ensure the complete and proper application of generally accepted accounting principles. In addition, the Company can only afford to retain its outside accountants to review the books and records of the Company on a quarterly basis and in connection with the annual audit of financial statements, whereas more timely and increased periodic reviews would be beneficial to the Company's internal controls over financial reporting pending development of an internal accounting staff. These material weaknesses were identified by our Chief Executive Officer and Acting Chief Financial Officer in connection with the review of our financial statements as of December 31, 2010.

In addition, Management has identified the following internal control deficiencies:

 
·
We did not have formal policies governing accounting transactions and financial reporting processes;
 
·
We did not have a consistent process involving the entry of transactions into the Company's financial recordation system by dedicated personnel;
 
·
We did not perform adequate oversight by management of certain accounting functions of our employees and maintained inadequate documentation of management review and approval of accounting transactions and financial reporting processes.
 
        Management is in the process of developing and implementing remediation plans to address its material weaknesses. Management has identified specific remedial actions to address the material weaknesses described above:

         o     Augment existing Company resources with additional consultants or employees to improve the recording of accounting transactions. The Company plans to hire additional personnel once the Company has achieved further commercialization of its products and is generating more revenue, or has raised significant additional working capital;

         o     Improve oversight by management by creating a system of periodic and monthly reviews of financial transactions and the recordation of transactions into the Company's financial recordation system;

         o      Adopt an audit committee charter delineating the committees duties with  respect to the review and oversight of the Company's financial statements, auditors and audit process; and

         o      Retain the services of the Company's outside accountants for periodic and intermittent review of the Company's financial data outside of the quarterly and annual procedures for the preparation of quarterly and annual reports and financial statements, upon the Company obtaining capital or generating additional revenue.

Changes in Internal Controls Over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
 
ITEM 9B. OTHER INFORMATION
 
None.

 
24

 

 
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 

Set forth below are the names, ages, positions and business experience of our directors, executive officers, and key employees as of April 15, 2011:
 
Name
Age
Position
Jacques Tizabi
39
President, Chief Executive Officer, Acting Chief Financial Officer, Director, and Secretary
     
Matin Emouna (1)
40
Director
     
Tom Sepenzis
40
Director
     
(1) Member of Audit and Compensation Committees.
 
All directors hold office until the next annual meeting of our shareholders and until their successors have been elected and qualified.  Officers serve at the pleasure of the board of directors.
 
There are no family relationships among any of our directors, executive officers, or persons nominated or chosen as our directors or executive officers.
 
Business Experience
 
JACQUES TIZABI has been the Chief Executive Officer, President and Chairman of the Board of Directors of our Company, and Acting Chief Financial Officer since October 2001. Mr. Tizabi spends on average 40-50 hours per week providing services to us. He oversees all material aspects of the Company’s operations.
 
MATIN EMOUNA has served as a director of our Company since October 2001. Since 1997, Mr. Emouna has maintained his own law practice in New York, where he represents foreign and domestic clients in a broad range of real estate transactions, with emphasis on new constructions, commercial real estate transactions, shopping center development, financing, international business matters, and commercial leasing. He holds B.S. degrees in Business Administration and Spanish from New York State University at Albany and a J.D. from Benjamin N. Cardozo School of Law. His experience in both law and international trade are helpful to the Company.
 
TOM SEPENZIS became a director of our Company in April of 2009.   Mr. Sepenzis worked for over a decade on Wall Street, becoming one of the most highly respected telecommunications analysts, earning the #1 ranking by Forbes magazine one week before his departure. Starting his career as an equities trader at Punk, Ziegel in 1993 he later moved to the firms Soundview Financial (1996), Piper Jaffrey (1998), CIBC World Markets (2000), and Think Equity (2002) as a telecommunications analyst. Switching careers to the entertainment business, he now is the CEO and founder of Ascension Pictures, in which capacity he produces and directs commercials, music videos, documentaries and full length feature films.

Involvement in Certain Legal Proceedings
 
None of the directors or executive officers have, during the past ten years:

 

 
25

 
 
 
 
·
Had any petition under the federal bankruptcy laws or any state insolvency law filed by or against, or had a receiver, fiscal agent, or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
 
 
·
Been convicted in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
 
 
·
Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
 
 
(i) 
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
 
 
(ii) 
Engaging in any type of business practice; or
 
 
(iii) 
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
 
 
·
Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described in (i) above, or to be associated with persons engaged in any such activity;
 
 
·
Been found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, where the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated ;
 
 
·
Been found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, where the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated.
 
 
·
Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
 
 
(i) 
Any federal or state securities or commodities law or regulation; or
 
 
(ii) 
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
 
 
(iii) 
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
 
 
·
Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
 
 
 
 
26

 
 

COMMITTEES
 
Our Audit Committee currently consists of Mr. Matin Emouna. Mr. Emouna is independent within the meaning of the applicable NASDAQ listing standards and applicable rules and regulations promulgated by the Securities and Exchange Commission. Our Audit Committee currently does not have a financial expert within the meaning of the applicable SEC rules as management does not believe one is necessary in light of the Company's current stage of product development.
 
Our Compensation Committee determines matters pertaining to the compensation and expense reporting of certain of our executive officers, and administers our stock option, incentive compensation, and employee stock purchase plans. Our Compensation Committee currently consists of Mr. Matin Emouna.
 
 
CODE OF ETHICS
 
We have adopted a Code of Business Conduct and Ethics which is designed to set the standards of business conduct and ethics and help directors and employees resolve ethical issues. The Code applies to all directors and employees, including the Chief Executive Officer and Chief Financial Officer and other persons performing similar functions. The Code covers topics including, but not limited to, conflicts of interest, confidentiality of information, fair dealing with customers, supplies and competitors, and compliance with applicable laws, rules and regulations. The purpose of the Code is to ensure to the greatest possible extent that our business is conducted in a consistently legal and ethical manner.  Upon written request to the Company, we will provide a copy of the Code free of charge. Any such request should be directed to the Company at the address set forth on the cover page of this annual report.
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of our common stock, to file with the Securities and Exchange Commission initial reports of ownership, and reports of changes in ownership, of our common stock and other equity securities of ours.  Executive officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file.  To our knowledge, based solely  representations from our executive officers and directors that no other reports were required during the fiscal year ended December 31, 2010, we believe our executive officers, directors and greater than ten percent shareholders of our common stock, complied with all Section 16(a) filing requirements applicable to them.


 
27

 

 
ITEM 11. EXECUTIVE COMPENSATION
 
EXECUTIVE COMPENSATION

The following executive compensation disclosure reflects all compensation awarded to, earned by, or paid to the executive officers below for the fiscal years ended December 31, 2010 and 2009.  The following table summarizes all compensation for fiscal years 2010 and 2009 received by our Chief Executive Officer.  No other executive officer earned in excess of $100,000 in fiscal year 2010.

SUMMARY COMPENSATION TABLE
 
 
 
 
Name and
principal position
 
 
 
 
 
Year
 
 
 
 
Salary
 ($)
 
 
 
 
Bonus
($)
 
 
 
Stock
 Awards
($)
 
 
 
Option
 Awards
($)
 
 
Non-Equity
Incentive Plan Compensation
($)
Nonquali-
fied
Deferred
Compen-
sation Earnings
($)
 
 
 
All Other Compen-
sation ($)
 
 
 
 
Total
($)
Jacques Tizabi,
President, CEO, Acting CFO
 
2010
 
$303,877
 
--
 
--
 
--
 
--
 
--
 
--
 
$303,877
 
Jacques Tizabi,
President, CEO, Acting CFO
2009
$289,406
--
--
--
--
--
--
$289,406
 
The salary amounts listed in the table above were not paid, but are accrued.
 
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 
The following table sets forth certain information regarding outstanding equity awards granted to our CEO.

OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-END
                                                                                               
 Option Awards   Stock Awards
 
 
 
 
Name
 
Number of securities underlying unexercised options (#) Exercisable
 
Number of securities underlying unexercised options (#) Unexercisable
 
Equity incentive plan awards: number of securities underlying unexercised earned options (#)
 
Option exercise price ($)
 
Option expiration date
 
Number of shares or units of stock that have not vested (#)
 
Market value of shares or units of stock that have not vested ($)
 
Equity incentive plan awards: number of unearned shares, units, or other rights that have not vested (#)
 
 
Equity incentive plan awards: market or payout value of unearned shares, units, or other rights that have not vested ($)
 
Jacques Tizabi
500,000
-
-
$2.00
March 2011
       
Jacques Tizabi
5,750 - - $60.00
October 2011
       
Jacques Tizabi 34,000 - - $66.00
August 2013
       

All option awards listed about are fully vested as of December 31, 2010.
 
DIRECTOR COMPENSATION

We currently do not pay our directors any compensation, and there is no director compensation to report for our fiscal year ended December 31, 2010.
 


 
 
28

 

 
EMPLOYMENT AGREEMENTS
 
We have an employment agreement with Jacques Tizabi. Mr. Tizabi's employment agreement, dated as of September 24, 2001, and amended August 23, 2004, provides for Mr. Tizabi to serve as our Chairman of the Board, Chief Executive Officer and President until December 31, 2010, unless otherwise extended. We have agreed to extend Mr. Tizabi’s employment agreement until December 31, 2015. The employment agreement provides for Mr. Tizabi to receive an annual base salary of $250,000, subject to salary increases of 5% per year commencing January 1, 2006. Mr. Tizabi also is entitled to specified perquisites, including participation in any group life, medical, disability and other insurance plans provided by us, use of a luxury automobile approved by the compensation committee (with a maximum cost of $2,500 per month), monthly dues for club memberships not to exceed $1,500 per month, and reimbursement of entertainment expenses provided to our customers, vendors, and strategic partners. To date, Mr. Tizabi has not received any of these specified perquisites.
 
If Mr. Tizabi's employment is terminated due to his death, the employment agreement provides that we will pay Mr. Tizabi's estate his remaining base salary during the remaining scheduled term of the employment agreement, accelerate the vesting of his options and continue to provide family medical benefits. If Mr. Tizabi's employment is terminated due to his disability, the employment agreement provides that we will pay Mr. Tizabi his remaining base salary during the remaining scheduled term of the employment agreement (reduced by any amounts paid under long-term disability insurance policy maintained by us for the benefit of Mr. Tizabi).
 
If Mr. Tizabi terminates the employment agreement for cause, if we terminate the employment agreement without cause or in the event of a change of control, in which event the employment of Mr. Tizabi terminates automatically, we will pay Mr. Tizabi his remaining base salary during the remaining scheduled term of the employment agreement and an amount based on his past bonuses and continue to provide specified benefits and perquisites.
 
If Mr. Tizabi terminates the employment agreement without cause or we terminate the employment agreement for cause, Mr. Tizabi is entitled to receive all accrued and unpaid salary and other compensation and all accrued and unused vacation and sick pay.
 
If any of the payments due Mr. Tizabi upon termination qualifies as "excess parachute payments" under the Internal Revenue Code, Mr. Tizabi also is entitled to an additional payment to cover the tax consequences associated with these excess parachute payments.
 
Mr. Tizabi has agreed that he will defer payment of all accrued but unpaid bonus or salary, or other compensation payable to him in excess of $150,000 per year, beginning in 2005 until future years. In 2009, Mr. Tizabi received the following as a reduction of the accrual of his unpaid bonus or salary since 2005:  127,386,666 shares of the Company’s common stock with a fair market value of $392,160 on the date of issuance along with cash payments or payments made by the Company on behalf of Mr. Tizabi totaling $158,257.

 
29

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
  STOCKHOLDER MATTERS

BENEFICIAL OWNERSHIP
 
The following table sets forth information as of April 15, 2011, relating to the ownership of our common and preferred stock, by (i) each person known by us to be the beneficial owner of more than five percent of the outstanding shares of each class of our capital stock, (ii) each of our directors and nominees, (iii) each of our named executive officers and (iv) all of our executive officers and directors as a group.  Except as may be indicated in the footnotes to the table and subject to applicable community property laws, each person has the sole voting and investment power with respect to the shares owned.  The address of each person listed is in care of Universal Detection Technology, 340 N. Camden Drive, Suite 302, Beverly Hills, California 90210.
 
Name of Beneficial Owner
Number of Shares of
Common Stock
Beneficially Owned (1)
 
 
Percent of Class (1)
     
Jacques Tizabi,
President, CEO, Acting CFO, Director
127,926,416 (2)
10.4%
Matin Emouna
0
0
Tom Sepenzis
0
0
All current directors and executive officers as a group (3 members)
127,926,416
10.4%
 
(1) 
Under Rule 13d-3 under the Exchange Act, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by that person (and only that person) by reason of these acquisition rights.  As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership with respect to the number of shares of our common stock actually outstanding at April 15, 2011.  As of April 15, 2011, we had 3,587,599,829 common shares, no par value, outstanding.
 
(2) 
Includes 539,750 shares that may be acquired upon the exercise of fully vested options.
 

CHANGE IN CONTROL
 
We are not aware of any arrangement that might result in a change in control in the future.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Described below are certain transactions or series of transactions since January 1, 2009 between us and our executive officers, directors and the beneficial owners of five percent or more of our common stock, on an as converted basis, and certain persons affiliated with or related to these persons, including family members, in which they had or will have a direct or indirect material interest in an amount that exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, other than compensation arrangements that are otherwise required to be described under “Executive Compensation.”

During the year ended December 31, 2010, the Company borrowed a total of $318,828 from its president and chief executive officer under various written and oral promissory note agreements executed by the Company.  The notes had interest rates ranging from 0% to 15%.  The Company repaid notes totaling $20,826 and interest of $526. As of December 31, 2010, $340,075 in principal and $639 in interest was due.

For the period from January 1, 2011 through April 14, 2011, the president and chief executive officer for the Company had advanced $22,044 to the Company for expenses.  The Company did not make any payments to its president and chief executive officer for the period.  As of April 14, 2011, $362,119 in principal and $639 in interest was due to the president and chief executive officer for various promissory note agreements executed by the Company and for advances expenses.  The notes had interest rates ranging from 0% to 15%.

Director Independence
 
Mr. Matin Emouna and Mr. Tom Sepenzis are independent directors as that term is defined by NYSE Rule 303A.02(a). The Company currently does not have a nominating/corporate governance committee. Of the members of the Company’s board of directors, Messrs. Matin Emouna and Tom Sepenzis meet the NYSE’s independence standards for members of such committees and Mr. Jacques Tizabi does not meet the NYSE’s independence requirements for members of such committees.

 
30

 

 
ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
 
Prior to engagement, the Audit Committee pre-approves all audit or non-audit services to be performed by our independent auditors. The Audit Committee approved the engagement of Kabani & Company as our independent auditors for $40,000. The Audit Committee also approved an additional $18,000 for audit related services related to our quarterly filings.
 
AUDIT FEES
 
Summary of Principal Accounting Fees for Professional Services Rendered

The following table presents the aggregate fees for professional audit services and other services rendered by Kabani & Company, our independent registered public accountants, in the fiscal years ended December 31, 2010 and 2009.  


  
 
Year Ended 
December 31, 2010
   
Year Ended 
December 31, 2009
 
             
Audit Fees
 
$
40,000
     
40,000
 
Audit-Related Fees (quarterly reports)
   
18,000
     
18,000
 
Tax Fees
   
-
     
-
 
All Other Fees
   
-
     
-
 
   
$
58,000
     
58,000
 

Audit Fees

The aggregate fees billed by Kabani & Company for the audit and review of our annual financial statements and services that are normally provided by an accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2010 and 2009, were approximately $40,000 and $40,000, respectively.

Audit-Related Fees

The aggregate fees billed by Kabani & Company for assurance and related services rendered by Kabani & Company that are reasonably related to the performance of the audit or review of our financial statements for the fiscal years ended December 31, 2010 and 2009 were $18,000 and $18,000, respectively.
 
Tax Fees

No fees were billed by Kabani & Company for professional services rendered for tax compliance, tax advice and tax planning for the fiscal years ended December 31, 2010 and 2009.
 
All Other Fees

No other fees were billed by Kabani & Company for the fiscal years ended December 31, 2010 and 2009.
 

 
31

 

ITEM 15. EXHIBITS
 
The following documents are filed as part of this Annual Report on Form 10-K:
 
(a)  
Documents filed as a part of this report:
 
(1)  
Financial Statements
 
The financial statements of Universal Detection Technology and its subsidiaries for the periods ended December 31, 2010 and 2009 and Kabani & Company’s report dated April 14, 2011.
 
(2)  
Financial Statement Schedules
 
Not required.
 
(b) Exhibits:
 
3.1 
Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now the Company) (incorporated by reference to Exhibit 3(a) to Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation).
   
3.2
Certificate of Amendment of Articles of Incorporation of A. E. Gosselin Engineering, Inc. (now the Company) (incorporated by reference to Exhibit 3(a) to Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation).
   
3.3
Certificate of Amendment of Articles of Incorporation of Dasibi Environmental Corp. (now the Company) (incorporated by reference to Exhibit 3(a) to Amendment No. 1 to the Registration Statement on Form 10 of Dasibi Environmental Corporation).
   
3.4
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 of the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001, filed on April 15, 2002).
   
3.5
Certificate of Determination of Preferences of Preferred Shares (incorporated by reference to Exhibit 3.5 of the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2006, filed on April 16, 2007).
   
3.6
Certificate of Amendment of Articles of Incorporation of Universal Detection Technology (incorporated by reference to Exhibit 3.6 of the Company’s Current Report on Form 8-K filed on September 27, 2007).
   
3.7
Certificate of Amendment of Articles of Incorporation of Universal Detection Technology (incorporated by reference to Exhibit 3.4 of the Company’s Current Report on Form 8-K filed on July 25, 2008).
   
4.1
Amended and Restated 2003 Stock Incentive Plan (incorporated by reference to Exhibit 4.2 of the Company's Annual Report on Form 10-KSB for the year ended December 31, 2004, filed on March 31, 2005).
   
4.2
2006 Stock Compensation Plan (incorporated by reference to the Company's Form S-8 Registration Statement filed on February 13, 2006).
   
4.3
2006 Consultant Stock Plan (incorporated by reference to the Company's Form S-8 Registration Statement filed on June 30, 2006).
   
4.4
2006-II Consultant Stock Plan (incorporated by reference to the Company'sForm S-8 Registration Statement filed on November 22, 2006).
   
4.5
2007 Consultant Stock Plan (incorporated by reference to the Company’s Form S-8 Registration Statement filed on April 17, 2007).
   
4.6
2007 Equity Incentive Plan (effective May 30, 2007) (incorporated by reference to the Company’s Form S-8 Registration Statement filed on June 6, 2007).
   
4.7
2007 Equity Incentive Plan (effective June 21, 2007) (incorporated by reference to the Company’s Form S-8 Registration Statement filed on June 27, 2007).
   
4.8
2007­-2 Equity Incentive Plan (incorporated by reference to the Company’s Form S-8 Registration Statement filed on July 13, 2007).
   
4.9
2007­-3 Equity Incentive Plan (incorporated by reference to the Company’s Form S-8 Registration Statement filed on October 2, 2007).
   
4.10
2007­-4 Equity Incentive Plan (incorporated by reference to the Company’s Form S-8 Registration Statement filed on November 2, 2007).
   
4.11
2008 Equity Incentive Plan (incorporated by reference to the Company’s Form S-8 Registration Statement filed on February 11, 2008).
   
4.12
2008 Equity Incentive Plan II (incorporated by reference to the Company’s Post-Effective Amendment No. 1 to Form S-8 Registration Statement filed on May 27, 2008).
 
 
32

 
 
4.13
2008 Equity Incentive Plan III (incorporated by reference to the Company’s Form S-8 Registration Statement filed on July 11, 2008).
   
4.14
2008 Equity Incentive Plan IV (incorporated by reference to the Company’s Form S-8 Registration Statement filed on September 8, 2008).
   
4.15
2009 Equity Incentive Plan (incorporated by reference to the Company’s Form S-8 Registration Statement filed on February 23, 2009).
   
4.16
2009 Equity Incentive Plan II (incorporated by reference to the Company’s Form S-8 Registration Statement filed on May 15, 2009).
   
4.17
2009 Equity Incentive Plan III (incorporated by reference to the Company’s Form S-8 Registration Statement filed on November 6, 2009).
   
10.1
Employment Agreement by and between the Company and Jacques Tizabi dated September 25, 2001 (incorporated by reference to the Company's Quarterly Report on Form 10-QSB for the Quarter Ended March 31, 2002, filed on May 20, 2002).
   
10.2
Amendment to Employment Agreement of Jacques Tizabi, dated August 23, 2004. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB for the Quarter Ended September 30, 2004, filed on November 22, 2004).
   
10.3
Letter of Engagement dated August 19, 2005, between Trilogy Capital Partners, Inc. and Universal Detection Technology (incorporated by reference to the Company's Current Report on Form 8-K filed on September 28, 2005).
   
10.4
Stock Purchase Warrant issued to Trilogy Capital Partners (incorporated by reference to the Company's Registration Statement on Form SB-2 filed on February 14, 2006).
 
10.5
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on May 20, 2009)
   
10.6
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 14, 2009)
   
10.7
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 13, 2009)
   
10.8
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K filed on April 15, 2010)
   
10.9
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on May 24, 2010)
   
10.10
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 23, 2010)
   
10.11
Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 19, 2010)
   
10.12
Form of Debt Conversion Agreement*
   
10.13
Commercial Property Lease dated June 1, 2009 (incorporated by reference to Exhibit 10.20 of the Company’s Amended Annual Report on form 10-K/A filed on November 17, 2010)
   
10.14
Agreement with Morphix Technologies dated March 8, 2010*
   
10.15
Agreement with Mirion Technologies (MPGI), Inc. dated February 22, 2011*
   
10.16
Agreement Advnt Biotechnologies, LLC Value Added Reseller (VAR) Agreement dated September 21, 2010*
   
10.17
Agreement with Detrick Lawrence Corporation dated April 7, 2011*
   
10.18
Agency Agreement with APP Systems Services PTE LTD dated March 15, 2011*
   
21.1
Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 of the Company's Annual Report on Form 10-KSB for the year ended December 31, 2003, filed March 31, 2004).
   
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*.
   
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
----------------------------
* Filed herewith
 
 
 

 
33

 

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date:  April 15, 2011
UNIVERSAL DETECTION TECHNOLOGY
   
By:
/s/ Jacques Tizabi
 
Jacques Tizabi, President, Chief Executive
 
Officer, Acting Chief Financial Officer, and Chairman of the Board of Directors

POWER OF ATTORNEY
 
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jacques Tizabi, his attorney-in-fact, each with the power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming said attorney-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
 
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Date: April 15, 2011
/s/ Jacques Tizabi
 
Jacques Tizabi, President, Chief Executive
 
Officer, Acting Chief Financial Officer, and Chairman of the Board of Directors
   
   
Date: April 15, 2011
/s/ Tom Sepenzis
 
Tom Sepenzis,
Director
   
   
Date: April 15, 2011
/s/ Matin Emouna
 
Matin Emouna,
Director

 

 
 
 
 
 
 
34


 
EX-10.12 2 udt_10k-ex1012.htm DEBT CONVERSION AGREEMENT udt_10k-ex1012.htm

Exhibit 10.12
UNIVERSAL DETECTION TECHNOLOGY
____________________

Debt Conversion Agreement
____________________

Noteholder:
 
   
Note Amount:
$
   
Outstanding Principal:
$    
Interest Rate:
 
  %
Date of Note:
 
   
Maturity:
 
   
Accrued Interest:
$
   
 


____, 2011

REPRODUCTION OF THIS DOCUMENT IS NOT AUTHORIZED

AGREEMENT

This Agreement (the “Agreement”) is entered into by and between Universal Detection Technology (the “Issuer”) and ___ (the “Noteholder”) on the date first shown above. The Noteholder confirms that pursuant to the note dated ___ (the “Note”) in the principal amount of $___ with an interest rate of ___% per annum and a maturity date of ___, the Issuer owes the Noteholder a balance of $___ including principal and accrued interest as of ___.
 
The Noteholder further agrees to convert the following amount of principal and interest (the “Conversion Amount”) due under the Note into shares of common stock of the Issuer (“Shares”), no par value, at the price stated below. The parties anticipate that the Shares will be eligible for resale pursuant to Rule 144(b)(1).
 
Principal Being Converted:
$
   
Interest Being Converted:
$
   
Conversion Price:
$
   
Number of Shares to Be Issued:
 
   

 

 
 

 
 
The Noteholder is surrendering for conversion that portion of the principle and interest due under the Note represented by the Conversion Amount and is not furnishing any other or additional consideration to the Issuer. The Noteholder hereby waives, releases, relinquishes and discharges the Issuer of any and all claims and causes of action it now has or that may hereafter arise with respect to the Conversion Amount and agrees to accept the Shares as full satisfaction thereof. No claims are reserved with respect to the Conversion Amount, and the Noteholder expressly waives any and all rights related thereto, except for those provided for herein, that it may have under the provisions of California Civil Code Section 1542, which provides:
 
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
 
The Noteholder acknowledges and agrees that this Agreement and the waiver set forth herein are valid and binding on the Noteholder in accordance with the terms hereof. The Noteholder represents and warrants that:
 
 
It has the requisite authority to execute and deliver this Agreement and that the person executing and delivering this Agreement has been duly authorized by the Noteholder to do so;
 
 
It is not, and has not been for the three months preceding the date hereof, an affiliate of the Issuer and will not hold more than 10% of the issued and outstanding Shares upon consummation of the conversion contemplated hereby; and
 
 
It has not assigned or transferred, or purported to assign or transfer, the Note or any right or claim in connection therewith to any other person.
 
This Agreement shall be governed by the laws of the State of California, without regard to the conflict of laws principles thereof. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement may not be modified or amended except by a writing signed by both parties hereto. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof.
 
Agreed to and accepted by:
 
UNIVERSAL DETECTION TECHNOLOGY     NOTEHOLDER  
         
         
         
         
         
 
   
 
 
By: Jacques Tizabi
   
Noteholder:
 
Its: CEO
   
Name:
 
                                                                                     
 
 
 
EX-10.14 3 udt_10k-ex1014.htm MORPHIX AGREEMENT udt_10k-ex1014.htm  

Exhibit 10.14
 

AGREEMENT
 
This agreement is made and executed this 8th day of March 2010, between Morphix Technologies ("Manufacturer"), whose principal office is located at 2557 Production Road, Virginia Beach, Virginia 23454, USA, and Universal Detection Technology ("Distributor"), whose principal office is located at 340 North Camden Drive, Suite 302, Beverly Hills, CA 90210.
 
This agreement is intended to appoint the Distributor as an authorized Distributor for the sale and service of the products of the Manufacturer and to set forth the respective duties, obligations, and responsibilities of both parties to this agreement.
 
In consideration of the mutual agreements and acknowledgment herein made, the parties agree as follows.
 
ARTICLE 1. RIGHTS GRANTED
 
The Manufacturer hereby grants to the Distributor a nonexclusive right upon the terms and conditions herein contained to purchase inventory, promote and resell the Manufacturer's Products within the Territory. The Distributor agrees not to promote or sell the Manufacturer's Products for use outside the Territory.
 
ARTICLE 2. PRODUCTS AND TERRITORIES
 
As used herein, the term "Manufacturer's Products" shall mean those which are expressly identified in Exhibit A attached hereto and made a part hereof. As used herein the term "Territory" shall mean those geographical locations which are expressly identified in Exhibit A attached hereto and made a part hereof. Manufacturer reserves the right to modify the Manufacturer's Products and/or the Territory by written notice to the Distributor.
 
ARTICLE 3. TERMS OF SALE
 
3.1 All of the sales of the Manufacturer's Products to the Distributor shall be made under the provisions of this agreement. Any documents that either party may use from time to time for their mutual convenience such as purchase orders or sales acknowledgment forms shall be deemed to be for administrative convenience only and the terms and conditions of this agreement shall supersede and take precedence over any terms and conditions which may be contained on any such forms.
 
3.2 The price the Manufacturer charges to the Distributor shall be based on a discount from the Manufacturers suggested resale price. The current discount percentage is identified in Exhibit A attached hereto and made a part hereof. Manufacturer may, from time to time, modify the suggested resale price and/or the discount percentage by written notice to the Distributor. All prices for Manufacturer's Products are quoted in U.S. Dollars.
 
3.3 The price the Distributor charges for the Manufacturer's Products shall be established solely by the Distributor and under its sole and complete control. Should the Manufacturer provide "suggested resale" prices or any other form of suggestion as to resale price level, the Distributor is free to either observe those suggestions or not. denote the origin of the Manufacturer's Products. The Distributor shall not contest the right of the Manufacturer to the exclusive use of any of the Manufacturer's trademarks or trade names.

 
 

 

 

 
ARTICLE 9. RELATIONSHIP OF THE PARTIES
 
The relationship of the parties to this agreement is vendor and vendee. The Distributor, its agents, and employees shall not be deemed agents, employees or legal representatives of the Manufacturer for any purpose whatsoever. The Distributor will not modify any of the Manufacturer's Products without written permission from the Manufacturer. Neither the Distributor nor the Manufacturer shall have any right to enter into any contract or commitment in the name of, or on behalf of, the other, or to bind the other in any respect whatsoever.
 
ARTICLE 10. TERM OF THE AGREEMENT
 
10.1 This agreement shall continue from its effective date until it is terminated by either party as follows:
 
(a) Either party may terminate this agreement without cause by written notice given to the other not less than thirty (30) days prior to the effective date of such notice.
 
(b) The Manufacturer may terminate this agreement by notice given to the Distributor, effective immediately, if any of the following events occur:
 
(i) failure of the Distributor to fulfill or perform any of its duties relating to financial policies, any of its duties or responsibilities regarding use of the Manufacturer's trademarks or trade names, or any attempt to bind the Manufacturer in any way not expressly allowed by this agreement;
 
(ii) any assignment or attempted assignment by the Distributor of any interest in this agreement without the Manufacturer's prior written consent;
 
(iii) any sale, transfer or relinquishment of any substantial interest in the ownership or any change in management of the Distributor;
 
(iv) failure of the Distributor to function in the ordinary course of business;
 
(v) any dispute, disagreement or controversy between or among the principals, partners, managers, officers or shareholders of Distributor which, in Manufacturer's judgment, may adversely affect the operation, management or business of Distributor and/or the business or best interests of Manufacturer;
 
(vi) the conviction of any of the responsible members of management or major owners of the Distributor which will adversely reflect on the goodwill or reputation of the Manufacturer or its products -- such determination shall be made in the Manufacturer's own discretion Commonwealth of Virginia. Any suit to enforce this Agreement shall be brought only in Norfolk Virginia, and the parties hereto consent to such exclusive jurisdiction.

 
 

 

 
12.9 Distributor acknowledges and agrees that is shall comply with all provisions of the Foreign Corrupt Practices Act of the United States, and that Distributor shall nat sell, transfer or otherwise dispose of any U.S. origin Products or related software, know-how, technical data, documentation or other Products or materials famished to it pursuant to this Agreement to any party or in any manner which would constitute a violation of the export control regulations of the United States (now or hereafter in effect) if the disposition was made by a U.S. corporation, or a non U.S. corporation subject to those regulations. Such export regulations prohibit, without limitation, exports, transshipments or re-exports of Products to: (i) such countries or regions that are subject to U.S. sanctions programs or (ii) to entities or individuals that appear on the U.S. government's (1) Specially Designated Nationals List; (2) Denied Persons List; (3) Unverified List; (4) Debarred List or (5) Entity List as made available from time to time by the U.S. Department of Commerce.
 
12.10 Distributor agrees that it shall not analyse, have analysed or permit any third party to analyze any Product to determine the Product's composition or formulation. Distributor agrees that it shall not reverse engineer, have reverse engineered or permit any third party to reverse engineer any Product.
 
 
 
[Signature Page Follows]

 
 

 


 
 
 

 

Exhibit A
 
 
 
Manufacturer's Products (pursuant to Section 2)
 
Chameleon product line
 
 
 
Territory (pursuant to Section 2)
 
USA
 
 
 
 
 
 
 
Discount Percentage (pursuant to Section 3.2)
 
Annual Sales Volume
% Discount
For the first $500,000
25%
For the next $2,500,000
30%
For amounts over $3,000,000
33%

 
Annual Sales Volume is defined as the total amount (in US$) of Manufacturer's Product that the Manufacturer invoices to the Distributor within a calendar year.
 
 

EX-10.15 4 udt_10k-ex1015.htm MIRION AGREEMENT udt_10k-ex1015.htm  

Exhibit 10.15
 
General Terms & Conditions
 
Pricing Valid Only for Homeland Security, Medical and First Respond$" Markets. For any Nuclear foower, Department of Energy, or National Lab Projects Please call for for Pricing!
 
1. 
Mirion Technologies (MGPI), Inc. Standard Terms and Conditions (incorporated herein as a reference) and the notes listed below form an integral part of this proposal.
 
2.
Herein, Mirion Techhnologies (MGPI), Inc. shall be referred to as the seller and UDT as the reseller.
 
3. 
The reseller is forbidden to sell any Mirlon Technologies (MGPl) Inc. equipment or or sergvices outside the United States of America (50 states). The reseller shall immediately, notify Mirlon Technologies (MGPI), Inc for any equipment exported by third parties or other entities. Failute to comply with requirement shall be subject to immediate termination of this agreement.
 
4. 
The seller does not appoint the reseller as Its exclusive distributor for the Homeland Security, Medical, Governmental or any other industry, In any part of the world.
 
5. 
The reseller shall purchase all products, including replacements, repairs, and spare parts, exclusively from the seller.
 
6. 
The seller's standard policy requires all products and repair services to be directed through the reseller and shipped accordingly. For returns please call to acquire Return Material Authorization Number (RMA).
 
7. 
No direct shipment to the end user will be allowed; in the event a~drop-shipmentHis reqUired, reseller will be subjected to a 5% serviCe charge of the total value of the order.
 
8. 
Product delivery dates may vary depending upon inventory status on the date of quotation and/or the date of PO receipt.
 
9. 
The terms of payment are net 30 days for resellers who have an established account (in good standing) with the seller. Otherwise, the terms of payment shall be~pre-paid':
 
10.
  The seller's standard product warranty of one (1) year for hardware and ninety (90) days for software shall commence on the date of shipment.
 
11. 
The seller shall provide the reseller with product information, such as sales literature, new product developments and other marketing assistance, when deemed a reasonable aid to the reseller in the promotion of product sales.
 
 
 
 
 
 

EX-10.16 5 udt_ex1016.htm ADVNT VAR AGREEMENT udt_ex1016.htm

Exhibit 10.16
 
 
ADVNT BIOTECHNOLOGIES, LLC.
VALUE ADDED RESELLER (VAR) AGREEMENT

Dated: September, 21, 2010
by and between ADVNT BIOTECHNOLOGIES, LLC ("ADVNT"), an Arizona Limited Liability Company of 22510 N 18th Drive, Phoenix, AZ 850.27, and UNIVERSAL DETECTION TECHNOLOGY, ("VAR") an CA corporation having its principal place of business at 340 N. Camden Drive, Suite 302, Beverly Hills, CA., 90210.
 
WITNESS:
 
WHEREAS, Advnt Biotechnologies, LLC (ADVNT) is the only entity to distribute throughout the United States and its territories the Advnt-brand products set forth on Schedule A, hereto (the "Products") and WHEREAS, VAR desires, on the terms and conditions set forth herein (and in documents incorporated by reference herein), to become a Value Added Reseller of the Products in the territory described on Schedule B (the "Territory") hereto, and ADVNT is willing, on such terms and conditions, so to appoint VAR.
 
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and adequacy of which is acknowledged by each of the parties hereto, those parties agree as follows:
 
1.   Products; Customers; Territory.
 
(a)The Products listed on Schedule A consist of Advnt-brand professional products specifically designed for environmental screening inspection practices as further defined below. Thus, the Products are only to be sold to customers in the Biowarfare/Mold Inspection Market (the "Customers"). Customers do not include (i) Retailers, (ii) Wholesalers, or (iii) Hospital Group Purchasing Organizations. ADVNT grants VAR nonexclusive rights to sell the Products to Customers in the Territory. ADVNT's grant of rights and licenses to VAR under this and any related Agreement do not extend to serving any prospective purchaser who is not a Customer, as defined above. VAR understands and agrees that among the rights retained by ADVNT, is an express reservation of the right to sell (or arrange for the sale of) Products to any Customer in the Territory, and to distribute the Products to Customers in the Territory through any third-party organization which distributes the Products nationally to Customers engaged in one or more of the Professional Practice specialties described above, or which acts as a buying group for such Customers. Any decision under this subparagraph 1(a) by ADVNT shall be final and conclusive between the parties.
 
 
 
1

 
 
 
2.   Duties of VAR.
 
(a) During the term of this Agreement, VAR agrees to immediately communicate to ADVNT in writing and by fax with a confirmation copy by mail, every complaint it receives from Customers about the Products.
 
(b) VAR agrees to provide, if and when ADVNT so requests, full information about VAR's handling of any or all Products in its inventory, and to grant ADVNT personnel access to such inventory and to VAR records relating thereto during normal business hours for the purpose of assuring that VAR's Product inventory complies with all orders, rules and regulations of any federal, state, or local governmental organization. Without prior written consent from ADVNT, VAR shall not alter the Products in any way including, without limitation, removing any ADVNT name, logo, brands, Product code, lot codes or expiration dates, or other Product identification, from the Products, or altering or deleting any packaging or product information supplied with the Products by ADVNT.
 
3.  Incorporation of Customer Application & Financial Responsibility Form. ADVNT and VAR are signing herewith a Customer Application & Financial Responsibility Form, which is incorporated into this Agreement as a material part hereof and is appended as Schedule E.
 
4.  Orders by VAR: Orders Subject to Acceptance by ADVNT. VAR from time to time shall offer in writing to purchase from ADVNT such quantities of the Products, as VAR shall desire to purchase. All such offers shall be subject to written acceptance by ADVNT at its home office. If ADVNT is unable for any reason to supply in part or in full the quantity of Products that VAR orders (including, without limitation, because such Products are no longer manufactured or sold to ADVNT), ADVNT may allocate its supplies of the Products among any or all purchasers thereof on such basis as it may consider fair and practical. ADVNT shall have no liability for declining in part or in full to accept VAR's offers to purchase quantities of the Products, and VAR shall purchase, if tendered by ADVNT, less than all of the quantity of Products ordered by VAR.
 
5.  Price; Terms and Conditions of Sale. Current prices for the Products, payment terms and other terms and conditions of sale are as set forth on the current ADVNT authorized VAR price list attached as part of Schedule C. All current ADVNT warranty terms for the Products are also included in Schedule C, and VAR shall not offer to customers, or inform them of any warranty terms that differ in any way from those on Schedule C (as it may be changed by ADVNT during the term of this Agreement). ADVNT reserves the right, in its sole discretion, to change Schedule C during the term of this Agreement. Subject to Paragraph 7 of this Agreement, such prices, terms and conditions shall apply to all sales hereunder except to the extent superseded by the terms and conditions set forth on any purchase order acceptance issued by ADVNT in connection with its acceptance of an order from VAR. All sales of the Products between ADVNT and VAR during the term of this Agreement shall be exclusively upon the terms and conditions provided for above and no additional or conflicting terms or conditions set forth in any communications or orders issued by VAR shall be of any force or effect unless specifically acknowledged and referred to as an amendment to this Agreement in a writing duly executed in accordance with Paragraph 10(b) of this Agreement. VAR understands and agrees that it has no right to change ADVNT's prices or other terms and conditions of sale, including warranty terms.
 
 
2

 
 
6.  Storage of VAR's Product Inventory. All Products shall be stored by VAR at all times under such conditions as are appropriate to preserve and keep the Products in first-class, usable condition. VAR shall maintain at all of its locations inventories of the Products adequate to serve Customer needs.
 
7.  Term and Termination; Limitations of Liability.
 
(a)This Agreement shall not become effective until ADVNT receives VAR's current financial statements in a form satisfactory to ADVNT. The term shall extend one year from the effective date, provided, however, that ADVNT shall be entitled to terminate this Agreement upon written notice to VAR prior to such date, without prejudicing or affecting any of its rights arising prior to such termination, under the following circumstances:
 
(i) VAR shall fail to pay any amount when due and payable to ADVNT hereunder;
 
(ii) VAR shall fail to comply with any of the requirements of Paragraphs 2, 3, 5 or 6;
 
(iii) VAR shall (A) apply for the appointment of, or there shall be appointed, a receiver, custodian, trustee, liquidator, or the like, of itself or of all or any substantial part of its property, (B) admit in writing its inability to pay its debts as they become due, (C) make a general assignment for the benefit of creditors, or (11) commence, or have commenced against it and not have dismissed within 60 days, a case under federal or other bankruptcy laws or under similar laws relating to insolvency, reorganization, liquidation, dissolution, winding up or composition or adjustment of debts;
 
(iv) VAR shall breach any other material term or condition hereof.
 
(b) ADVNT'S LIABILITY TO VAR FOR ANY LOSS OR DAMAGE ARISING DIRECTLY OR INDIRECTLY FROM THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL PURCHASE PRICE PAID BY VAR FOR THE PRODUCTS. ADVNT SHALL NOT BE RESPONSIBLE FOR ANY CONSEQUENTIAL, INDIRECT, OR INCIDENTAL DAMAGES RELATING TO OR ARISING OUT OF THE SALE OF ANY PRODUCT PURSUANT TO THIS AGREEMENT.
 
(c) VAR UNDERSTANDS AND AGREES THAT ADVNT SHALL NOT BE LIABLE FOR DAMAGES IN ANY FORM BY REASON OF THE TERMINATION OF THIS AGREEMENT AT ANY TIME AND FOR ANY REASON. VAR HEREBY IRREVOCABLY ACKNOWLEDGES THAT ADVNT SHALL, UNDER NO CIRCUMSTANCES, BE LIABLE FOR ANY TERMINATION DAMAGES OR INDEMNITIES ON GROUNDS OF MARKET DEVELOPMENT OR GOODWILL, LOSS OF ANTICIPATED PROFITS, AND/OR BECAUSE OF ANY EXPENDITURE THAT MAY HAVE BEEN INCURRED BY VAR (BY WAY OF PURCHASING OR LEASING ASSETS, OR OTHERWISE) FOR VAR'S PERFORMANCE OF THIS AGREEMENT.
 
 
3

 
 
(d) If during the term of this Agreement VAR at any time determines that it does not wish to continue to distribute the Products under this Agreement, within thirty (30) days of that decision, VAR shall give ADVNT notice of VAR's decision, such notice to be in writing and sent by fax with a confirmation copy by mail. Upon expiration of this Agreement's specified term, if both parties nevertheless continue to perform according to the provisions of this Agreement, the parties expressly agree to be bound only by the terms of this Agreement, on a month-to-month basis, subject to termination by either party upon 30 days written notice.
 
(e) VAR and ADVNT may agree to terminate this Agreement at any time.
 
(f) VAR or ADVNT may terminate this Agreement at any time during its term, for any reason or for no reason, by giving 60 days written notice.
 
8.VAR Is An Independent Contractor. VAR is entering into this Agreement as an independent contractor, and nothing in this Agreement, the Schedules attached hereto, any related Agreement, or any purchase order acceptance shall be deemed to constitute VAR an agent or a franchisee, partner, joint venture, or affiliate of ADVNT. VAR shall take no action (including, without limitation, making any statements or representations) giving rise to the impression, or by its silence or failure to act contribute to the impression, that VAR has any such relationship with ADVNT. VAR is not granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of ADVNT and/or any other person or to bind ADVNT in any manner whatsoever.
 
9.  Insurance and Indemnification. VAR hereby agrees to indemnify and hold ADVNT harmless from all claims, suits, demands, actions and liability of any kind or nature arising out of or otherwise connected with VAR's sale and distribution of Products. VAR shall at its own cost and expense secure and maintain during the term of this Agreement and any renewal hereof liability insurance naming ADVNT as an insured party, such insurance to be written by a company or companies satisfactory to ADVNT (Insurance shall be placed with insurers rated A-VIII or better by A.M. Best, Inc) . Such liability insurance shall be in an amount not less than $1,000,000 covering one person, not less than $2,000,000 covering more than one person, and not less than $1,000,000 covering property damages; the insurance shall protect ADVNT against any liability which may accrue against it by reason of the ownership, maintenance or operation by VAR of any premises in which Products may be stored or located; the ownership, operation, or control of any vehicle used by Distributor in the distribution of Products; or otherwise arising out of the arrangement between VAR and ADVNT. If VAR or their subcontractors are required to perform remedial hazardous material operations such as asbestos containing materials, contaminated soil, black mold, etc., they must, in addition to the above requirements, maintain "Contractor's Pollution Liability" coverage with limits not less than $1,000,000 per occurrence and aggregate for bodily injury and property damage. ADVNT shall be included as an additional insured. VAR shall send evidence of such insurance to ADVNT.
 
 
4

 
 
10.  Authority to Enter into Agreement; Warranty of Non-Interference with ADVNT contracts outside environmental screening/inspection practice Market.
 
(a) Each of the parties hereby covenants and represents in respect of itself that it is authorized to enter into this Agreement and that in so doing it is not in violation of the terms or conditions of any contract or other agreement to which it may be a party.
 
(b)  VAR hereby acknowledges notice that only the President of ADVNT has the authority to bind ADVNT to this Agreement and any modification or extension thereof. This Agreement cannot be amended or supplemented orally or by a course of dealing. An amendment to this Agreement can only be made in a writing executed by the President of ADVNT and a duly authorized officer or principal of VAR.
 
(c) VAR hereby warrants that it will not interfere, directly or indirectly, with any contract that ADVNT has entered into or will enter into with any non-Customer (as defined in this Agreement and any related Agreement), or with any third party that has as its purpose assisting in or furthering the sale by ADVNT of the Products and/or any other ADVNT products to such non-Customers. In furtherance of this commitment, VAR hereby agrees to indemnify and hold ADVNT harmless from and against any and all claims, liabilities, actions, damages, fines, judgments, settlements, costs and expenses (including reasonable attorneys' fees, expenses, and court costs) resulting from or arising out of any breach of this representation.
 
11.  Trademarks and Trade Names. VAR shall not register or use any ADVNT trademark or trade name without the prior written consent of ADVNT and shall not contest or otherwise bring into question ADVNT's ownership thereof.
 
12.  Notice. Subject only to the reporting obligations set out in Paragraphs 2 and 7(d), any notice required or permitted to be given under this Agreement shall be in writing, sent by prepaid overnight courier (e.g., Federal Express, etc.) to the respective addresses set forth in the introductory paragraph to this Agreement, and shall be deemed duly given two days after having been so sent. The parties may from time to time designate in writing other addresses expressly for the purpose of receipt of notice hereunder.
 
13.  Amendment; Waiver; Entire Agreement. No amendment of, or waiver of any breach of, this Agreement shall be effective unless in writing, and no waiver shall constitute a waiver of any subsequent breach. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings, negotiations, letters or commitments of any nature whatsoever and may not be modified orally. Any written modification is subject to Paragraph 10(b).
 
14.  ASSIGNMENT. THIS AGREEMENT MAY NOT BE ASSIGNED BY VAR NOR SHALL PERFORMANCE REQUIRED OF VAR HEREUNDER BE DELEGATED WITHOUT THE PRIOR WRITTEN CONSENT OF ADVNT. IN ADDITION, ADVNT SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE TO VAR IF THERE SHALL BE A CHANGE IN THE EFFECTIVE CONTROL OF THE BUSINESS AFFAIRS OF THE VAR OR A MATERIAL CHANGE IN THE EQUITY OR PARTNERSHIP OWNERSHIP STRUCTURE OF THE VAR
 
 
5

 
 
15.  Severability. This Agreement shall be deemed separable and if any portion hereof shall be held to be invalid for any reason, the remainder shall not be deemed invalid but shall remain in full force and effect.
 
16.Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of ARIZONA. The parties also expressly agree that the United Nations Convention on Contracts for the International sale of goods shall not be applied to this Agreement.
 
17.Dispute Resolution. Every controversy, claim, or dispute arising from or relating to this VAR Agreement ( the "Dispute") shall be resolved in accordance with Schedule D, which sets forth the sole and exclusive procedures for the resolution of any such Dispute.
 
18. STANDARDS OF PERFORMANCE. VAR ACKNOWLEDGES THAT THE STANDARDS OF PERFORMANCE IMPOSED ON IT BY THIS AGREEMENT ARE REASONABLE AND THAT ANY FAILURE ON ITS PART TO COMPLY FULLY WITH ALL OF THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL CONSTITUTE A MATERIAL AND SUBSTANTIAL BREACH OF THIS AGREEMENT. VAR ACKNOWLEDGES THAT THE FOREGOING AGREEMENT HAS RESULTED FROM ARMS-LENGTH NEGOTIATIONS BETWEEN PARTIES OF EQUIVALENT BARGAINING POWER AND THAT TERMINATION OF THIS AGREEMENT UNDER THE CIRCUMSTANCES AND FOR THE CAUSES PROVIDED FOR HEREIN WOULD BE FOR GOOD CAUSE AND WOULD NOT BE UNFAIR OR INEQUITABLE.
 
 
IN WITNESS WHEREOF, the parties hereto have hereunto executed this Agreement
 
ACCEPTED this 21st day of September, 2010.
 
 
 
 
 
 

 
 
6

 
 
SCHEDULE A
 
Products
 
Black Mold Detection
 
 
 
 
 
 
 
7

 
 
 
 
 
 
 
8

 
 
 
SCHEDULE B
 
Territory; Geographic Scope; VAR's Organization
 
 
Territory comprises the following: (If the territory includes a part of one or more states, attach a map of the Territory with the Territory's boundary drawn on the map).
 
VAR's Organization
 
VAR's Organization Consists of the Following Facilities:
 
Facility                                        Activities              Address
 
 
 
 
9

 
 
SCHEDULE C
 
Price List
 
 
Attach current ADVNT Authorized Price List(s).
 
      Standard Payment Terms: Full payment prior to shipment.
 
      Credit on account must be approved by ADVNT prior to any credit sale, per terms list.
 
ALL ORDERS ARE SUBJECT TO ACCEPTANCE BY ADVNT BIOTECHNOLOGIES, LLC.
 
Additional Terms, Conditions & Website Statement of Use
 
Acceptance of the Terms
 
By using our products, our Site, materials preTiented therein or using any services provided by or through products, our Site or materials you acknowledge that you have read and understood these terms of use (the "Terms") and you agree to be bound by them and to comply with all applicable laws and regulations regarding the use of this item.
 
If you do not agree to the Terms, do not order our products, use our site, or material therein, nor use the services it provides.
 
The Terms may be revised and updated from time to time, with or without any notice. AdVnt Biotechnologies shall make reasonable efforts to post a prominent notice in case the Terms shall change substantially. AdVnt Biotechnologies urges you to check the Last Revised date, which appears at the top of these Terms in order to be updated. You can review the most current version of the Terms at any time at:
 
http:// www.advnt.org
 
 
By using, entering and/or viewing the Site, you acknowledge that these Terms constitute a binding and enforceable legal contract between the Company and any person so using or entering the Site.
 
 
 
 
10

 
 
Availability of the Service
 
Access to the products, our Site, or material therein may not be available at all times or in all areas. AdVnt Biotechnologies reserves the right to modify or discontinue, temporarily or permanently, the products, with or without any notice to you. You agree that AdVnt Biotechnologies shall not be liable to you or to any third party for the content or any modification, suspension, or discontinuance of: (a) The products (b) our Site, or (c) the materials presented therein (including contact information, links, publications, product materials presented, other specialized content, documentation, data, related graphics, and other features as applicable) offered herein (collectively, the "Materials").
 
Use Restrictions
 
You may not: (i) copy, modify, adapt, make available (whether publicly or not), translate, reverse engineer, decompile, or disassemble any portion of the products, ADVNT's Web Site, the material therein, or the information which our Site contains in any way; (ii) create a browser or border environment, or GUI around the Site (e.g. no "frames" are allowed); (iii) interfere with or disrupt the operation of the Site, or the servers or networks that host the Site or make the Materials available, or disobey any laws or regulations or requirements, procedures, policies, or regulations of such servers or networks; (iv) interfere with or violate users' right to privacy or other rights, or harvest or collect personally identifiable information about users without their express consent, including using any robot, spider, crawler, site search or retrieval application, or other manual or Stitonnatic device or process to retrieve index and/or data-mine information; (v) impersonate any person or entity or provide false personal information or business information, for the purpose of receiving the Materials provided in this site or gaining unlawful access to it; (vi) falsely state or otherwise misrepresent your affiliation with any person or entity, including without limitation, with the Company, or express or imply that Company endorses or is in any way affiliated with you, your website, your business or any statement you make, or present false information about this Site; (vii) transmit or otherwise make available in connection with this Materials any virus, "worm", "Trojan horse", "time bomb", "web bug", spyware, or any other computer code, file, or program that is malicious by nature or defective, and may, or is intended to damage or hijack the operation of any hardware, software, or telecommunications equipment, or any other actually or potentially harmful, disruptive, or invasive code or component; (viii) create a database by systematically copying and storing all or any of Company's Intellectual Property (as shall be defined below); and (ix) use this Site for any illegal, immoral or unauthorized purpose.
 
Your failure to comply with the provisions set forth herein may result in the termination of your access to our products, our Site and/or the Materials contained therein and may expose you to civil and/or criminal liability.
 
 
11

 
 
Disclaimer
 
The information contained or provided by this product or contained in this Site is provided for informational purposes only, and should not be construed as medical or other professional advice on any subject matter. No recipients of content from the product, this Site or the material therein should act or refrain from acting on the basis of any content included in the product content or our Site, or materials therein, without seeking the appropriate medical or other professional advice on the particular facts and circumstances at issue. The content of our products, our Site and the material therein contains general information and AdVnt Biotechnologies expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents provided by AdVnt Biotechnologies.
 
Any general information sent to AdVnt Biotechnologies through the Site is not secure and is done on a non-confidential basis. Company does not necessarily endorse, and is not responsible for, any third-party content that may be accessed through this Site.
 
Intellectual Property Rights
 
The Materials and all the content provided through it, including without limitation, the graphics, photos, texts, data, personal data and information, business and technical data and information, guides, manuals, specifications, any proprietary resources, presentations, sounds, music, videos, interactive features, software (whether in source code or object code), scripts, designs, interface functionality trademarks, service marks, and logos (collectively, "Intellectual Property"), whether or not registered and/or protected by copyrights, trademarks, service marks, patents or other proprietary rights and laws, are solely owned by or licensed to AdVnt Biotechnologies and subject to copyright and other applicable intellectual property rights under United States laws, foreign laws and international conventions.
Except as permitted by applicable laws, you are not granted, expressly or by implication, estoppels or otherwise, any license or right to use any of the Intellectual Property without the prior written permission of AdVnt Biotechnologies. When used with AdVnt Biotechnologies permission or as permitted by applicable law, to the extent provided, all trademarks must be identified as trademarks of AdVnt Biotechnologies using the appropriate symbol (e.g., TM or ®) at the first occurrence in the text of any published printed or electronic communications, including advertising, promotions, packaging, technical documentation, sales and marketing collateral and product labels.
 
Disclaimer and Warranties
 
THE MATERIALS, PRODUCTS AND THE CONTENTS OF THE SITE, INCLUDING WITHOUT LIMITATION ANY CONTENT, DATA AND INFORMATION RELATED THERETO, IS PROVIDED ON AN "AS IS" OR "AS AVAILABLE" BASIS, WITHOUT ANY WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF TITLE OR NON-INFRINGEMENT OR IMPLIED WARRANTIES OF USE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE INCLUDING FOR SUCCESSFUL OR PROPER UTILIZATION. ADVNT BIOTECHNOLOGIES DOES NOT WARRANT THAT THE PRODUCTS, MATERIALS, SERVICES AND INFORMATION PRESENTED ON THIS SITE WILL BE UNINTERRUPTED OR ERROR-FREE. ADVNT BIOTECHNOLOGIES MAY CORRECT, MODIFY, ENHANCE, IMPROVE AND MAKE ANY OTHER CHANGES TO ANY PRODUCT. DATA, INFORMATION AND SITE CONTENT AVAILABLE VIA THE SITE, AT ANY TIME OR TO DISCONTINUE SELLING OR DISPLAYING SUCH MATERIALS, INFORMATION AND CONTENT WITHOUT NOTICE.
 
ADVNT BIOTECHNOLOGIES, IT'S EMPLOYEES OR IT'S SUBSIDIARIES DOES NOT WARRANT NOR GUARANTEE ANY ADVICE, INFORMATION, MEDICAL OR OTHERWISE GRANTED THROUGH OUR PRODUCTS, MATERIALS OR THE SITE AND ASSUMES NO LIABILITY, WITH RESPECT TO SUCH INFORMATION OR ADVICE OR ITS ACCURACY. YOU ACKNOWLEDGE AND UNDERSTAND THAT THE INFORMATION AND MATERIALS PRESENTED WITH OUR PRODUCTS OR ON THIS SITE SHOULD BE USED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND NOT FOR MEDICAL OR OPERATIONAL PLANNING OR OTHER PURPOSES. ALSO, ADVNT BIOTECHNOLOGIES, IT'S EMPLOYEES OR IT'S SUBSIDIARIES CANNOT ASSUME ANY RESPONSIBILITY FOR UPDATING OR CORRECTING ANY SUCH INFORMATION OR ADVICE ONCE IT HAS BEEN GIVEN.
 
 
 
12

 
 
 
Limitation of Liability
 
THE USE OF OUR PRODUCTS, MATERIALS, OUR SITE OR OUR SERVICE IS SOLELY AT YOUR OWN RISK. IN NO EVENT SHALL ADVNT BIOTECHNOLOGIES BE LIABLE FOR ANY DAMAGES WHATSOEVER INCLUDING, BUT NOT LIMITED TO, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING DEATH OR INJURY, WHETHER IN AN ACTION OF CONTRACT, NEGLIGENCE OR OTHER TORTIOUS ACTION RESULTING FROM OR ARISING OUT OF THE USE OR INABILITY TO USE OUR PRODUCTS, OUR SITE, OR OUR MATERIALS REGARDLESS OF WHETHER ADVNT BIOTECHNOLOGIES OR AN AUTHORIZED REPRESENTATIVE OF ADVNT BIOTECHNOLOGIES HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT WHERE LIABILITY IS MANDATORY IN WHICH EVENT LIABILITY FOR DAMAGES SHALL BE LIMITED TO THE SUMS ACTUALLY RECEIVED BY ADVNT BIOTECHNOLOGIES FROM YOU IN CONNECTION WITH OUR PRODUCTS, OUR SITE, OR MATERIALS THEREIN.
 
User's Representations and Warranties
 
As a condition for your use of our products, materials and our Site, you hereby represent and warrant that (i) you possess the legal authority to enter into these Terms and to form a binding agreement under any applicable law, to use our products or our Site in accordance with these Terms, and to fully perform your obligattns hereunder; (ii) the execution of these Terms does not and will not violate any other agreement to which you are bound or any law, rule, regulation, order or judgment to which you are subject; (iii) you will safeguard your account information and will supervise and be completely responsible for any use of your account by anyone other than you; (iv) you will provide true and accurate information and will not impersonate or provide a false identity; (v) you will not infringe any right of any third party, including intellectual property rights, privacy rights and publicity rights; and (vii) you will not harm any user and will not use our products, our Site and materials presented therein for any, illegal, immoral or unauthorized purposes.
 
Indemnification
 
You agree to defend, indemnify and hold harmless AdVnt Biotechnologies, its officers, directors, employees and agents, from and against any and all claims, damages, obligations, losses, liabilities, costs, debts, and expenses (including but not limited to attorney's fees) arising from: (i) your use of our products, our Site or materials presented therein including for successful or proper utilization; (ii) your violation of any term of these Terms; (iii) your violation of any third party right, including without limitation any intellectual property right, property right, privacy right or publicity right; and (iv) any damage of any sort, whether direct, indirect, special or consequential, you may cause to any third party with relation to the products, our Site or the Materials. This defense and indemnification obligation will survive these Terms.
 
Termination
 
You agree that AdVnt Biotechnologies, in its sole discretion, may terminate your purchase of our products, material or use of this Site or any part thereof, at any time and for any reason, including, without limitation, if AdVnt Biotechnologies believes that you have violated or acted inconsistently with the letter or spirit of these terms and conditions. You agree that any termination of your access to our products, this Site and/or the Materials therein under any provision of these terms and conditions may be effected without prior notice. Upon termination of these terms and conditions, your right to use our products, this Site or the materials presented therein will immediately cease. AdVnt Biotechnologies shall not be liable to you or any third party for any termination of your access to our products, this Site, or materials or any part thereof.
 
 
 
13

 
 
General
 
 
1.
These Terms do not, and shall not be construed to create any relationship, partnership, joint venture, employer-employee, agency, or franchisor-franchisee relationship between the parties hereto.
 
2.
Any claim relating to the Products, Service, Materials or its use thereof will be governed by and interpreted in accordance with the laws of the State of Arizona without reference to its conflict-of-laws principles. Any dispute arising out of or related to your use of the Products, Service or Materials will be brought in, and you hereby consent to exclusive jurisdiction and venue in, the competent courts of Arizona. Except that you agree that AdVnt Biotechnologies shall have the right to bring suit against you, in any venue and/or jurisdictiort outside of the State of Arizona, in which you have assets, domicile or a place of business.
 
3.
You agree to waive all defenses of lack of personal jurisdiction and forum non-convenes, and agree that process may be served in a manner authorized by applicable law or court rule.
 
4.
If any provision of this Terms of Use is found to be unlawful, void, or for any reason unenforceable, then that provision will be deemed severable from this Terms of Use and will not affect the validity and enforceability of any remaining provisions.
 
5.
No waiver by either party of any breach or default hereunder will be deemed to be a waiver of any preceding or subsequent breach or default. Any heading, caption or section title contained herein is inserted only as a matter of convenience, and in no way defines or explains any section or provision hereof.
 
 
 
 
 
14

 
 
Value Added Reseller Price List
 
 
 
 
 

 
 
15

 
 
SCHEDULE D
DISPUTE RESOLUTION
 
23.  Dispute Resolution. Every controversy, claim, or dispute arising from or relating to this VAR Agreement (the "Dispute") shall be resolved in accordance with this Schedule D, which sets forth the sole and exclusive procedures for the resolution of any such Dispute.
 
(a) ADVNT and VAR will attempt in good faith to resolve promptly any Dispute by negotiations between senior executives of the parties to this Agreement who have the authority to settle the Dispute. If the parties so agree, the executives may be assisted by a mediator supplied by the American Arbitration Association ("AAA"); costs and fees of the mediation will be borne equally by the parties, paid in advance. If the Dispute is not resolved within 30 days of a party's written request for negotiation, either party may initiate arbitration as hereinafter provided.
 
(b) A party initiating arbitration shall file (with the appropriate Case Management Center of the AAA) and serve the other party, within 90 days of the end of the negotiation period set forth above, a demand in accordance with the Commercial Arbitration Rules of the AAA, and the other party shall file an answering statement (including counterclaims, if any) within the time period specified by the Rules. The parties agree and understand that they have a contractual obligation hereunder to conduct the arbitration of any Dispute in good faith.
 
(c) The AAA shall appoint a single rfutral arbitrator from its Commercial Arbitration Panel or its Large Complex Case Panel to decide the Dispute. The arbitrator shall be an attorney who has practiced law for at least 15 years and (if possible) who has experience relating to bio-medical hand-held assays sold environmental screening practices in the United States. The AAA shall employ its appointment practices in effect at the time the demand is filed to make the appointment. Except as otherwise specifically provided in this Schedule D, the AAA's Commercial Arbitration Rules shall govern the arbitration proceedings.
 
(d) The arbitration will take place in Phoenix, Arizona.
 
(e) Discovery may be had by both parties pursuant to the provisions of the Federal Rules of Civil Procedure, and the arbitrator shall have full discretion to regulate such discovery so as to provide for prompt, efficient, and fair resolution of the Dispute. During the conduct of the arbitration proceedings, the arbitrator shall have full discretion concerning the admissibility and relevance of evidence, being guided in exercising such discretion by the principles set out in the Federal Rules of Evidence rather than any other body of evidentiary law as defined by state common law, codes, or rules of evidence.
 
 
 
16

 
 
(f) The parties agree and understand that during any arbitration conducted pursuant to this Schedule D, the AAA will, from time to time, assess each party for its share of AAA fees and the fees and expenses of the arbitrator; it is also understood that the AAA will make such requests for payment in advance of one or more proceedings conducted by the arbitrator. If any such request for fees and expenses is not honored promptly by a party (a "Default"), and such Default results in the delay or postponement of any scheduled activities (e.g., discovery, motion practice, or hearings), the AAA shall inform the Arbitrator of the Defaulting Party's identity. Thereafter, the arbitrator may receive submissions from the parties (and factual information from the AAA) to decide whether the Default constitutes a breach by the Defaulting Party of its obligation to arbitrate in good faith. If the Default is determined by the arbitrator to constitute such a breach, the arbitrator may award any relief, up to and including a default judgment, against the party in Default.
 
(g) Any order by the arbitrator concerning interim relief shall be rendered in writing and signed by the arbitrator. Neither party shall have a right to request the arbitrator to write an opinion detailing the reasons for such an order. The final award of the arbitrator shall also be rendered in writing and signed by the arbitrator. Neither party shall have the right to request the arbitrator to write an opinion detailing the reasons for the final award. Unless otherwise agreed to by the parties, the final award shall be rendered within 30 days of the closing of the arbitration proceeding pursuant to the arbitrator's declaration.
 
(h) Each party shall bear its own costs and attorneys fees arising out of the arbitration. Although the arbitrator may not award attorney fees to the prevailing party, the arbitrator may, in his or her sole discretion, require the losing party to reimburse the prevailing party for all or a portion of the prevailing party's share of the AAA's and the arbitrator's fees and expenses. Notwithstanding the preceding sentence, each party shall be solely responsible for any filing fees which that party owes to the AAA on account of any claims and/or counterclaims asserted by such party during the proceedings.
 
(i) Each party agrees to abide by die arbitration award and further agrees that judgment may be entered upon the award in any court of competent jurisdiction.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17

 
EX-10.17 6 udt_10k-ex1017.htm DETRICK LAWRENCE AGREEMENT udt_10k-ex1017.htm

Exhibit 10.17
 
 
AGREEMENT
 
Between Detrick Lawrence Corporation and its division the Emergency Film Group, 140 Cooke Street, PO Box 1928, Edgartown, MA 02538-1928 and
 
Universal Detection Technology
340 N. Camden Drive, Suite 302
Beverly Hills, CA 90210, USA
 
WHEREAS, the Detrick Lawrence Corporation and its division, the Emergency Film Group (herein referred to as The Producer), holds the copyright to certain motion picture training programs, (herein referred to as The Programs),
 
WHEREAS Universal Detection Technology (Herein referred to as The Distributor) wishes to distribute these programs,
 
THEREFORE, the parties have agreed that:
 
1.  The Producer will make available to The Distributor copies of the Programs for resale listed in Exhibit A as provided hereafter.
 
A. A Program series may have one, two, three, four, five or eight titles.
 
B. Each title in the HazChem, Hazmat Operations and Hazardous Materials: Managing The Incident series is considered a separate program.
 
C.  Many Programs include publications in support of the Program. These publications are included in the price of the Program. Additional copies and publications will be quoted separately.
 
2.  The Producer will ship the desired Programs to The Distributor or its designated recipient within 24 hours of order receipt, Large orders of more than 12 units per title will ship within 4 days. Shipments will be made via UPS unless otherwise requested. Shipping charges will be prepaid and added to the invoice. Distributors may choose to use their own shipping number. Drop ship services are available at no charge.
 
3.  The Producer will provide The Distributor, upon request, and as available, photographs from our existing library, which are suitable for marketing purposes. All materials are to be returned immediately after use.
 
 The Distributor agrees to sell the Programs at a price not less than the price listed in the most recent Emergency Film Group catalog or newsletter unless specifically authorized in writing by the Producer. The current list price of all the programs is listed in Exhibit A.
 
 The Distributor will give acknowledgment to The Producer in all materials that they produce in respect to the Programs and will not remove the name Emergency Film Group or Detrick Lawrence Corporation where it appears within the body of the Programs or cover those names whets they appear on cases or cassettes.
 
 
 
1

 
 
6.  The Distributor will provide The Producer with copies of all sales and marketing materials used to promote each program.
 
7. The Distributor will pay all Producer invoices within 30 days of receipt, Past due invoices will be subject to a finance charge of 1.5% per month (18% APR). Foreign Distributors must prepay for products by credit card or wire transfer in American dollars.
 
8. The length of the agreement is 2 year(s), from date of signing, and may ha extended by written agreement of the parties.
 
9. The copyright of these programs is wholly owned and will be retained by Detrick Lawrence Corporation.
 
10. The Producer agrees to sell The Programs to The Distributor at a30% discount of the price listed In Exhibit A, and a 20% discount on training packages listed in Exhibit B. There are no discounts on books, videos and CD-ROMs that EFG distributes for other publishers or producers.
 
11. Should The Distributor sell more than S100,000.00 in videos, The Distributor thereafter will receive a 40% discount an all program orders and 30% on training packages.
 
12. The Distributor may sell any of the packages listed in the EFG catalogue and in Exhibit "IV. However, since the packages are already heavily discounted, The Producer agrees to sell the packages at a 20% discount from the prices listed in the EFG catalogue.
 
13. Before The Producer fulfills orders, The Distributor must establish credit with the producer or pay by credit card when placing an order.
 
 AGREEMENT. This is the only agreement between the parties and shall not constitute the parties hereto as partners, or create a joint venture or fiduciary relationship between them.
 
 
 
 
 
 
 
 
2

 
EX-10.18 7 udt_10k-ex1018.htm AGENCY AGREEMENT udt_10k-ex1018.htm  

Exhibit 10.18
 

 
AGENCY AGREEMENT


This non-exclusive Distribution Agreement (“Agreement”), effective as of the 15th day of March, 2011 (the “Effective Date”), is entered into by and between Universal Detection Technology, Inc., having offices at 340 N Camden Drive, Suite 302, Beverly Hills, CA 90210, United States of America (the “Company”), and APP Systems Services PTE, LTD., having offices at 11 Toh Guan Road East #03-01, APP Enterprise Building, Singapore 608603 (the “Agent”).

1- THE AGREEMENT

a) Company hereby agrees to engage the Agent, on a non-exclusive basis, in efforts to promote and sell Company’s radiation detectors in Singapore and Japan, (the “Territory”). Agent shall exercise its best efforts to find, negotiate, and complete sales to both public and private entities within the Territory. Completing a sale insinuates that Company’s devices have been, or are contractually expected to be, delivered and that all related funds have been collected by the Company. The company is responsible to pay Agent’s fees upon collecting relevant proceeds from sales within the Territory.

b) The term of this agreement shall be one year from the Effective Date as defined and outlined in this Agreement. This Agreement can be renewed after one year from the Effective Date by joint agreement between Company and Agent.

c) Company shall be under no obligation to pay any fees or other monies to Agent on account of this Agreement unless the sale of one or more units of Company’s product has taken place due to the efforts of Agent and as a direct consequence of Agents negotiations.

d) Company hereby agrees not to circumvent Agent and not to make any direct sales to parties introduced to Company by Agent without informing Agent and making necessary arrangement for Agent to secure related fees.

3- THE FEE

a) The fee for Agent’s introductions and negotiations that lead to successful sale of Company’s product shall be ten percent (10%) of the US Dollar amount of the proceeds to Company net of any applicable domestic and international dues and taxes.



340 N Camden Drive, Suite 302, Beverly Hills, CA 90210, USA – +1 (310) 248 3655 – www.udetection.com


 
 

 
 


IN  WITNESS WHEREOF, the parties have signed this Agreement.


Company
Agent
   
   
   
   
   
/s/ Jacques Tizabi
/s/ C.P. Lee                              
Jacques Tizabi
Name:  Lee, C.P.
Chairman & CEO
Title:   Director, Sales and Marketing
Universal Detection Technology
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
340 N Camden Drive, Suite 302, Beverly Hills, CA 90210, USA – +1 (310) 248 3655 – www.udetection.com


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Exhibit 31.1
 

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jacques Tizabi, certify that:
 
 
1.
I have reviewed this Annual Report of Universal Detection Technology;
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
 
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
 
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

 
/s/ Jacques Tizabi
Jacques Tizabi,
Chief Executive Officer and Acting Chief Financial Officer
Dated:  April 15, 2011
 

EX-32.1 16 udt_10k-ex3201.htm CERTIFICATION udt_10k-ex3202.htm  



Exhibit 32.1
 

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

 
In connection with the Annual Report of Universal Detection Technology (the "Registrant") on Form 10-K for the year ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jacques Tizabi, Chief Executive Officer and Acting Chief Financial Officer of the Registrant, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
Date: April 15, 2011
 

By: /s/ Jacques Tizabi
Jacques Tizabi,
Chief Executive Officer and Acting Chief Financial Officer
 
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