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Note 11- Subsequent Events.
9 Months Ended
Sep. 30, 2012
Subsequent Events [Text Block]

Note 11- Subsequent Events.


On October 16, 2012, in order to enhance the Company’s ability to raise capital and limit dilution of its stockholders, as well as to satisfy the Company’s obligations to Arizona Research and Development (“ARD”) for past services and to George Konrad under the agreement among Mr. Konrad, ARD and the Company dated April 7, 2011, as amended August 19, 2011 (the “Initial Agreement”) and the employment agreement between the Company and Mr. Konrad dated April 7, 2011 (the “Employment Agreement”), Mr. Konrad agreed to surrender to the treasury 3,000,000 shares of the Company’s common stock owned by him in exchange for payment of $530,000. Of this amount, $130,000 was paid to ARD and $300,000 was paid to Mr. Konrad upon execution of the agreement (the “Settlement Agreement”). The Company agreed to pay $100,000 to Mr. Konrad in six consecutive monthly installments of $16,666.67 beginning November 16, 2012. In the event any part of the $100,000 balance remains unpaid six months after the date of the Agreement, Mr. Konrad has an option to convert some or all of the unpaid balance into shares of the Company’s common stock at a price of $.0667 per share, subject to appropriate adjustment for any future stock splits, stock dividends, etc. The execution of the Settlement Agreement terminated both the Initial Agreement and the Employment Agreement, and neither party has any further obligations or liabilities under those agreements. Pursuant to the Settlement Agreement, Mr. Konrad resigned from his position as President and Director of the Company. He was not replaced in either position.


In October 2012, the Company raised gross proceeds of $321,750 through the private placement of 450,000 unregistered shares of common stock to accredited investors at $.715 per share. Each investor who purchased shares at $.715 per share received a three-year warrant to purchase shares of common stock at $1.00 per share for a number of shares equal to one half of the number of shares purchased by the investor in this offering. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent.


In October 2012, the Company raised gross proceeds of $170,280 through the private placement of 396,000 unregistered shares of common stock to accredited investors at $.43 per share. The $.43 shares were offered only to investors who purchased shares of Common Stock in the Company’s April – July 2012 offering at $1.00 per share. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent.


The bulk of the funds raised by the Company in October 2012 was used to finance the payments totaling $430,000 to Mr. Konrad and ARD under the agreement described above. Closing of the offerings described in this Note was conditioned on the Company’s raising the minimum of $430,000 to be paid to Mr. Konrad. The Company did raise the minimum offering described above in October 2012.


In October 2012, the Company entered into an employment agreement with a project engineer providing for a monthly salary of $5,000, with employment terminable by either party on 30 days’ prior written notice. The Company issued to the employee a fully vested 10-year option to purchase 500,000 shares of common stock at $.56 per share and another 10-year option for 500,000 shares at $.56 per share which will vest in six months.


In the third quarter of 2012, we raised gross proceeds of $71,000 through the private placement of 71,000 unregistered shares of common stock to accredited investors at $1.00 per share. Each investor received a three-year warrant to purchase shares of common stock at $3.00 per share for a number of shares equal to the number of shares purchased by the investor in this offering. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent.