10-Q/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Amendment No. 1 to

FORM 10-Q

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   September 30, 2012

OR

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ____

Commission File Number 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, Suite 302 Beverly Hills, California	90210
(Address of principal executive offices)	(Zip Code)

Issuer's telephone number: (310) 248-3655

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   x       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 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 x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the latest practicable date: As of November 16, 2012, there were 1,224,732 shares of common stock outstanding.

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-Q is being filed solely to furnish the Interactive Data files as Exhibit 101, in accordance with Rule 405 of Regulation S-T. No other changes have been made to the Form 10-Q, as originally filed on November 19, 2012.

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Item 6. Exhibits

101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.LAB*	XBRL Label Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document

* Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	UNIVERSAL DETECTION TECHNOLOGY
Dated: November 26, 2012	By:	/s/ Jacques Tizabi
		Jacques Tizabi,
		President, Chief Executive Officer (Principal Executive Officer), and Acting Chief Financial Officer (Acting Principal Financial Officer)

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4. NOTES PAYABLE

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

NOTE 4 - NOTES PAYABLE

During the nine month periods ended September 30, 2012, the Company borrowed an aggregate of $540,000 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 February 21, 2015.  No principal or interest payments have been made on these notes.  As of September 30, 2012 and December 31, 2011, the Company had total notes payable amounting to $971,882 and $753,139 respectively, net of loan fees of $56,693 and $0 respectively.

During the three months ended September 30,2012, the Company entered in various convertible  note agreements (included in the total above) totaling $250,000 due by September 2013 at an interest rate of 8% per annum.  The outstanding principal balances of the notes are convertible into common shares at the conversion price of $0.50 per share.   The Company also issued warrants to purchase up to 70,000 shares of common stock for $1.00 as part of the convertible note issuance.   The value attributed to the warrants was $46,094, treated as additional paid-in capital.  The warrants were using the Black Scholes model for warrants, with volatility of 308% to 493% and risk free interest rates of 0.17%.to 0.20%.   The market prices of the common stock on the dates of the grants were $0.85 to $1.10.   An additional $203,906 was recorded as additional paid-in capital for the value of the conversion feature of the notes.   The Company issued an additional 65,400 share of common stock valued at $59,086 as payment of financing fees in connection with these loans.   $150,000 was received in October 2012 and is included in Other Receivables at September 30, 2012.

During the three months ended September 30, 2012 the Company entered in various note agreements (included in the total above) totaling $60,000 due by May 2013 at an interest rate of 8% per annum.  After a holding period of six months, the outstanding principal balance of the notes are convertible into common shares at the conversion price equal to 55% of the average of the lowest three trading prices during the ten day trading period before the conversion.

The interest expense on these notes payable for the nine months ended September 30, 2012 and 2011 amounted to $116,506 and $73,980, respectively.

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3. GOING CONCERN

9 Months Ended

Sep. 30, 2012

Going Concern

NOTE 3 - GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $49,211,764 as of September 30, 2012, including a net loss of $1,164,347 during the nine months period ended September 30, 2012.

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 the first nine months of 2012, the Company sold detection kits under various purchase agreements for $70,716. The Company also entered into various agreements to issue 35,268 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 $141,071.  The Company issued 38,500 shares of its common stock to its President and CEO to satisfy outstanding debt and accrued salary valued at $770,000.

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CONSOLIDATED CONDENSED BALANCE SHEETS (USD $)	Sep. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 2,637	$ 2,062
Accounts Receivable,net	1,099	1,099
Other Receivable	150,000
Inventory	1,069	28,560
Prepaid expenses
Total current assets	154,805	31,721
Deposits	21,300	21,300
Equipment, net	2,707	3,374
Total assets	178,812	56,395
CURRENT LIABILITIES:
Accounts payable, trade	1,203,561	1,165,974
Accrued liabilities	660,730	632,960
Unearned Revenue	5,075	11,878
Accrued payroll - officers	702,614	902,481
Notes payable - related party		466,870
Notes payable	490,382	443,514
Accrued interest expense	843,786	745,110
Total current liabilities	3,906,148	4,368,787
Long term notes payable	481,500	309,625
Total liabilities	4,387,648	4,678,412
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, 907,969 and 382,951 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively	39,439,839	38,112,311
Additional paid-in-capital	5,563,089	5,313,089
Accumulated deficit	(49,211,764)	(48,047,417)
Total stockholders' deficit	(4,208,836)	(4,622,017)
Total liabilities and stockholders' deficit	$ 178,812	$ 56,395

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1. ORGANIZATION AND DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 30, 2012

Organization And Description Of Business

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

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.

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8. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012
Related Party Transactions Details Narrative
Stock issued to President for unpaid salary, shares	225,000
Stock issued to President for unpaid salary, amount	$ 450,000

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2. ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

NOTE 2 - ACCOUNTING POLICIES

Accounting Principles

In the opinion of management, the accompanying balance sheets and related interim statements of income, and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s 2011 Form 10-K filed on May 10, 2012 with the U.S. Securities and Exchange Commission.

Principles of Consolidation

The accompanying consolidated condensed 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.

Use of Estimates

The preparation of consolidated financial statements is in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior period balances to conform to the current year presentation.

Recent Accounting Pronouncements

In July 2012, the FASB issued amended standards to simplify how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. These amended standards are effective for us beginning in the fourth quarter of 2012; however, early adoption is permitted. We do not expect these new standards to significantly impact our consolidated condensed financial statements.

In September 2011, the FASB issued guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is less than its carrying amount, the two-step goodwill impairment test is not required. The new guidance will be effective for us beginning July 1, 2012. We do not expect the adoption will have a significant impact on our consolidated condensed financial statements.

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance will be effective for us beginning July 1, 2012 and will have financial statement presentation changes only. We do not expect the adoption will have a significant impact on our consolidated condensed financial statements.

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CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Statement of Financial Position [Abstract]
Preferred stock par value	$ 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	$ 0	$ 0
Common stock shares authorized	20,000,000,000	20,000,000,000
Common stock shares issued	1,023,954	382,951
Common stock shares outstanding	1,023,954	382,951

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3. GOING CONCERN (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012
Going Concern Details Narrative
Shares issued to convert outstanding debt, shares	35,268
Shares issued to convert outstanding debt, value	$ 141,071
Shares issued to officers for debt and accrued salary, shares	38,500
Shares issued to officers for debt and accrued salary, amount	$ 770,000

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 16, 2012
Document And Entity Information
Entity Registrant Name	UNIVERSAL DETECTION TECHNOLOGY
Entity Central Index Key	0000763950
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,224,732
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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4. NOTES PAYABLE (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Notes Payable Details Narrative
Borrowings under promissory note agreements	$ 540,000
Interest rate	12.00%
Maturity date	Feb. 21, 2015
Notes payable	971,882	753,139
Notes payable loan fees	$ 56,693	$ 0

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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
REVENUE, NET	$ 14,532	$ 113,519	$ 70,716	$ 146,332
COST OF GOODS SOLD	11,154	108,477	56,499	144,960
GROSS PROFIT	3,378	5,042	14,217	1,372
OPERATING EXPENSES:
Selling, general and administrative	348,928	265,763	939,083	783,014
Marketing		21,069	9,470	39,394
Depreciation and amortization	2,614	391	3,059	3,110
Total expenses	351,542	287,223	951,612	825,518
LOSS FROM OPERATIONS	(348,164)	(282,181)	(937,395)	(824,146)
OTHER INCOME (EXPENSE):
Interest expense	(49,818)	(23,679)	(116,506)	(73,980)
Other income		42,500		42,500
Loss on settlement of debt		(243,635)	(110,446)	(1,329,461)
Total other expenses	(49,818)	(224,814)	(226,952)	(1,360,941)
NET LOSS	$ (397,982)	$ (506,995)	$ (1,164,347)	$ (2,185,087)
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED: (in Dollars per share)	$ (0.41872)	$ (2.12464)	$ (1.38085)	$ (10.0659)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in Shares)	950,471	238,626	843,208	217,079

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7. COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company was involved in the following litigations:

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 June 30, 2012, $411,500 has been accrued.

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 June 30, 2012 and December 31, 2011 the Company has $636,275 and $610,621, 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, 2012 and December 31, 2011.

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.  As of September 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, 2012.

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.  No payments have been made on this judgment and no actions to enforce the judgment have been taken against UDT.

e)   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.

f)   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.  The Company issued stock with a fair market value of $36,000 on the date of the agreement in full payment of the stock portion of the settlement agreement.

As of November 16, 2012, out of the cash payments that the Company was responsible for under the settlement agreement, $8,520.82 is still owed and unpaid. This balance due is for part of the February 28, 2012 payment. Plaintiff has the right to get a judgment for $175,000 minus the payments that were made, if we fail to perform under the terms of the settlement agreement and if they serve us with a notice of default, which they have not.

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6. INCOME TAXES

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

NOTE 6 - INCOME TAXES

Our effective tax rates were approximately (0.0)% and (0.0)% for the nine months ended September 30, 2012 and 2011, respectively. Our effective tax rate was lower than the U.S. federal statutory rate due to, net operating loss carry-forwards available to offset current and future taxable income.

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5. EQUITY TRANSACTIONS (Details) (USD $)			9 Months Ended
	Sep. 30, 2012 Options	Dec. 31, 2011 Options	Sep. 30, 2012 Warrants
Options:
Outstanding and exercisable, beginning balance	2	2
Granted			70,000
Outstanding and exercisable, ending balance	2	2	70,000
Weighted Average Exercise Price
Outstanding and exercisable, beginning balance	$ 1,320,000	$ 1,320,000
Granted			$ 1
Outstanding and exercisable, ending balance	$ 1,320,000	$ 1,320,000	$ 1

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2. ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2012

Accounting Policies Policies

Accounting Principles

In the opinion of management, the accompanying balance sheets and related interim statements of income, and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s 2011 Form 10-K filed on May 10, 2012 with the U.S. Securities and Exchange Commission.

Principles of Consolidation

The accompanying consolidated condensed 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.

Use of Estimates

The preparation of consolidated financial statements is in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior period balances to conform to the current year presentation.

Recent Accounting Pronouncements

In July 2012, the FASB issued amended standards to simplify how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in the previously issued standards. These amended standards are effective for us beginning in the fourth quarter of 2012; however, early adoption is permitted. We do not expect these new standards to significantly impact our consolidated condensed financial statements.

In September 2011, the FASB issued guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is less than its carrying amount, the two-step goodwill impairment test is not required. The new guidance will be effective for us beginning July 1, 2012. We do not expect the adoption will have a significant impact on our consolidated condensed financial statements.

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance will be effective for us beginning July 1, 2012 and will have financial statement presentation changes only. We do not expect the adoption will have a significant impact on our consolidated condensed financial statements.

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8. RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

NOTE 8 - RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2012, the Company issued 225,000 shares of common stock to its president and CEO to convert $450,000 of accrued but unpaid salary to him.

During the nine months ended September 30, 2012, the Company borrowed an aggregate of $212,934 in principal with no interest due and repaid $679,804 in principal and $1,768 in interest payments to its president and CEO.  A total of $359,804 was repaid in cash and $320,000 was repaid through the issuance of 160,000 shares of its common stock.  As of September 30, 2012, no principal and in interest were due.

During the year ended December 31, 2011, the Company borrowed a total of $592,256 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 of 0%.  The Company repaid notes totaling $465,460 and interest of $0 to its president and chief executive officer. As of December 31, 2011, $466,869 in principal and $1,392 in interest was due to its president and chief executive officer.

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9. SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

NOTE 9 - SUBSEQUENT EVENTS

In October 2012, the Company issued 47,000 shares of common stock at an aggregate value of $24,440 in connection with certain loan fees.

In November 2012, the Company issued 152,000 shares of common stock at an aggregate value of $106,400 to various consultants for services.

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5. EQUITY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2012

Equity Transactions Tables

Common stock purchase options

Common stock purchase options and warrants consisted of the following as of September 30, 2012:

			Weighted Average		Aggregated
			Exercise		Intrinsic
	# Shares		Price		Value
Options:
Outstanding and exercisable, December 31, 2011		2	$	1,320,000	$	-
Granted		-				-
Exercised		-				-
Expired						-
Outstanding and exercisable, September 30, 2012		2	$	1,320,000	$	-
Warrants:
Outstanding and exercisable, December 31, 2011		-			$	-
Granted		70,000	$	1		-
Exercised		-				-
Expired						-
Outstanding and exercisable, September 30, 2012		70,000	$	1	$	-

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6. INCOME TAXES (Details Narrative)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Income Taxes Details Narrative
Effective tax rate	0.00%	0.00%

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,164,347)	$ (2,185,087)
Adjustments to reconcile net loss to net cash used in operations:
Stocks issued for services	397,321	199,131
Loss on settlement of debt	110,446	1,329,461
Depreciation	667	3,110
Amortization of note discount and loan fees	15,954
Changes in operating assets and liabilities:
Inventory	27,491	(16,152)
Accounts receivable
Prepaid expenses
Deposits
Stock to be issued
Unearned Revenue	(6,803)	49,661
Accounts payable and accrued liabilities	376,716	355,318
Net cash used in operating activities	(242,555)	(264,558)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(1,435)
Decrease (increase) in restricted cash
Net cash used in investing activities		(1,435)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes with beneficial conversion and warrants	100,000
Proceeds from notes payable-related party	212,934	436,458
(Payments on)/proceeds from notes payable	290,000	148,000
Payments on notes payable - related party	(359,804)	(256,160)
Net cash provided by financing activities	243,130	328,298
NET INCREASE IN CASH AND CASH EQUIVALENTS	575	62,305
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	2,062	987
CASH AND CASH EQUIVALENTS, END OF PERIOD	2,637	63,292
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income tax		3,200
Interest Paid	1,769
SUPPLEMENTAL DISCLOSURES FOR NON CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued for settlement of debt and accrued interest	141,071	1,740,755
Shares issued for settlement of debt and accrued payroll - related party	770,000
Shares issued for loan fees	$ 19,136

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5. EQUITY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

Equity Transactions

NOTE 5 - EQUITY TRANSACTIONS

Issuance of Common Stock

During the six month period ended June 30, 2012, the Company issued an aggregate of 299,750 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 $675,000. A total of 225,000 of the 299,750 shares of common stock were issued to the Company’s president and CEO. The fair market value of the shares issued to the Company’s president and CEO was $450,000.

The Company issued 30,000 shares of common stock for an aggregate amount of $60,000 during the six month period ended June 30, 2012 for payment of consulting or other professional fees.

During the six month period ended June 30, 2012, the Company entered into various agreements to convert $30,625 of debt and accrued interest into 35,267 shares of common stock. The fair market value of the stock on the dates of agreement and issuances was $141,071. The Company recorded a related loss on settlement of debt of $110,446.

In addition to the above issuances, the Company also issued 160,000 shares of common stock to its president and CEO for payment of outstanding debt.

Stock Split

A majority of shareholders approved a resolution providing the Company’s Board of Directors with the authority to effect a one-for-twenty-thousand (1:20,000) reverse stock split of the Company’s common stock for stockholders of record as of March 13, 2012. The reverse stock split took effect July 5, 2012 which resulted in 919,218 shares outstanding.

Stock Options

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 15,000 shares of common stock for awards to be made under the Plan. 15,000 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 16,500 shares of common stock for awards to be made under the Plan. 16,342 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 125 shares of common stock for awards to be made under the Plan. 125 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 190 shares of common stock for awards to be made under the Plan. 190 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 500 shares of its common stock for awards to be made under the Plan. 500 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 3,000 shares of its common stock for awards to be made under the Plan. 2,980 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 10,000 shares of its common stock for awards to be made under the Plan. 10,000 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 30,000 shares of its common stock for awards to be made under the Plan. 30,000 of the shares under this plan have been issued.

On October 27, 2011, the Board of Directors adopted the 2011 Equity Incentive Plan (The “2011-II 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 shares of its common stock for awards to be made under the Plan. 60,000 of the shares under this plan have been issued.

Common stock purchase options consisted of the following as of June 30, 2012:

		Weighted Average	Aggregated
		Exercise	Intrinsic
	# shares	Price	Value
Options:
Outstanding and exercisable, December 31, 2011	2	$1,320,000	$	-
Granted	-			-
Exercised	-			-
Expired				-
Outstanding and exercisable, June 30, 2012	2	$1,320,000	$	-

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5. EQUITY TRANSACTIONS (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2012
Equity Transactions Details Narrative
Stock issued to employees for services rendered, shares	391,110
Stock issued to employees for services rendered, value	$ 780,814
Stock issued for consutling or other professional fees, shares	36,225
Stock issued for consutling or other professional fees, value	66,505
Stock issued as payment for loan fees, shares	18,400
Stock issued as payment for loan fees, shares	19,136
Stock issued for debt and accrued interest, shares	35,268
Stock issued for debt and accrued interest, amount	30,625
Fair market value of shares issued for debt and accrued interest	141,071
Loss on settlement of debt through issuance of stock	$ (110,446)
Stock issued to President for outstanding debt, shares	160,000