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[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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California
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95-2746949
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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340 North Camden Drive, Suite 302
Beverly Hills, California
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90210
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company x
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Page No.
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PART I.
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Financial Information
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Item 1.
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Financial Statements (unaudited) :
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3 | |
Notes to Financial Statements
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7 | ||
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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14 | |
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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20 | |
Item 4.
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Controls and Procedures
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20 | |
PART II.
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Other Information
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Item 1.
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Legal Proceedings
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20 | |
Item 1A
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Risk Factors
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21 | |
Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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21 | |
Item 3.
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Defaults Upon Senior Securities
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22 | |
Item 4.
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Removed and Reserved
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22 | |
Item 5.
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Other Information
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22 | |
Item 6.
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Exhibits
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23 | |
SIGNATURES
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24 |
ASSETS
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As of | |||||||
June 30, 2011
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December 31, 2010
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|||||||
CURRENT ASSETS:
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||||||||
Cash and cash equivalents
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$ | 15,032 | $ | 987 | ||||
Accounts Receivable,net
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1,099 | 1,099 | ||||||
Inventory, net
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5,556 | 936 | ||||||
Prepaid expenses
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52,447 | - | ||||||
Total current assets
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74,134 | 3,022 | ||||||
Deposits
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21,300 | 21,300 | ||||||
Equipment, net
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2,732 | 5,451 | ||||||
Total assets
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$ | 98,166 | $ | 29,773 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
CURRENT LIABILITIES:
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||||||||
Accounts payable, trade
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$ | 1,206,647 | $ | 1,189,824 | ||||
Accrued liabilities
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592,589 | 635,761 | ||||||
Unearned Revenue
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60,888 | - | ||||||
Accrued payroll - officers
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942,945 | 783,410 | ||||||
Notes payable - related party
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528,999 | 340,074 | ||||||
Notes payable
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516,514 | 874,394 | ||||||
Shares to be issued
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154,048 | - | ||||||
Accrued interest expense
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757,165 | 725,692 | ||||||
Total current liabilities
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4,759,795 | 4,549,155 | ||||||
Long term notes payable
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25,000 | - | ||||||
Total liabilities
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4,784,795 | 4,549,155 | ||||||
COMMITMENTS AND CONTINGENCIES
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||||||||
STOCKHOLDERS' DEFICIT:
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||||||||
Preferred stock, $.01 par value, 20,000,000 shares authorized, -0- issued and outstanding
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- | - | ||||||
Common stock, no par value, 20,000,000,000 shares authorized,
4,772,514,316 and 2,253,029,102 shares issued and outstanding
as of June 30, 2011 and December 31, 2010, respectively
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37,111,928 | 35,601,080 | ||||||
Additional paid-in-capital
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5,313,089 | 5,313,089 | ||||||
Accumulated deficit
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(47,111,646 | ) | (45,433,551 | ) | ||||
Total stockholders' deficit
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(4,686,629 | ) | (4,519,382 | ) | ||||
Total liabilities and stockholders' deficit
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$ | 98,166 | $ | 29,773 |
For the six months ended June 30,
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||||||||
2011
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2010
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|||||||
REVENUE, NET
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$ | 32,813 | $ | 3,057 | ||||
COST OF GOODS SOLD
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36,483 | 2,150 | ||||||
GROSS PROFIT
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(3,670 | ) | 907 | |||||
OPERATING EXPENSES:
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||||||||
Selling, general and administrative
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517,252 | 591,920 | ||||||
Marketing
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18,325 | 60,996 | ||||||
Depreciation and amortization
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2,719 | 5,668 | ||||||
Total expenses
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538,296 | 658,584 | ||||||
LOSS FROM OPERATIONS
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(541,966 | ) | (657,677 | ) | ||||
OTHER INCOME (EXPENSE):
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||||||||
Interest expense
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(50,301 | ) | (82,136 | ) | ||||
Other income
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- | 7,500 | ||||||
Loss on settlement of debt
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(1,085,826 | ) | (478,727 | ) | ||||
Total other expenses
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(1,136,127 | ) | (553,363 | ) | ||||
NET LOSS
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$ | (1,678,093 | ) | $ | (1,211,040 | ) | ||
NET LOSS PER SHARE - BASIC AND DILUTED:
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$ | (0.0005 | ) | $ | (0.0010 | ) | ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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3,531,225,815 | 1,214,409,060 |
For the three months ended June 30,
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||||||||
2011
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2010
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|||||||
REVENUE, NET
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$ | 30,508 | $ | 1,099 | ||||
COST OF GOODS SOLD
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34,558 | 1,002 | ||||||
GROSS PROFIT
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(4,050 | ) | 97 | |||||
OPERATING EXPENSES:
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||||||||
Selling, general and administrative
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347,882 | 277,085 | ||||||
Marketing
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17,643 | 57,611 | ||||||
Depreciation and amortization
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797 | 2,704 | ||||||
Total expenses
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366,322 | 337,400 | ||||||
LOSS FROM OPERATIONS
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(370,372 | ) | (337,303 | ) | ||||
OTHER INCOME (EXPENSE):
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||||||||
Interest expense
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(22,917 | ) | (40,002 | ) | ||||
Other income
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- | 3,750 | ||||||
Loss on settlement of debt
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(580,404 | ) | (251,002 | ) | ||||
Total other expenses
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(603,321 | ) | (287,254 | ) | ||||
NET LOSS
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$ | (973,693 | ) | $ | (624,557 | ) | ||
NET LOSS PER SHARE - BASIC AND DILUTED:
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$ | (0.0002 | ) | $ | (0.0005 | ) | ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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4,124,759,512 | 1,343,232,457 |
2011
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2010
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|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (1,678,093 | ) | $ | (1,211,040 | ) | ||
Adjustments to reconcile net loss to net cash used in operations:
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||||||||
Stocks issued for services
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50,312 | 298,583 | ||||||
Loss on settlement of debt
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1,085,826 | 478,727 | ||||||
Depreciation
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2,719 | 5,668 | ||||||
Changes in operating assets and liabilities:
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||||||||
Inventory
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(4,620 | ) | - | |||||
Accounts receivable
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- | 335 | ||||||
Prepaid expenses
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(52,447 | ) | (67,144 | ) | ||||
Stock to be issued
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154,048 | - | ||||||
Unearned Revenue
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60,888 | - | ||||||
Accounts payable and accrued liabilities
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183,487 | 240,101 | ||||||
Net cash used in operating activities
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(197,880 | ) | (254,770 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
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||||||||
Decrease (increase) in restricted cash
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- | (3,012 | ) | |||||
Net cash (used) provided by investing activities
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- | (3,012 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES:
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||||||||
Proceeds from notes payable-related party
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256,475 | 155,923 | ||||||
(Payments on)/proceeds from notes payable
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23,000 | 119,000 | ||||||
Payments on notes payable - related party
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(67,550 | ) | (13,326 | ) | ||||
Net cash provided by financing activities
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211,925 | 261,597 | ||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
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14,045 | 3,815 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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987 | 1,367 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 15,032 | $ | 5,182 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
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||||||||
Income tax
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$ | 3,200 | $ | - | ||||
Interest Paid
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$ | - | $ | 526 | ||||
SUPPLEMENTAL DISCLOSURES FOR NON CASH INVESTING AND FINANCING ACTIVITIES:
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||||||||
Shares issued for settlement of debt and accrued interest
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$ | 1,309,756 | $ | 761,310 |
a)
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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 June 30, 2011, $411,500 has been accrued.
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b)
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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)
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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 June 30, 2011 and December 31, 2010, the Company has $584,967 and $559,303, respectively, accrued for including interest relating to this matter which is part of notes payable and accrued interest in the accompanying balance sheet as of June 30, 2011, and December 31, 2010.
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c)
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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. As of June 30, 2011, $28,098 was due under the agreement and is included in the accounts payable in the accompanying balance sheet as of June 30, 2011.
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d)
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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. No payments have been made on this judgment and no actions to enforce the judgment have been taken against UDT.
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e)
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On June 24, 2010, Plaintiff Meyers Associates, L.P. commenced an action in the Supreme Court of the State of New York, New York County, entitled Meyers Associates, L.P. v. Universal Detection Technology ("UDT"), case No. 108321/10. The complaint alleges breach of contract and damages related to performance by Meyers Associates, L.P. ("Meyers") of an investment banking services agreement dated December 22, 2005 and UDT's alleged failure to compensate Meyers for such services under the terms of the agreement. Plaintiff seeks damages in the amount of approximately $116,000 plus an award of court costs and attorneys fees. In October 2010, Plaintiff filed a Notice of Motion for Default Judgment against UDT and filed a Request for Judicial Intervention in connection therewith. The Company has not received any further communication regarding this action and does not know if a default judgment was granted.
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f)
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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 the Company, a second corporate defendant, and our CEO, as a result of a personal guarantee. On December 15, 2010, Defendants filed an Answer which asserted several defenses. The parties have exchanged initial disclosures, and the matter has been set for trial commencing on December 5, 2011. On August 3, 2011 the parties entered into a settlement agreement whereby the Defendants in the case will jointly pay $85,000 to the plaintiffs and the Company will issue $45,000 of the Company’s stock to the plaintiffs. The cash payments will be made in equal monthly payments over 7 months commencing on August 31, 2011. In consideration of the settlement, the parties have executed a mutual release and have agreed to withdraw the lawsuit. The releases and withdrawal are contingent upon the Company's full performance of the settlement agreement terms.
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Weighted Average
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Aggregated
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|||||||||||
Exercise
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Intrinsic
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|||||||||||
# shares
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Price
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Value
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||||||||||
Options:
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||||||||||||
Outstanding and exercisable, December 31, 2010
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539,750 | $2 to $66 | $ | - | ||||||||
Granted
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- | - | ||||||||||
Exercised
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- | - | ||||||||||
Expired
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(500,000 | ) | $2 | - | ||||||||
Outstanding and exercisable, June 30, 2011
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39,750 | $60 to $66 | $ | - | ||||||||
Warrants:
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Outstanding and exercisable, December 31, 2010
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- | N/A | $ | - | ||||||||
Granted
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- | - | ||||||||||
Exercised
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- | - | ||||||||||
Expired
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- | - | ||||||||||
Outstanding and exercisable, June 30, 2011
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- | N/A | $ | - |
·
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administrative expenses, including salaries of officers and other employees we plan to hire;
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·
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repayment of debt;
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·
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sales and marketing;
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·
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product development, testing and manufacturing; and
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·
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expenses of professionals, including accountants and attorneys.
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·
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One loan from three family members, 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 June 30, 2011, we have $584,967 accrued for including interest relating to this matter.
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·
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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 June 30, 2011, there was $161,000 principal amount (and $103,401 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.
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·
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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 this third party and us, we agreed to pay a total of $130,800 pursuant to a scheduled payment plan through July 2005. At June 30, 2011, there was $71,500 principal amount (and $34,709 in interest). We did not make our scheduled payment under this note in July 2005, and are in default of this note.
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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 June 30, 2011, we owed $64,500 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.
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·
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One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,500 due June 27, 2007 with an interest rate of 12.5% per annum. As of June 30, 2011, we owed $765 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.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $240 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $480 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we owed $5,000 in principal and $1,500 in interest. We did not make our scheduled payment on January 16, 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.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $390 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $360 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $510 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we owed $9,940 in principal and $2,684 in interest. We did not make our scheduled payment on March 31, 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.
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·
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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 12.0% per annum. As of June 30, 2011, we owed $1,638 in principal and $442 in interest. We did not make our scheduled payment on March 31, 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.
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·
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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 12.0% per annum. As of June 30, 2011, we owed $1,420 in principal and $383 in interest. We did not make our scheduled payment on March 31, 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.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $375 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $134 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $540 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $75 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $410 in interest.
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·
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One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $18,940 due on June 9, 2011 with an interest rate of 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $1,375 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance owed $900 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we owed $27,000 in principal and $7,883 in interest.
|
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $300 in interest.
|
|
·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $898 in interest.
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|
·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $1,556 in interest.
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·
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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 12.0% per annum. As of June 30, 2011, we owed $776 in principal balance and $171 in interest. We did not make our scheduled payment on September 3, 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.
|
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·
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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 12.0% per annum. As of June 30, 2011, we owed $32,000 in principal and $8,670 in interest. We did not make our scheduled payment on November 2, 2009. 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.
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|
·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $1,130 in interest.
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|
·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $4,500 in interest.
|
|
·
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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 12.0% per annum. As of June 30, 2011, we owed $90,000 in principal and $14,670 in interest. We did not make our scheduled payment on December 23, 2009. 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.
|
|
·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $1,755 in interest.
|
|
·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $1,575 in interest.
|
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·
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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 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $2,205 in interest.
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|
·
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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% per annum. As of June 30, 2011, we paid off the principal balance and owed $4,710 in late charge.
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|
·
|
One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $35,000 due on May 12, 2011 with an interest rate of 12.0% per annum. As of June 30, 2011, we paid off the principal balance and owed $2,100 in interest.
|
|
·
|
One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $25,000 due on April 14, 2014 with an interest rate of 12.0% per annum. As of June 30, 2011, we owed $25,000 in principal and $625 in interest.
|
|
·
|
One loan from the President & CEO evidenced by a promissory note in the aggregate principal amount of $275 due on September 14, 2010 with an interest rate of 12.0% per annum. As of June 30, 2011, we owed $275 in principal and $73 in interest. We did not make our scheduled payment on September 14, 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.
|
|
·
|
One loan from the President & CEO evidenced by a promissory note in the aggregate principal amount of $506 due on October 6, 2010 with an interest rate of 12.0% per annum. As of June 30, 2011, we owed $506 in principal and $93 in interest. We did not make our scheduled payment on October 6, 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.
|
|
·
|
One loan from the President & CEO evidenced by a promissory note in the aggregate principal amount of $174 due on October 8, 2010 with an interest rate of 12.0% per annum. As of June 30, 2011, we owed $174 in principal and $52 in interest. We did not make our scheduled payment on October 8, 2010, 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.
|
|
·
|
One loan from the President & CEO evidenced by a promissory note in the aggregate principal amount of $5,318 due on March 30, 2010 with an interest rate of 12.0% per annum. As of June 30, 2011, we owed $5,318 in principal and $798 in interest. We did not make our scheduled payment on March 30, 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.
|
|
·
|
One non-interest bearing loan from the President and CEO for unpaid reimbursements. During the six months ended June 30, 2011, we borrowed an aggregate of $256,475 in principal and repaid $67,550 in principal payments. As of June 30, 2011, we owed $522,726 in principal.
|
·
|
During the three months ended June 30, 2011, we entered into agreements to issue 868,788,732 shares of common stock to various notes holders to convert outstanding debt obligations valued at approximately $638,281 as follows:
|
o
|
On April 20, 2011, we issued 169,811,320 shares of common stock to noteholders or to parties designated by the noteholders to convert outstanding obligations valued at $186,792. The price per share of the conversion was $0.0011.
|
o
|
On April 20, 2011, we issued 170,000,000 shares of common stock to noteholders or to parties designated by the noteholders to convert outstanding obligations valued at $187,000. The price per share of the conversion was $0.0011.
|
o
|
On June 2, 2011, we issued 115,584,555 shares of common stock to noteholders or to parties designated by the noteholders to convert outstanding obligations valued at $57,792. The price per share of the conversion was $0.0005.
|
o
|
On June 2, 2011, we issued 144,642,857 shares of common stock to noteholders or to parties designated by the noteholders to convert outstanding obligations valued at $72,321. The price per share of the conversion was $0.0005.
|
o
|
On June 2, 2011, we issued 85,000,000 shares of common stock to noteholders or to parties designated by the noteholders to convert outstanding obligations valued at $42,500. The price per share of the conversion was $0.0005.
|
o
|
On June 2, 2011, we issued 183,750,000 shares of common stock to noteholders or to parties designated by the noteholders to convert outstanding obligations valued at $91,875. The price per share of the conversion was $0.0005.
|
·
|
One loan from three family members, 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 scheduled payments and are in default of these notes. As of June 30, 2011, we have $584,967 accrued for including interest relating to this matter.
|
·
|
One loan from an unaffiliated party in the aggregate principal amount of $195,000 with interest at a rate of 9% 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 June 30, 2011, there was $161,000 principal amount remaining on this note. We did not make our scheduled payment under this note and are in default. As of June 30, 2011, we owed $103,401 in interest on this note.
|
·
|
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 this third party and us, we agreed to pay a total of $130,800 pursuant to a scheduled payment plan through July 2005. At June 30, 2011, there was $71,500 principal amount remaining on this note. We did not make our scheduled payments under this note and are in default. As of June 30, 2011, we owed $34,709 in interest on this note.
|
Exhibit Number
|
Description
|
3.1
|
Articles of Incorporation of Universal Detection Technology, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 26, 2011).
|
3.2
|
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2001, filed on April 15, 2002).
|
4.1
|
Amended and Restated 2003 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 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 Exhibit 4.1 to the Company's Form S-8 Registration Statement (File No. 333-131783) filed on February 13, 2006).
|
4.3
|
2006 Consultant Stock Plan (incorporated by reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement (File No. 333-135507) filed on June 30, 2006).
|
4.4
|
2006-II Consultant Stock Plan (incorporated by reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement (File No. 333-138923) filed on November 22, 2006).
|
4.5
|
2007 Consultant Stock Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-142158) 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 Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-144084) filed on June 27, 2007).
|
4.8
|
2007-2 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-144583) filed on July 13, 2007).
|
4.9
|
2007-3 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-146438) filed on October 2, 2007).
|
4.10
|
2007-4 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-147097) filed on November 2, 2007).
|
4.11
|
2008 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-149169) filed on February 11, 2008).
|
4.12
|
2008 Equity Incentive Plan II (incorporated by reference to Exhibit 4.1 to the Company’s Post-Effective Amendment No. 1 to Form S-8 Registration Statement (File No. 333-150400) filed on May 27, 2008).
|
4.13
|
2008 Equity Incentive Plan III (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-152297) filed on July 11, 2008).
|
4.14
|
2008 Equity Incentive Plan IV (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-153371) filed on September 8, 2008).
|
4.15
|
2009 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-157461) filed on February 23, 2009).
|
4.16
|
2009 Equity Incentive Plan II (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-159289) filed on May 15, 2009).
|
4.17
|
2009 Equity Incentive Plan III (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-162963) filed on November 6, 2009).
|
4.18
|
2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-174010) filed on May 6, 2011).
|
10.1
|
Form of Note Conversion Agreement*
|
31
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
32
|
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
101.INS
|
XBRL Instance Document*
|
101.SCH
|
XBRL Schema Document*
|
101.CAL
|
XBRL Calculation Linkbase Document*
|
101.DEF
|
XBRL Definition Linkbase Document*
|
101.LAB
|
XBRL Label Linkbase Document*
|
101.PRE
|
XBRL Presentation Linkbase Document*
|
UNIVERSAL DETECTION TECHNOLOGY | |||
Dated: August 22, 2011
|
By:
|
/s/ Jacques Tizabi | |
Jacques Tizabi, | |||
President, Chief Executive Officer (Principal Executive Officer), and Acting Chief Financial Officer (Acting Principal Financial Officer) | |||
Noteholder:
|
|
Note Amount: | $______ |
Outstanding Principal:
|
$______
|
Interest Rate:
|
_______%
|
Date of Note:
|
_______
|
Maturity:
|
_______
|
Accrued Interest:
|
$______
|
Principal Being Converted:
|
$_____
|
Interest Being Converted:
|
$_____
|
Conversion Price:
|
$_____
|
Number of Shares to Be Issued:
|
______
|
|
·
|
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.
|
Agreed to and accepted by: | |
UNIVERSAL DETECTION TECHNOLOGY | NOTEHOLDER |
/s/ Jacques Tizabi | _________________________________ |
By: Jacques Tizabi, CEO |
|
1.
|
I have reviewed this Quarterly 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 the 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 this 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.
|
CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Preferred stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value (in Dollars per share) | $ 0 | $ 0 |
Common stock shares authorized | 20,000,000,000 | 20,000,000,000 |
Common stock shares issued | 4,772,514,316 | 2,253,029,102 |
Common stock shares outstanding | 4,772,514,316 | 2,253,029,102 |
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
REVENUE, NET | $ 30,508 | $ 1,099 | $ 32,813 | $ 3,057 |
COST OF GOODS SOLD | 34,558 | 1,002 | 36,483 | 2,150 |
GROSS PROFIT | (4,050) | 97 | (3,670) | 907 |
OPERATING EXPENSES: | Â | Â | Â | Â |
Selling, general and administrative | 347,882 | 277,085 | 517,252 | 591,920 |
Marketing | 17,643 | 57,611 | 18,325 | 60,996 |
Depreciation and amortization | 797 | 2,704 | 2,719 | 5,668 |
Total expenses | 366,322 | 337,400 | 538,296 | 658,584 |
LOSS FROM OPERATIONS | (370,372) | (337,303) | (541,966) | (657,677) |
OTHER INCOME (EXPENSE): | Â | Â | Â | Â |
Interest expense | (22,917) | (40,002) | (50,301) | (82,136) |
Other income | Â | 3,750 | Â | 7,500 |
Loss on settlement of debt | (580,404) | (251,002) | (1,085,826) | (478,727) |
Total other expenses | (603,321) | (287,254) | (1,136,127) | (553,363) |
NET LOSS | $ (973,693) | $ (624,557) | $ (1,678,093) | $ (1,211,040) |
NET LOSS PER SHARE - BASIC AND DILUTED: (in Dollars per share) | $ (0.0002) | $ (0.0005) | $ (0.0005) | $ (0.0010) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in Shares) | 4,124,759,512 | 1,343,232,457 | 3,531,225,815 | 1,214,409,060 |
Document And Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Aug. 22, 2011
|
Aug. 19, 2011
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | UNIVERSAL DETECTION TECHNOLOGY | Â | Â |
Document Type | 10-Q | Â | Â |
Current Fiscal Year End Date | --12-31 | Â | Â |
Entity Common Stock, Shares Outstanding | Â | 6,086,829,054 | Â |
Entity Public Float | Â | Â | $ 2,434,731 |
Amendment Flag | false | Â | Â |
Entity Central Index Key | 0000763950 | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Filer Category | Smaller Reporting Company | Â | Â |
Entity Well-known Seasoned Issuer | No | Â | Â |
Document Period End Date | Jun. 30, 2011 | ||
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q2 | Â | Â |
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NOTE 7 - SUBSEQUENT EVENTS
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Subsequent Events [Text Block] |
NOTE
7 - SUBSEQUENT EVENTS
During July 2011, the
Company issued 200,000,000 shares of common stock valued at
approximately $120,000 to convert outstanding debt.
During
July 2011, the Company issued an aggregate of 43,750,000
shares of common stock to employees for services rendered
valued at approximately $26,250.
During
July 2011, the Company issued 31,535,947 shares of its
common stock as payment of professional fees for an
aggregate price of $15,768.
On
July 27, 2011, the Company issued 500,000,000 shares of
Common Stock to its president and chief executive officer
in conversion and in full satisfaction of accrued but
unpaid salary owed to him in the amount of $200,000.
In
July 2011, the Company executed a promissory note in the
aggregate principal amount of $40,000 payable to an
unrelated party. The promissory note bears
interest at 12.0% per annum, due July 25, 2014.
In
August 2011, the Company executed a promissory note in the
aggregate principal amount of $50,000 payable to
an unrelated party. The promissory
note bears interest at 12.0% per annum, due August 8,
2014.
In August 2011, the Company issued 90,000,000 shares of
common stock to AJ Robbins, P.C. pursuant to the
settlement agreement dated August 3, 2011. The value
of the stock on the date of the agreement was approximately
$36,000.
|
NOTE 3 - NOTES PAYABLE
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Debt Disclosure [Text Block] |
NOTE
3 – NOTES PAYABLE
During
the six month period ended June 30, 2011, the Company
borrowed an aggregate of $25,000 from third parties under
various promissory note agreements. The
promissory notes all bear interest at 12.0% per annum, and
are due on or before April 14, 2014. No
principal or interest payments have been made on these
notes. As of June 30, 2011 and December 31, 2010, the
Company had total notes payable of $1,070,512 and
$1,214,467 respectively.
The
interest expense on these notes payable for the six months
ended June 30, 2011 and 2010 was $49,927 and $79,220,
respectively.
|
NOTE 1 - BASIS OF PRESENTATION
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
NOTE
1 - BASIS OF PRESENTATION
The
accompanying unaudited consolidated financial statements
have been prepared by Universal Detection Technology and
Subsidiaries, pursuant to the rules and regulations of the
Securities and Exchange Commission (the “SEC”)
Form 10-Q and Item 310 of Regulation S-K, and generally
accepted accounting principles for interim financial
reporting. The information furnished herein reflects all
adjustments (consisting of normal recurring accruals and
adjustments) that are, in the opinion of management,
necessary to fairly present the operating results for the
respective periods. Certain information and footnote
disclosures normally present in annual consolidated
financial statements prepared in accordance with accounting
principles generally accepted in the United States of
America have been omitted pursuant to such rules and
regulations. These consolidated financial statements should
be read in conjunction with the audited consolidated
financial statements and footnotes included in the
Company’s Annual Report on Form 10-K for the year
ended December 31, 2010. The results of the three and six
months ended June 30, 2011, are not necessarily indicative
of the results to be expected for the full year ending
December 31, 2011.
|
NOTE 4 - COMMITMENTS AND CONTINGENCIES
|
6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Text Block] |
NOTE
4 – COMMITMENTS AND CONTINGENCIES
The
Company was involved in the following litigations:
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. |
NOTE 5 - STOCKHOLDERS' EQUITY
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] |
NOTE
5- STOCKHOLDERS’ EQUITY
During
the six month period ended June 30, 2011, the Company
issued an aggregate of 211,250,000 shares of common stock
to employees for services rendered to the
Company. The Company recorded the expense at the
fair market value of the shares of $123,125.
During
the six month period ended June 30, 2011, the Company
ratified stock issuances of 111,411,762 shares
of common stock as payment of consulting or other
professional fees for an aggregate amount of
$81,235. The Company issued 104,875,815 shares
of the common stock for an aggregate amount of $77,967
during the six month period. As of June 31,
2011, 6,535,947 shares of common stock valued at $3,268
remain to be issued for payment of consulting or other
professional fees.
During
the six month period ended June 30, 2011, the Company
entered various agreements to convert $374,711 of debt and
accrued interest into 2,505,968,827 shares of common
stock. The fair market value of the stock on the
date of agreement and issuances was
$1,460,536. The company recorded a loss on
settlement of debt of $1,085,825. During the six
month period ended June 30, 2011, the Company issued
2,203,368,827 shares relating to the agreements, and
302,600,000 shares were reported on the balance sheet as
shares to be issued. The fair market value of
the issued shares was $1,309,756, and the fair market value
of the pending shares on the dates of the agreements was
$150,780.
COMMON
STOCK PURCHASE WARRANTS AND OPTIONS
From
time to time, the Company issues options and warrants as
incentives to employees, officers and directors, as well as
to non-employees. No options or warrants have
been issued for the six months ended June 30, 2011.
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 300,000,000 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.
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.
On
May 6, 2011, the Board of Directors adopted the 2011 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
600,000,000 shares of its common stock for awards to be
made under the Plan. 316,125,815 of the shares under this
plan have been issued.
Warrants:
There
were no warrants granted during the six month period ended
June 30, 2011.
Common
stock purchase options and warrants consisted of the
following as of June 30, 2011:
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 six months ended June 30, 2011,
includes compensation expense for all stock-based
compensation awards vested during the six months ended June
30, 2011, 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 six
month period ended June 30, 2011.
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.
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NOTE 6 - RELATED PARTY TRANSACTIONS
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6 Months Ended |
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Jun. 30, 2011
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Related Party Transactions Disclosure [Text Block] |
NOTE
6 - RELATED PARTY TRANSACTIONS
During
the six months ended June 30, 2011, the Company borrowed an
aggregate of $256,475 in principal with no interest due and
repaid $67,550 in principal payments to its president and
CEO. As of June 30, 2011, $528,998 in principal
and $1,016 in interest was due.
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 promissory note agreements
executed by the Company and under oral
agreements. The agreement and notes had interest
rates ranging from 0% to 12%. The Company repaid
notes totaling $20,826 and interest of $526 to its
president and chief executive officer. As of December 31,
2010, $340,074 in principal and $639 in interest was due to
its president and chief executive officer.
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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6 Months Ended |
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Jun. 30, 2011
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Significant Accounting Policies [Text Block] |
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GOING
CONCERN
As
of June 30, 2011, the Company had a working capital deficit
of $4,685,661 and an accumulated deficit of $47,111,646.
The Company incurred a net loss of $1,678,093 for the six
month period ended June 30, 2011. 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.
During
the first six months of 2011, the Company sold detection
kits under various purchase agreements for $32,813. The
Company also entered into various agreements to issue
2,203,368,827 shares of its common stock to third parties
in order to convert outstanding debt to the respective
parties. The value of the stock issued in
consideration for the debt conversion was
$1,309,756.
RECLASSIFICATION
Certain
reclassifications have been made to the prior year balances
to conform to the current year presentation.
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.
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.
As
of June 30, 2011 and December 31, 2010, the Company had
total unearned revenue of $60,888 and $0
respectively.
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 certain estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting
period. Actual results could differ from those
estimates. Significant estimates include collectability of
accounts receivable, accounts payable, sales returns and
recoverability of long-term assets.
RECENT
ACCOUNTING PRONOUNCEMENTS
In
May 2011, the Financial Accounting Standards Board
(“FASB”) issued accounting guidance related to
fair value measurements and disclosures to achieve common
fair value measurements and disclosures between GAAP and
International Financial Reporting Standards. This guidance
clarifies the application of certain existing fair value
measurement guidance and expands the disclosures for fair
value measurements that are estimated using significant
unobservable (Level 3) inputs. This guidance is effective
on a prospective basis for annual and interim reporting
periods beginning on or after December 15, 2011. The
Company does not believe the adoption of this guidance will
have a material impact on its consolidated financial
statements.
In
June 2011, the FASB issued authoritative guidance which
amends existing guidance related to the presentation of
comprehensive income. This guidance (1) eliminates the
option to present the components of other comprehensive
income as part of the statement of changes in
stockholders’ equity; (2) requires the
consecutive presentation of the statement of net income and
other comprehensive income; and (3) requires an entity
to present reclassification adjustments on the face of the
financial statements from other comprehensive income to net
income. This guidance does not change the items that must
be reported in other comprehensive income, when an item of
other comprehensive income must be reclassified to net
income, or affect how earnings per share is calculated or
presented. This guidance is effective for interim reporting
periods and fiscal years beginning after December 15,
2011 and will be applied on a retrospective basis for all
periods presented. The Company does not believe the
adoption of this guidance will have a material impact on
its consolidated financial statements.
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