<SUBMISSION>
<ACCESSION-NUMBER>0001376474-12-000040
<TYPE>424B3
<PUBLIC-DOCUMENT-COUNT>8
<FILING-DATE>20120216
<DATE-OF-FILING-DATE-CHANGE>20120216
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>TECHNEST HOLDINGS INC
<CIK>0001077800
<ASSIGNED-SIC>3829
<IRS-NUMBER>880357272
<STATE-OF-INCORPORATION>NV
<FISCAL-YEAR-END>0630
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>424B3
<ACT>33
<FILE-NUMBER>333-177821
<FILM-NUMBER>12620008
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>352A CHRISTOPHER AVENUE
<CITY>GAITHERSBURG
<STATE>MD
<ZIP>20879
<PHONE>301-767-2810
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>352A CHRISTOPHER AVENUE
<CITY>GAITHERSBURG
<STATE>MD
<ZIP>20879
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>FINANCIAL INTRANET INC/NY
<DATE-CHANGED>19990128
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>tn_424b3.htm
<DESCRIPTION>TECHNEST HOLDINGS, INC. - 424B3 FILING
<TEXT>
<HTML>
<head><title>U</title> </head> <body style="MARGIN-TOP:0px; FONT-FAMILY:Times New Roman; COLOR:#000000; FONT-SIZE:10pt"> <div style=WIDTH:697px> <p style=MARGIN:0px align=center><br></p><b> <div style=WIDTH:697px> <p style=MARGIN:0px align=center><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right><b>Filed pursuant to Rule 424(b)(3)</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right><b>Registration No.&nbsp;333-177821</b></p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px"><b>Prospectus Supplement No.&nbsp;1</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>(To Prospectus dated February 10, 2012)</b></p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=center><b>25,800,000 SHARES OF COMMON STOCK</b></p> <p style=MARGIN:0px align=center><b>OF</b></p> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS, INC.</b></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=230> <td> <td width=230 /> </tr><tr> <td width=230 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:12pt; PADDING-TOP:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:12pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=230 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:12pt; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:48px; MARGIN:0px">This prospectus supplement No.&nbsp;1 supplements and amends the prospectus dated February 10, 2012, referred to herein as the Prospectus.&nbsp; This prospectus supplement includes our attached Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 dated and filed with the Securities and Exchange Commission on February 16, 2012. In addition, on February 15, 2012, Southridge Partners II, LP converted 100 shares of Series E 5% Convertible Preferred Stock into 2,251,390 shares of Technest common stock.<font style=FONT-SIZE:12pt> </font>The number of shares of Technest common stock into which each share of Series E Preferred is convertible was determined by dividing $1,000 (the stated value) by $0.044416985 per share. &nbsp;Southridge Partners II, LP continues to hold 200 shares of Series E Preferred which are convertible into 4,502,783 shares of Technest common stock.</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:48px; MARGIN:0px">This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement.&nbsp; This prospectus supplement is qualified by reference to the Prospectus, except to the extent that the information in this prospectus supplement updates or supersedes the information contained in the Prospectus, including any supplements and amendments thereto.</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:48px; MARGIN:0px">This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the Prospectus, including any supplements and amendments thereto.</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:48px; MARGIN:0px"><b>There are significant risks associated with an investment in our securities. These risks are described under the caption &#147;Risk Factors&#148; beginning on page 7 of the Prospectus, as the same may be updated in prospectus supplements.</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:48px; MARGIN:0px"><b>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>The date of this prospectus supplement is February 16 , 2012.</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p></div> <hr> </b> <p style=MARGIN:0px align=center>&nbsp;</p> <p style=MARGIN:0px align=center>&nbsp;</p> <p style=MARGIN:0px align=center>&nbsp;</p> <p style=MARGIN:0px align=center>&nbsp;</p> <p style=MARGIN:0px align=center><b>U.S. SECURITIES AND EXCHANGE COMMISSION</b></p> <p style=MARGIN:0px align=center><b>Washington, D.C. 20549</b></p> <p style=MARGIN:0px align=center>&nbsp;</p> <p style=MARGIN:0px align=center><b>FORM 10-Q</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Mark One)</p> <p style=MARGIN:0px>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p style="MARGIN:0px; FONT-FAMILY:Wingdings" align=center>x<font style="FONT-FAMILY:Times New Roman">&nbsp;&nbsp;QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center>For the quarterly period ended: December 31, 2011</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px align=center><b>OR</b></p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-FAMILY:Wingdings" align=center>&#168;<font style="FONT-FAMILY:Times New Roman">&nbsp;&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center>For the transition period from ______________ to ______________</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center><b>Commission File Number 000-27023</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS, INC.</b></p> <p style=MARGIN:0px align=center>(Exact name of registrant as specified in its charter)</p> <p style=MARGIN:0px>&nbsp;</p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=348> <td /> </tr><tr> <td width=348 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center><b>Nevada</b></p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center><b>88-0357272</b></p></td></tr> <tr> <td width=348 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>(<i>State or other jurisdiction of incorporation or organization</i>)</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>(<i>IRS Employer Identification No.</i>)</p></td></tr></table> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center><b>352A Christopher Avenue, Gaithersburg, MD 20879</b></p> <p style=MARGIN:0px align=center>&nbsp;(<i>Address of principal executive offices and zip code</i>)</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=center><b>(301) 767-2810</b></p> <p style=MARGIN:0px align=center>(<i>Registrant&#146;s telephone number, including area code</i>)</p> <p style=MARGIN:0px>&nbsp;</p> <p style="TEXT-INDENT:48px; MARGIN:0px">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 filed such reports), and (2) has been subject to such filing requirements for the past 90 days.&nbsp;Yes&nbsp;<font style=FONT-FAMILY:Wingdings>x </font>No <font style=FONT-FAMILY:Wingdings>&#168;</font></p> <p style="TEXT-INDENT:48px; MARGIN:0px">&nbsp;</p> <p style="TEXT-INDENT:48px; MARGIN:0px">Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).&nbsp;Yes <font style=FONT-FAMILY:Wingdings>x </font>No <font style=FONT-FAMILY:Wingdings>&#168;</font></p> <p style="TEXT-INDENT:48px; MARGIN:0px">&nbsp;</p> <p style="TEXT-INDENT:48px; MARGIN:0px">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.</p> <p style=MARGIN:0px>&nbsp;</p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=348> <td /> </tr><tr> <td width=348 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Large accelerated filer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font style=FONT-FAMILY:Wingdings>&#168;</font></p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accelerated filer&nbsp; <font style=FONT-FAMILY:Wingdings>&#168;</font></p></td></tr> <tr> <td width=348 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Non-accelerated filer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font style=FONT-FAMILY:Wingdings>&#168;</font></p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Smaller reporting company&nbsp; <font style=FONT-FAMILY:Wingdings>x</font></p></td></tr></table> <p style=MARGIN:0px>&nbsp;</p> <p style="TEXT-INDENT:48px; MARGIN:0px">Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).&nbsp; Yes&nbsp;<font style=FONT-FAMILY:Wingdings>&#168; </font>No <font style=FONT-FAMILY:Wingdings>x</font></p> <p style="TEXT-INDENT:48px; MARGIN:0px">&nbsp;</p> <p style="TEXT-INDENT:48px; MARGIN:0px">As of February 13, 2012, there were 120,279,296 shares of common stock, $0.001 par value, of the registrant issued and outstanding.</p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px align=center><b>FORM 10-Q</b></p> <p style=MARGIN:0px align=center><b>TABLE OF CONTENTS</b></p> <p style=MARGIN:0px align=center><b>December 31, 2011</b></p> <p style=MARGIN:0px>&nbsp;</p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=56> <td> <td width=50 /> </tr><tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Page</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#parti><u>PART I.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#parti><u>FINANCIAL INFORMATION:</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item1><u>Item 1.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item1><u>Financial Statements (Unaudited)</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#balancesheet><u>Consolidated Balance Sheets at December 31, 2011 and June 30, 2011</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#balancesheet><u>3</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#statementofoperation><u>Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2011 and 2010</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#statementofoperation><u>4</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#stockholdersdeficit><u>Consolidated Statement of Changes in Stockholders&#146; Equity for the Six Months Ended December 31, 2011</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#stockholdersdeficit><u>5</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#cashflow><u>Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2011 and 2010</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#cashflow><u>6</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#notesfin><u>Notes to Condensed Consolidated Financial Statements</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#notesfin><u>7</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item2><u>Item 2.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item2><u>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#item2><u>16</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item4><u>Item 4.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item4><u>Controls and Procedures</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#item4><u>21</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#partii><u>PART II.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#partii><u>OTHER INFORMATION</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item1apartii><u>Item 1A.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item1apartii><u>Risk Factors</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#item1apartii><u>23</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item2partii><u>Item 2.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item2partii><u>Sale of Unregistered Securities</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#item2partii><u>36</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item5partii><u>Item 5.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item5partii><u>Other Information</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#item5partii><u>37</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:12pt; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:12pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item6partii><u>Item 6.</u></a></p></td> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#item6partii><u>Exhibits</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#item6partii><u>38</u></a></p></td></tr> <tr> <td width=56 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=647 colspan=2 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; COLOR:#0000ff"><a href=#signature><u>Signatures</u></a></p></td> <td width=50 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; COLOR:#0000ff" align=center><a href=#signature><u>39</u></a></p></td></tr></table> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>STATEMENTS CONTAINED IN THIS FORM 10-Q, WHICH ARE NOT HISTORICAL FACTS CONSTITUTE FORWARD-LOOKING STATEMENTS AND ARE MADE UNDER THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES. YOU CAN IDENTIFY THESE STATEMENTS BY FORWARD-LOOKING WORDS SUCH AS "MAY", "WILL", "EXPECT", "ANTICIPATE", "BELIEVE", "ESTIMATE", "CONTINUE", AND SIMILAR WORDS. YOU SHOULD READ STATEMENTS THAT CONTAIN THESE WORDS CAREFULLY. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-Q ARE BASED ON INFORMATION AVAILABLE TO US ON THE DATE HEREOF, AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. EACH FORWARD-LOOKING STATEMENT SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN PART I, ITEM 1, OF THIS QUARTERLY REPORT AND WITH THE INFORMATION CONTAINED IN ITEM 2, TOGETHER WITH MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTAINED IN OUR<b>&nbsp;</b>ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 2011, INCLUDING, BUT NOT LIMITED TO, THE SECTION THEREIN ENTITLED "RISK FACTORS."</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>2</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px align=center><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px" align=center><br></p><a name=parti> <p style=MARGIN:0px align=center><b>PART I. FINANCIAL INFORMATION</b></p><a name=item1> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS, INC.</b></p><a name=balancesheet> <p style=MARGIN:0px align=center><b>CONSOLIDATED BALANCE SHEETS</b></p> <p style=MARGIN:0px align=center><b>DECEMBER 31, 2011 AND JUNE 30, 2011</b></p> <p style=MARGIN:0px align=center><b>(Unaudited)</b></p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center><b>December&nbsp;31,</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center><b>June&nbsp;30,</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center><b>ASSETS</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Current Assets</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Cash and cash equivalents ($626 and $23,184)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>11,597</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>50,598</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accounts receivable, net of allowances of $- and $9,000 at December 31, 2011 and June 30, 2011, respectively ($6,257 and $155,376)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>41,101</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>219,494</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Unbilled receivable ($31,230 and $-)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>31,230</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Prepaid expenses and other current assets ($- and $16,053)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>19,522</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>28,337</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Assets related to discontinued operations</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,000,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,000,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Current Assets</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,103,450</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,298,429</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Property and Equipment</b> &#150; Net of accumulated depreciation of&nbsp;$1,869 and $1,249 at December 31, 2011 and June 30, 2011, respectively</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>43,479</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>22,299</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Other Assets</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Deposits</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>18,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>46,525</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Deferred financing costs</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>36,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>36,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Customer contracts, less accumulated amortization of $145,832 and $58,332 at December 31, 2011 and June 30, 2011, respectively</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>204,168</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>291,668</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Other Assets</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>258,168</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>374,193</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Assets</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,405,097</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,694,921</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center><b>LIABILITIES AND STOCKHOLDERS&#146; DEFICIT</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Current Liabilities</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accounts payable ($227,798 and $185,644)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>1,356,437</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>1,094,666</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accrued expenses and other current liabilities ($68,608 and $65,958)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>196,522</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>185,758</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accrued compensation</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>105,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>45,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accrued income taxes</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>369,816</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>369,816</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Notes payable</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>51,050</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>46,250</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Contingent value rights payable</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>3,242,405</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>3,194,247</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Liabilities related to discontinued operations</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>1,045,374</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>1,045,374</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Current Liabilities</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>6,366,604</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,981,111</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Liabilities</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>6,366,604</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,981,111</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Commitments and Contingencies</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Stockholders&#146; Deficit</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Preferred stock &#150; Series E 5% Convertible; stated value $1,000 per share; 300 shares issued and outstanding at December 31, 2011 and June 30, 2011 (preference in liquidation at December 31, 2011 and June 30, 2011 of $311,177 and $303,511, respectively)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>300,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>300,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Common stock - par value $.001 per share; 495,000,000 shares authorized; 120,279,296 shares issued and outstanding at December 31, 2011 and &nbsp;June 30, 2011, respectively</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>120,279</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>120,279</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Additional paid-in capital</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>3,103,453</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>2,917,952</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Accumulated deficit</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(4,254,063 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(3,437,130 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Total stockholders&#146; deficit of Technest Holdings, Inc.</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(730,331 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(98,899 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Non-controlling interest</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(231,176 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(187,291 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Stockholders&#146; Deficit</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(961,507 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(286,190 </p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Total Liabilities and Stockholders&#146; Deficit</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,405,097</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>5,694,921</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Asset and liability amounts in parentheses represent the portion of the December 31, 2011 and June 30, 2011 balances attributable to Technest, Inc. which is a variable interest entity (See Note 5).</p> <p style="MARGIN:0px; FONT-SIZE:1pt">&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>See notes to unaudited condensed consolidated financial statements.&nbsp;</p> <p style="MARGIN:0px; FONT-SIZE:1pt">&nbsp;</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>3</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=center><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px" align=center><br></p> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS, INC.</b></p><a name=statementofoperation> <p style=MARGIN:0px align=center><b>CONSOLIDATED STATEMENTS OF OPERATIONS</b></p> <p style=MARGIN:0px align=center><b>(Unaudited)</b></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=195 colspan=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Three&nbsp;Months&nbsp;Ended</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=195 colspan=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Six&nbsp;Months&nbsp;Ended</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center><b>December&nbsp;31,</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center><b>December&nbsp;31,</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center><b>December&nbsp;31,</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center><b>December&nbsp;31,</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2010</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2010</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Revenues</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>185,842</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>71,427</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>315,200</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>71,427</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Cost of Revenues</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>59,017</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>100,735</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>138,221</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>100,735</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Gross Profit (Loss)</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>126,825</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(29,308</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>176,979</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(29,308</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Operating Expenses</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Selling, general and administrative</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>427,095</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>335,808</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>1,005,002</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>472,310</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Research and development</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>15,360</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>15,360</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Amortization of customer contracts</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>43,750</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>87,500</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Goodwill impairment loss</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>48,158</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Total Operating Expenses</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>470,845</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>351,168</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>1,140,660</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>487,670</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Operating Loss</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(344,020</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(963,681</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Other Income (Expense), Net</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Interest expense</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(4,069</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(5,906</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="TEXT-INDENT:-9px; MARGIN:0px">)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Other income</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>68,769</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>108,769</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Total Other&nbsp;Income (Expense), Net</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>64,700</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>102,863</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Loss before Income Taxes</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(279,320</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(860,818</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Income tax benefit</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Net Loss</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(279,320</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(860,818</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Net Loss Attributable to Non-Controlling Interest</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>22,789</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>43,885</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Net Loss Attributable to Technest Holdings, Inc.</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(256,531</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(816,933</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Cash dividends accrued to Preferred Stockholders - Series E</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(3,833</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(7,666</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Net Loss Applicable to Common Shareholders</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(260,364</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(824,599</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Net Loss Per Share - Basic and Diluted</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(0.002</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(0.004</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(0.007</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(0.006</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px"><b>Weighted Average Number of Common Shares Outstanding</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:-12px; MARGIN:0px; PADDING-LEFT:12px">Basic and diluted</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>120,279,296</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>90,400,479</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>120,279,296</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>85,436,694</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>See notes to unaudited condensed consolidated financial statements.</p> <p style=MARGIN:0px><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>4</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS, INC.</b></p><a name=stockholdersdeficit> <p style=MARGIN:0px align=center><b>CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT</b></p> <p style=MARGIN:0px align=center><b>FOR THE SIX MONTHS ENDED DECEMBER 31, 2011</b></p> <p style=MARGIN:0px align=center><b>(Unaudited)</b></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=62> <td width=6> <td width=6> <td width=6> <td width=62> <td width=6> <td width=6> <td width=6> <td width=67> <td width=6> <td width=6> <td width=6> <td width=62> <td width=6> <td width=6> <td width=6> <td width=62> <td width=6> <td width=6> <td width=6> <td width=62> <td width=6> <td width=6> <td width=6> <td width=62> <td width=6 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=156 colspan=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Total</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=156 colspan=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Additional</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Non-</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Stockholders'</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Preferred</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=156 colspan=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Common&nbsp;Stock</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Paid-In</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Accumulated</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Controlling</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Equity</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Stock</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Shares</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=73 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Amount</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Capital</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Deficit</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>Interest</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=center>(Deficit)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=67 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-SIZE:8pt"><b>Balance, June 30, 2011</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>300,000</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>120,279,296</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=67 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>120,279</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>2,917,952</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&nbsp;(3,437,130</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&nbsp;(187,291</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&nbsp;(286,190</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-SIZE:8pt">Cash dividends accrued on Preferred Stock &#150; Series&nbsp;E</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=67 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>(7,666</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>(7,666</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-SIZE:8pt">Stock-based compensation</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=67 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>193,167</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>193,167</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-SIZE:8pt">Net loss</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=67 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>(816,933</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>(43,885</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>(860,818</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=67 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-SIZE:8pt"><b>Balance, December 31, 2011</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>300,000</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>120,279,296</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=67 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>120,279</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>3,103,453</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&nbsp;(4,254,063</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&nbsp;(231,176</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; FONT-SIZE:8pt; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">$</p></td> <td width=62 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt" align=right>&nbsp;(961,507</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="MARGIN:0px; FONT-SIZE:8pt">)</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>See notes to unaudited condensed consolidated financial statements.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>5</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS, INC.</b></p><a name=cashflow> <p style=MARGIN:0px align=center><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p> <p style=MARGIN:0px align=center><b>FOR THE SIX MONTHS ENDED DECEMBER 31, 2011 AND 2010</b></p> <p style=MARGIN:0px align=center><b>(Unaudited)</b></p> <p style=MARGIN:0px align=center><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2010</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Cash Flows From Operating Activities:</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Net loss</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(860,818</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&nbsp;(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Adjustments to reconcile net loss to net cash used in operating activities:</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Depreciation and amortization of property and equipment</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>620</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>206</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Amortization of customer contracts</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>87,500</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Goodwill impairment loss</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>48,158</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Stock-based compensation</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>193,167</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Changes in operating assets and liabilities:</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Accounts receivable and unbilled receivables</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>147,163</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(71,380</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Deposits, prepaid expenses and other assets</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>37,340</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(7,875</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Accounts payable</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>261,771</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>227,689</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Accrued expenses and other current liabilities</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>3,098</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(5,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Accrued compensation</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>60,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Net Cash Used In Operating Activities</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(22,001</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(373,338</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Cash Flows From Investing Activities:</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Purchase of equipment</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(21,800</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(6,191</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Net Cash Used In Investing Activities</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(21,800</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(6,191</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Cash Flows From Financing Activities:</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Principal paid on notes payable</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(18,500</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Proceeds from issuance of note payable</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>23,300</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; PADDING-LEFT:12px">Proceeds from issuance of common stock</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>515,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Net Cash Provided By Financing Activities</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>4,800</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>515,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Net Change in Cash and Cash Equivalents</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(39,001</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>135,471</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Cash and Cash Equivalents - Beginning of Period</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>50,598</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>59,597</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Cash and Cash Equivalents - End of Period</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>11,597</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>195,068</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2010</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Supplemental Disclosures Of Cash Flow Information:</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Interest paid</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>4,871</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Income taxes paid</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Non-Cash Investing and Financing Activities:</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Cash dividend accrued on Preferred Stock-Series E</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>7,666</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>See notes to unaudited condensed consolidated financial statements.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>6</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px align=center><b>TECHNEST HOLDINGS INC.</b></p><a name=notesfin> <p style=MARGIN:0px align=center><b>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</b></p> <p style=MARGIN:0px align=center><b>FOR THE SIX MONTHS ENDED DECEMBER 31, 2011 AND 2010</b></p> <p style=MARGIN:0px align=center><b>(Unaudited)</b></p> <p style=MARGIN:0px align=center><b>&nbsp;&nbsp;&nbsp;</b></p> <p style=MARGIN:0px><b>1. &nbsp;NATURE OF OPERATIONS AND BASIS OF PRESENTATION</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Business</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Technest Holdings, Inc. (&#147;Holdings&#148; or the &#147;Company&#148;) includes its wholly-owned subsidiary AccelPath, LLC (&#147;AccelPath&#148;) and Holdings&#146; wholly-owned subsidiary Genex Technologies, Inc. and its 49% owned subsidiary Technest, Inc. (&#147;Technest&#148;) (see Basis of Presentation below). Holdings has two primary businesses: AccelPath, which is in the business of enabling pathology diagnostics and Technest, which is in the business of the design, research and development, integration, sales and support of three-dimensional imaging devices and systems.<font style=FONT-SIZE:11pt>&nbsp;&nbsp;</font></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Reverse Acquisition</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On March 4, 2011, Technest Holdings, Inc. acquired AccelPath and AccelPath became a wholly-owned subsidiary of Holdings.&nbsp;&nbsp;The former members of AccelPath received an aggregate of 86,151,240 shares of Holdings common stock and, immediately after the transaction, owned 72.5% of Holdings&#146; issued and outstanding common stock.&nbsp;&nbsp;Immediately prior to the merger, Holdings had 32,678,056 shares of common stock outstanding. &nbsp;Following the acquisition, AccelPath began operating as a wholly-owned subsidiary of Holdings.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Accounting principles generally accepted in the United States generally require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes.&nbsp;&nbsp;The acquisition was accounted for as a reverse acquisition whereby AccelPath was deemed to be the accounting acquirer.&nbsp;&nbsp;Accordingly, the results of operations of Technest Holdings, Inc. have been included in the consolidated financial statements since the date of the reverse acquisition.&nbsp;&nbsp;The historical financial statements of AccelPath are presented as the historical financial statements of Holdings.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>As the accounting acquirer, AccelPath acquired tangible assets consisting of cash of $93,416, accounts receivable of $32,307, inventory of $19,388, assets related to discontinued operations of $5,000,000, property and equipment of $3,707, &nbsp;prepaid expenses and other assets of $61,644, and identifiable intangible assets of $350,000 related to existing customer contracts.&nbsp;&nbsp;AccelPath assumed accounts payable of $336,467, accrued expenses of $141,870, accrued income taxes of $369,816, contingent value rights payable of $3,194,247 and liabilities related to discontinued operations of $1,045,374.&nbsp;&nbsp;The fair value of Holdings net assets acquired on the date of the acquisition, based on management&#146;s analysis of the fair value of Holdings stock transferred, was $1,633,904. AccelPath recorded goodwill of $1,161,215 for the excess of purchase price over the net assets acquired.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Unaudited pro forma operating results for the six months ended December 31, 2010, assuming the reverse acquisition had been made as of July 1, 2010, are as follows:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=7> <td width=7> <td width=83> <td width=146 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>Revenues</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>1,308,730</p></td> <td width=146 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Net loss applicable to common shareholders</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(518,722 </p></td> <td width=146 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Net loss per share &#150; basic and diluted</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>(0.004 </p></td> <td width=146 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>All share and per share amounts presented in these consolidated financial statements have been retroactively restated to reflect the 33.327365 to 1 exchange ratio of AccelPath member interests to Holdings common shares in the merger.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Basis of&nbsp;Presentation</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>As a result of the reverse acquisition, the accompanying consolidated financial statements include the operations of AccelPath (the accounting acquirer) and its affiliate. AccelPath provided management services to a professional limited liabilitycompany (&#147;PLLC&#148;) in states where laws prohibit business corporations from providing pathology interpretations through the direct employment of pathologists. &nbsp;AccelPath had a long term professional service and administrative support agreements with such PLLC. A nominee shareholder owns all the equity of the PLLC.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>7</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>AccelPath follows accounting guidance concerning certain matters related to physician practice management entities (&#147;PPMs&#148;) with contractual management arrangements. The accounting guidance provides a listing of criteria which, when applied to the contractual arrangements between PPMs and the medical practice company, indicate whether or not they should be consolidated. In accordance with the criteria outlined, AccelPath includes the accounts and the operations of the PLLCs.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The accompanying consolidated financial statements also include the operations of its wholly-owned subsidiary, Genex Technologies, Inc. and its 49% owned subsidiary Technest, Inc. (see Note 5).&nbsp;&nbsp;Technest, Inc. conducts research and development in the field of computer vision technology and the Company has the right of first refusal to commercialize products resulting from this research and development.&nbsp;&nbsp;The Company&#146;s former Chief Executive Officer beneficially owns 23% of Technest, Inc., an employee owns 23% and an unrelated third party owns 5%.&nbsp; Technest, Inc. is considered a variable interest entity (VIE) for which the Company is the primary beneficiary.&nbsp;&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company consolidates all entities in which the Company holds a &#147;controlling financial interest.&#148; For voting interest entities, the Company is considered to hold a controlling financial interest when the Company is able to exercise control over the investees&#146; operating and financial decisions. For variable interest entities (&#147;VIEs&#148;), the Company is considered to hold a controlling financial interest when it is determined to be the primary beneficiary. For VIEs, a primary beneficiary is a party that has both: (1) the power to direct the activities of a VIE that most significantly impact that entity's economic performance, and (2) the obligation to absorb losses, or the right to receive benefits, from the VIE that could potentially be significant to the VIE. The determination of whether an entity is a VIE is based on the amount and characteristics of the entity's equity.</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>All significant inter-company balances and transactions have been eliminated in consolidation.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The accompanying unaudited condensed consolidated financial statements of Technest have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, without being audited, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary to make the financial statements not misleading have been included. Operating results for the three and six months ended December 31, 2011 are not necessarily indicative of the results that may be expected for the year ending June 30, 2012. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2011 filed with the Securities and Exchange Commission.</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><u>Recent Accounting Pronouncements</u></p> <p style=MARGIN:0px>There have been no recently issued accounting pronouncements that have had or are expected to have a material impact on the Company&#146;s consolidated financial statements.&nbsp;&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Settlement Agreement Related to the Sale of EOIR Technologies, Inc.</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On October 26, 2009, Holdings entered into a Settlement Agreement with EOIR Holdings, LLC (&#147;LLC&#148;) and EOIR Technologies, Inc. (&#147;EOIR&#148;), settling all claims related to the Stock Purchase Agreement (see Note 4).</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Under the terms of the Settlement Agreement, LLC agreed to pay Holdings $18,000,000 no later than December 25, 2009 and an additional $5,000,000 within sixty days of EOIR being awarded a contract under the Warrior Enabling Broad Sensor Services (WEBSS) Indefinite Delivery Indefinite Quantity (ID/IQ) contract or any contract generally recognized to be a successor contract to its current STES contract. The additional $5,000,000 is also payable to Holdings in the event that EOIR is awarded task orders under its current STES contract totaling $495,000,000.&nbsp;&nbsp;EOIR has guaranteed the performance of the obligations of LLC under the Settlement Agreement. The Settlement Agreement was entered into after a binding arbitration decision awarded Holdings $23 million for breach of the Stock Purchase Agreement between the parties.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On December 24, 2009, LLC paid Holdings $18,000,000 and subsequently, the actions pending between the parties were dismissed in accordance with the Settlement Agreement.&nbsp;&nbsp;The Company paid out of the proceeds received $3,621,687 of previously recorded liabilities related to the sale of EOIR and related litigation and $13,134,741 as a return of capital dividend to our shareholders.&nbsp;The Company recorded a $154,000 discount on the $5 million contingent receivable. The release of the WEBSS contract has fallen behind original expectations and the collection of the related receivable is now anticipated in the second calendar quarter of 2012.&nbsp;&nbsp;Holdings </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>8</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>believes that the collectability of the contingent receivable, which was acquired by AccelPath in the reverse acquisition, is determinable beyond a reasonable doubt and as such does not believe any reserves are warranted at December 31, 2011.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>2. &nbsp;GOING CONCERN UNCERTAINTY AND MANAGEMENT&#146;S PLAN</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the continuation of the Company as a going concern. The Company incurred a net loss applicable to common shareholders of $824,599 for the six months ended December 31, 2011. The Company also incurred net losses applicable to common shareholders of $2,983,213 and $325,235 for the years ended June 30, 2011 and 2010, respectively. &nbsp;Further, the Company had working capital deficits of $1,263,154 and $682,682 and stockholders&#146; deficits of $730,331 and $98,899 at December 31 and June 30, 2011, respectively. Management is anticipating sales growth through an expanded customer base and is also actively seeking financing through new and existing investors to fund operations. There is no assurance that the Company can reverse its net losses, or that the Company will be able to raise capital. These factors raise substantial doubt about the Company&#146;s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of the above uncertainty.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>3.&nbsp; &nbsp;CUSTOMER CONTRACTS AND GOODWILL</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Customer Contracts</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>In the reverse acquisition, the Company acquired Technest, Inc.&#146;s existing customer contracts with the National Institute of Health and the Department of Defense. The amounts assigned to these definite-lived intangible assets were determined by management based on a discounted cash flow of existing backlog and a projection of existing customer revenue.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>At December 31, 2011, the customer contracts have a cost basis of $350,000 and accumulated amortization of $145,832.&nbsp;&nbsp;The customer contracts are being amortized over an estimated life of two years.&nbsp;&nbsp;Amortization expense was $43,750 and $87,500 for the three and six months ended December 31, 2011, respectively. &nbsp;Amortization expense for the years ending June 30, 2012 and 2013 is expected to be $175,000 and $116,668, respectively. &nbsp;These contracts do not contain extension or renewal terms.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Goodwill and Impairment</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired in business combinations.&nbsp;&nbsp;Goodwill is not amortized but is tested at least annually for impairment.&nbsp;&nbsp;&nbsp;The purchase price allocation, as described in Note 1 is preliminary and is subject to change as the contingent value rights payable is subject to adjustment for certain future events as defined in the contingent value rights agreement.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company considered the fair value of the Technest reporting unit and concluded that its goodwill balance of approximately $1.2 million at June 30, 2011 was impaired. &nbsp;Therefore, the Company recognized an impairment loss of approximately $1.2 million on the entire amount of goodwill in the fourth quarter of the year ended June 30, 2011. &nbsp;During the three months ended September 30, 2011, the Company adjusted the contingent value rights payable which resulted in an additional goodwill impairment loss of $48,158. Goodwill was $0 at December 31, 2011 and June 30, 2011. There was no impairment loss recognized during the three months ended December 31, 2011.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>4.&nbsp; DISCONTINUED OPERATIONS</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Included in the assets acquired by AccelPath in the reverse acquisition were assets and liabilities related to Holdings discontinued operations. On September 10, 2007, Technest and its wholly owned subsidiary, EOIR entered into a Stock Purchase Agreement (&#147;SPA&#148;) with EOIR Holdings LLC (&#147;LLC&#148;), a Delaware limited liability company, pursuant to which Technest&nbsp;agreed to&nbsp;sell EOIR to LLC.&nbsp;&nbsp;The sale of EOIR to LLC was structured as a stock sale in which LLC acquired all of the outstanding stock of EOIR in exchange for approximately $34 million in cash, $11 million of which was paid at closing and $23 million of which was payable upon the successful re-award to EOIR of the contract with the U.S. Army's Night Vision and Electronics Sensors Directorate (&#147;NVESD&#148;). This transaction closed on December 31, 2007. On August 4, 2008, EOIR was one of three companies awarded the U.S. Army's NVESD contract with a funding ceiling of $495 million. The Contingent Purchase Price of $23 million was due as of August 21, 2008 in accordance with the SPA.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>9</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>On August 26, 2008, LLC notified Holdings that, in their opinion, the conditions set forth in the Stock Purchase Agreement triggering payment of the Contingent Purchase Price had not been satisfied.&nbsp;&nbsp;On August 21, 2009, an American Arbitration Association Panel of three arbitrators awarded Holdings $23,778,403 following a seven-day hearing that ended on June 30, 2009.&nbsp;&nbsp;The $23,778,403 included $830,070 of interest through the date of the Award and was also subject to additional interest due Holdings at 3.25% from the date of the Award through date of payment. &nbsp;On October 26, 2009, Holdings entered into a Settlement Agreement with&nbsp;LLC and EOIR&nbsp;settling all claims related to the Stock Purchase Agreement (see Note 1).</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The assets and liabilities related to the sale of EOIR and related legal and other costs incurred to collect the contingent consideration were acquired by AccelPath in the reverse acquisition and are presented as a discontinued operation in the consolidated financial statements.&nbsp;&nbsp;The accretion of the discount was recorded in income from continuing operations as the interest income represents the consequences of management's subsequent decision to hold the related asset.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>There was no loss from discontinued operations for the three and six months ended December 30, 2011 and 2010.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>5. &nbsp;TECHNEST, INC.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Holdings owns a 49% interest in Technest, Inc., a company that conducts research and development in the field of computer vision technology. Holdings has the right of first refusal to commercialize products resulting from this research and development. Holdings&#146; former Chief Executive Officer beneficially owns 23% of Technest, Inc., a current employee of Technest owns 23% and an unrelated third party owns 5%.&nbsp;Holdings has certain rights of first refusal and repurchase rights at fair market value, as defined in certain restricted stock agreements, with respect to the shares of Technest, Inc. that it does not own. Technest, Inc. is considered a variable interest entity (VIE) for which the Company is the primary beneficiary.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>6.&nbsp; CONTINGENT VALUE RIGHTS PAYABLE</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On January 13, 2011, Holdings entered into a Contingent Value Rights Agreement (the &#147;CVR Agreement&#148;) pursuant to which Holdings common stockholders of record as of January 25, 2011 received one contingent value right (a &#147;CVR&#148;) for each share of Holdings common stock held by them.&nbsp;&nbsp;Each CVR shall entitle the holder thereof to its pro rata portion of a payment to be received by Holdings pursuant to a Settlement Agreement and Mutual Release with EOIR Holdings LLC and EOIR Technologies, Inc. (the &#147;Settlement Agreement&#148;), less certain expenses (subject to adjustments for future events)&nbsp;&nbsp;that will be deducted from such payment.&nbsp;&nbsp;The contingent value rights payable was acquired by AccelPath in the reverse acquisition. &nbsp;At December 31, 2011, management estimates that the cash payment will be $3,242,405 or approximately $0.099 per CVR.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>7. &nbsp;NOTES PAYABLE</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On August 18, 2011, the Company borrowed $3,300 from a corporation controlled by our Chief Executive Officer. The note is payable on demand and accrues interest at a rate of 0.32% per annum. &nbsp;During the three months ended December 31, 2011, the Company borrowed $15,000 from a stockholder and $5,000 from our Chief Executive Officer. &nbsp;These notes are payable on demand and accrue interest at 0.19% per annum. &nbsp;AccelPath also has a note payable with a former Managing Member (see Note 9).</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>8.&nbsp; PREFERRED STOCK</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Bridge Financing</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On January 11, 2011, Holdings entered into a Securities Purchase Agreement with Southridge Partners II, LP (&#147;Southridge&#148;) to issue 300 shares of its Series E 5% Convertible Preferred Stock, with a stated value of $1,000 per share, to Southridge for a purchase price of $300,000.&nbsp;&nbsp;The shares of Series E 5% Convertible Preferred Stock were issued in three tranches over a 90-day period beginning on the closing of the reverse acquisition. &nbsp;Upon any liquidation or dissolution of Holdings, the holders of the Series E 5% Convertible Preferred Stock are entitled to receive the stated value of $1,000 per share plus all accrued unpaid dividends per share.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The number of shares of Holdings common stock into which each share of Series E Preferred is convertible is determined by dividing $1,000 (the stated value) by $0.044416985 per share.&nbsp;&nbsp;The 300 shares of Series E Preferred issued to Southridge are convertible into 6,754,173 shares of Holdings common stock.&nbsp;&nbsp;Prior to the closing of the reverse acquisition, Southridge Partners, LP and its affiliates were the holders of a majority of Holdings shares of common stock.&nbsp;&nbsp;The Series E Preferred accrues cash dividends at 5% per annum and is convertible to common stock at any time.&nbsp;&nbsp;On March 4, 2011, Southridge purchased $150,000 of Series E Preferred, on April </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>10</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>18, 2011, Southridge purchased $75,000 of Series E Preferred, and on June 2, 2011 Southridge purchased $75,000 of Series E Preferred for cash.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company&nbsp;determined that there was a beneficial conversion feature&nbsp;of&nbsp;$37,709 for the issuance of the 300 shares of Series E Preferred Stock.&nbsp;&nbsp;The beneficial conversion feature was calculated based on the effective conversion price per share compared to the fair value per share of common stock on the commitment date. &nbsp;This resulted in a deemed dividend in the amount of $37,709 for the year ended June 30, 2011. &nbsp;The Company also accrued cash dividends payable of $3,511 for the year ended June 30, 2011. The Company accrued cash dividends payable of $3,833 and $7,666 for the three and six months ended December 31, 2011, respectively.&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>9. &nbsp;COMMON STOCK&nbsp;ISSUANCES AND REPURCHASES</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On March 4, 2011, AccelPath entered into a resignation and repurchase agreement with one of its Managing Members.&nbsp;&nbsp;The Managing Member resigned on March 4, 2011 and AccelPath agreed to repurchase 10,498,120 shares of $0.001 par value common stock for $74,000.&nbsp;&nbsp;To complete the repurchase, AccelPath issued a $74,000 note payable due in eight monthly installments of $9,269 including interest at 0.54% per annum.&nbsp;&nbsp;At December 31, 2011, AccelPath has not paid $27,750 of principal payments due for August through October 2011. &nbsp;During a default, unpaid principal bears interest at 12% per annum. &nbsp;In addition, AccelPath entered into a consulting agreement with the Managing Member requiring payments of $750 per month for a period of eight months in consideration for continuing services.&nbsp;&nbsp;At December 31, 2011, AccelPath has accrued but not made the $2,250 of consulting payments due for August through October 2011. &nbsp;Interest expense for the three and six months ended December 31, 2011 was $1,035 and $1,054, respectively. Consulting expense for the three and six months ended December 31, 2011 was $750 and $3,000, respectively.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On March 7, 2011, Holdings issued 450,000 shares of common stock to Southridge in connection with the Equity Purchase Agreement.&nbsp;&nbsp;Under the Equity Purchase Agreement, Southridge shall commit to purchase up to $5,000,000 of Holdings common stock over the twenty-four month period commencing on the effective date of Holdings registration statement pursuant to the registration rights agreement.&nbsp;&nbsp;The purchase price of the common stock will be 95% of the average of the lowest three closing bid prices during the five day trading period. The fair value of the common stock issued of $36,000 was recorded as a deferred financing cost. The Company did not record any amortization during the six months ended December 31, 2011.&nbsp;&nbsp;In conjunction with the Equity Purchase Agreement, the Company entered into a Registration Rights Agreement with Southridge.&nbsp;&nbsp;The Registration Rights Agreement does not include any obligations of the Company to transfer consideration to Southridge. &nbsp;The registration statement was declared effective on February 9, 2012.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>10.&nbsp; OPTIONS, WARRANTS AND STOCK-BASED COMPENSATION</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>2011 Equity Incentive Plan</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On March 4, 2011, the Board of Directors adopted the Technest Holdings, Inc. 2011 Equity Incentive Plan and reserved up to 50,000,000 shares of common stock for issuance to employees, directors and consultants, subject to stockholder approval by March 4, 2012.&nbsp;&nbsp;The plan also provides for automatic annual increases, subject to Board approval, on January 1<font style=FONT-SIZE:7pt>st</font> of each year (commencing on January 1, 2012 and ending on January 1, 2021), in the aggregate number of shares reserved equal to the lesser of (a) five percent of the total number of shares outstanding on December 31<font style=FONT-SIZE:7pt>st </font>of the preceding year or (b) 3,000,000 shares.&nbsp;&nbsp;Under the plan, the Board may grant stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other stock awards.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><i>Valuation and amortization method</i>. The fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model.&nbsp;&nbsp;The estimated fair value of employee stock options is amortized to expense using the straight-line method over the vesting period.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><i>Volatility.</i>&nbsp;The Company estimates volatility based on the Company&#146;s historical volatility.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><i>Risk-free interest rate</i>. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><i>Expected term</i>. The expected term of stock options granted is based on an estimate of when options will be exercised in the future.&nbsp;&nbsp;The Company applied the simplified method of estimating the expected term of the options, as described in the SEC&#146;s Staff Accounting Bulletins 107 and 110, as the Company has had a significant change in its business operations as result of the reverse </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>11</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>acquisition and the historical experience is not indicative of the expected behavior in the future.&nbsp;&nbsp;The expected term, calculated under the simplified method, is applied to groups of stock options that have similar contractual terms.&nbsp;&nbsp;Using this method, the expected term is determined using the average of the vesting period and the contractual life of the stock options granted.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><i>Forfeitures.</i>&nbsp;&nbsp;&nbsp;Stock-based compensation expense is recorded only for those awards that are expected to vest.&nbsp;&nbsp;FASB ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.&nbsp;&nbsp;The term &#147;forfeitures&#148; is distinct from &#147;cancellations&#148; or &#147;expirations&#148; and represents only the unvested portion of the surrendered option.&nbsp;&nbsp;An annual forfeiture rate of 0% was applied to all unvested options as of December 31, 2011 which was management&#146;s best estimate.&nbsp;&nbsp;This analysis will be re-evaluated semi-annually and the forfeiture rate will be adjusted as necessary.&nbsp;&nbsp;Ultimately, the actual expense recognized over the vesting period will be for only those shares that vest.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The following weighted average assumptions were used for grants:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=111> <td> <td width=7> <td width=7> <td width=125> <td width=7> <td width=7> <td width=7> <td width=125> <td width=118 /> </tr><tr> <td width=111 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Six&nbsp;Months</b></p> <p style=MARGIN:0px align=center><b>Ended</b></p> <p style=MARGIN:0px align=center><b>December&nbsp;31,&nbsp;2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Year&nbsp;Ended</b></p> <p style=MARGIN:0px align=center><b>June&nbsp;30,&nbsp;2011</b></p></td> <td width=118 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=111 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Risk-free interest rate</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>0.90% - 0.96%</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>1.76% - 2.28%</p></td> <td width=118 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=111 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expected dividend yield</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>&#151;</p></td> <td width=118 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=111 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expected term</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>5.5 years</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>6 years</p></td> <td width=118 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=111 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Forfeiture rate</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>0%</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>0%</p></td> <td width=118 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=111 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expected volatility</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>122.33% - 124.91%</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=125 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>128.99% - 136.20%</p></td> <td width=118 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>A summary of option activity as of December 31, 2011 and for the six months then ended is presented below:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=48> <td> <td width=6> <td width=7> <td width=69> <td width=7> <td width=7> <td width=7> <td width=76> <td width=7> <td width=7> <td width=7> <td width=76> <td width=7> <td width=7> <td width=7> <td width=76> <td width=76 /> </tr><tr> <td width=48 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom><p style=MARGIN:0px><b>Options</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Shares</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Weighted-</b></p> <p style=MARGIN:0px align=center><b>Average</b></p> <p style=MARGIN:0px align=center><b>Exercise</b></p> <p style=MARGIN:0px align=center><b>Price</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Weighted-</b></p> <p style=MARGIN:0px align=center><b>Average</b></p> <p style=MARGIN:0px align=center><b>Remaining</b></p> <p style=MARGIN:0px align=center><b>Contractual</b></p> <p style=MARGIN:0px align=center><b>Term</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Aggregate</b></p> <p style=MARGIN:0px align=center><b>Intrinsic</b></p> <p style=MARGIN:0px align=center><b>Value</b></p></td> <td width=76 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Outstanding at July 1, 2011</p></td> <td width=6 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right>43,100,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right>0.065</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>9.78 years</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Granted</p></td> <td width=6 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right>2,620,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right>0.017</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Exercised</p></td> <td width=6 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Forfeited or expired</p></td> <td width=6 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Outstanding at December 31, 2011</p></td> <td width=6 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>45,720,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>0.062</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>9.31 years</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Exercisable at December 31, 2011</p></td> <td width=6 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=69 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>416,670</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>0.015</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>9.96 years</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>$</p></td> <td width=76 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On August 12, 2011, the Board of Directors granted stock options to purchase 120,000 shares of common stock at an exercise price of $0.05 per share.&nbsp;&nbsp;The weighted average fair value of the options on the date of the grant was estimated at $0.043 per share. &nbsp;These options vest over one year and have a term of 10 years.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On December 14, 2011, the Board of Directors granted stock options to purchase 2,500,000 shares of common stock at an exercise price of $0.015 per share. &nbsp;The weighted average fair value of the options on the date of the grant was estimated at $0.008 per share. &nbsp;These options vest monthly over 10 months and have a term of 10 years.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Stock-based compensation expense for the three and six months ended December 31, 2011 was $22,020 and $193,167, respectively. &nbsp;At December 31, 2011, unrecognized total compensation cost related to all unvested awards of $1,193,156 is expected to be recognized over a weighted average period of 2.23 years. At December 31, 2011 there were 4,280,000 shares reserved for future grants.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>12</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><u>Warrants</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The outstanding Technest Holdings, Inc. warrants remain in place subsequent to the reverse acquisition. No warrants were issued, or exercised during the six months ended December 31, 2011.&nbsp;&nbsp;On July 17, 2011, warrants to purchase 200,000 shares at $1.89 per share expired.&nbsp;&nbsp;The Company has reserved shares of common stock for the exercise of 75,000 outstanding warrants exercisable at $5.85 per share which expire on August 3, 2013.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The weighted average remaining life of the warrants is 1.6 years. &nbsp;At December 31, 2011 all warrants are exercisable and there is no&nbsp;aggregate intrinsic value for the warrants outstanding.</p> <p style="TEXT-INDENT:48px; MARGIN:0px">&nbsp;</p> <p style=MARGIN:0px><u>Stock Award Plan</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Technest Holdings, Inc. 2006 Stock Award Plan, pursuant to which Holdings may award up to 2,000,000 shares of its common stock to employees, officers, directors, consultants and advisors, remains in place subsequent to the reverse acquisition.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Holdings has broad discretion in making grants under the Stock Award Plan and may make grants subject to such terms and conditions as determined by the Board of Directors. Stock awards under the Plan will be subject to the terms and conditions, including any applicable purchase price and any provisions pursuant to which the stock may be forfeited, set forth in the document making the award. &nbsp;As of December 31, 2011, the Company has 111,845 shares available for future grant under the Plan.</p> <p style="TEXT-INDENT:48px; MARGIN:0px">&nbsp;</p> <p style=MARGIN:0px><b>11.&nbsp; NET LOSS PER SHARE</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Securities that could potentially dilute basic earnings per share ("EPS") and that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the three and six months ended December 31, 2011 and 2010 consist of the following:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=97> <td width=7> <td width=7> <td width=7> <td width=97> <td width=6 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=216 colspan=5 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>Shares Potentially Issuable</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2011</b></p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center><b>2010</b></p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Series E 5% Convertible Preferred Stock</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>6,754,173</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Stock Options</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>45,720,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>&#151;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Warrants</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>75,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>275,000</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Total</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>52,549,173</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 3px double; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=right>275,000</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>12.&nbsp; COMMITMENTS AND CONTINGENCIES</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Facility Rental</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Holdings leased offices with approximately 6,848 square feet in Bethesda, Maryland, pursuant to a lease which expired on December 31, 2011. &nbsp;At December 31, 2011, unpaid rent of $37,612 is included in accounts payable and $32,481 of unpaid operating expense charges are included in accrued expenses and other current liabilities.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On December 7, 2011, Holdings entered into a one-year lease for 1,957 square feet in Gaithersburg, Maryland which expires on December 31, 2012. &nbsp;The lease required the payment of a refundable security deposit of $4,000 which is included in prepaid expenses and other current assets at December 31, 2011. &nbsp;Monthly lease amounts for this facility total approximately $2,000 including monthly operating expense charges of $763. &nbsp;Rent expense is included in the accompanying financial statements since the reverse acquisition. Rent expense for the three and six months ended December 31, 2011 was $49,602 and $98,241, respectively. Future minimum rental payments required under the current operating lease through expiration are $24,000.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><u>Operating Lease</u></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>In May 2010, AccelPath entered into a non-cancelable operating lease for certain equipment.&nbsp;&nbsp;The lease requires monthly rental payments of $3,698 and expires in May 2015.&nbsp;&nbsp;The lease terms required payment of a refundable security deposit of $18,000 which is included in deposits on the Company&#146;s consolidated balance sheet.&nbsp;&nbsp;Rent expense for the three and six months ended December 31, 2011were $11,205 and $22,410, respectively. &nbsp;Rent expense for the three and six months ended December 31, 2010 were $11,094 and </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>13</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>$22,188, respectively. Future minimum lease payments remaining at December 31, 2011 for the years ending June 30, 2012, 2013, 2014 and 2015 are $22,188, $44,376, $44,376 and $36,980, respectively.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>13.&nbsp; INCOME TAXES</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>There was no provision for federal or state income taxes for the six months ended December 31, 2011 due to the Company&#146;s operating losses and a full valuation reserve on deferred tax assets. &nbsp;In addition, AccelPath (the accounting acquirer) was treated as a partnership for federal and state income taxes from inception until the reverse acquisition was completed. &nbsp;A partnership&#146;s income or loss is allocated directly to the partners for income tax purposes. &nbsp;Accordingly, there was no provision for federal or state income taxes for the six months ended December 31, 2010.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company&#146;s deferred tax assets consist primarily of the tax effects of its net operating loss carryforwards. &nbsp;As of December 31, 2011, the Company had a valuation allowance against 100% of the deferred tax asset. &nbsp;Management has determined that certain net operating loss carryforwards will not be available due to Internal Revenue Code Section 382 ownership changes and the utilization of other net operating loss carryforwards is uncertain.&nbsp;&nbsp;The Company carried forward the deferred tax assets, liabilities and valuation reserve of Holdings after the reverse acquisition because for tax purposes Holdings acquired AccelPath as a subsidiary.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>14.&nbsp;&nbsp;EMPLOYEE BENEFIT PLAN</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Holdings has a 401(k) plan for the benefit of employees. Essentially all Holdings employees are eligible to participate. The Company also contributes to the plan under a safe harbor plan requiring a 3% contribution for all eligible participants. In addition, the Company may contribute a 3% elective match. &nbsp;Contributions and other costs of the plan included in the accompanying financial statements for the three and six months ended December 31, 2011were $3,843 and $12,150, respectively.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>15. &nbsp;RELATED PARTY TRANSACTIONS</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>AccelPath made monthly payments of $10,000 each to certain executives (formerly &#147;Managing Members&#148;) as compensation for services performed.&nbsp;&nbsp; On March 4, 2011, one of the Managing Members resigned (see Note 9) and is no longer receiving this monthly payment. Two executives continue to receive this compensation. No written agreements are currently in place related to these payments.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>AccelPath recognized $60,000 and $120,000 of expense for these monthly payments during the three and six months ended December 31, 2011, respectively. &nbsp;AccelPath recognized $100,000 and $180,000 of expense for these monthly payments during the three and six months ended December 31, 2010, respectively. &nbsp;At December 31, 2011, $105,000 of unpaid monthly payments is recorded as accrued compensation.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>16. &nbsp;OPERATING SEGMENTS</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company operates in two operating segments which are consistent with its internal organization. The major segments are medical diagnostic services and government contracting.&nbsp; Where applicable, &#147;Unallocated&#148; represents items necessary to reconcile to the consolidated financial statements, which generally include corporate activity at the parent level and eliminations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company evaluates performance of individual operating segments based on operating income (loss). On a consolidated basis, this amount represents total net loss as shown in the consolidated statement of operations. Reconciling items represent executive compensation costs that are not allocated to the operating segments.&nbsp;&nbsp;Such costs have not been allocated from the parent to the subsidiaries.</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=404 colspan=14 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,&nbsp;2011</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Medical</p> <p style=MARGIN:0px align=center>Diagnostics</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Government</p> <p style=MARGIN:0px align=center>Contracting</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Unallocated</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Total</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Revenues</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>50,588</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>135,254</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>185,842</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Operating loss</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(165,334</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(156,666</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(22,020</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(344,020</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Other income</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>68,769</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>68,769</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Interest expense</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>4,069</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>4,069</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Depreciation and amortization</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>310</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>43,750</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>44,060</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expenditure for long-lived assets, including intangibles</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>11,650</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>11,650</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>14</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=404 colspan=14 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Three&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,&nbsp;2010</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Medical</p> <p style=MARGIN:0px align=center>Diagnostics</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Government</p> <p style=MARGIN:0px align=center>Contracting</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Unallocated</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Total</p></td> <td width=7 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Revenues</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>71,427</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>71,427</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Operating loss</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(380,476</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=center>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Other income</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Interest expense</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Depreciation and amortization</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>206</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>206</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expenditure for long-lived assets, including intangibles</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>6,191</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>6,191</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=404 colspan=14 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,&nbsp;2011</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Medical</p> <p style=MARGIN:0px align=center>Diagnostics</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Government</p> <p style=MARGIN:0px align=center>Contracting</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Unallocated</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Total</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Revenues</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>79,555</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>235,645</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>315,200</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Operating loss</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(405,005</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(365,509</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(193,167</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(963,681</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Other income</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>108,769</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>108,769</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Interest expense</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>5,906</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>5,906</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Depreciation and amortization</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>620</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>87,500</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>88,120</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expenditure for long-lived assets, including intangibles</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>21,800</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>21,800</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Total Assets at December 31, 2011</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>112,608</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>256,489</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>5,036,000</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>5,405,097</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=6> <td width=6> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7> <td width=7> <td width=7> <td width=83> <td width=7 /> </tr><tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=404 colspan=14 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Six&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,&nbsp;2010</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Medical</p> <p style=MARGIN:0px align=center>Diagnostics</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Government</p> <p style=MARGIN:0px align=center>Contracting</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Unallocated</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=90 colspan=2 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Total</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Revenues</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>71,427</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>$</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>71,427</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Operating loss</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>(516,978</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>)</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Other income</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Interest expense</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Depreciation and amortization</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>206</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>206</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Expenditure for long-lived assets, including intangibles</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>6,191</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>6,191</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Total Assets at December 31, 2010</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=6 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>298,308</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>-</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=83 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px align=right>298,308</p></td> <td width=7 style=MARGIN-TOP:0px valign=bottom> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>17. &nbsp;SUBSEQUENT EVENTS</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The registration statement for the Equity Purchase Agreement (see Note 9) was declared effective on February 9, 2012.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On February 10, 2012, the Company borrowed $40,000 from Southridge Partners II LP under a promissory note which matures on August 31, 2012. &nbsp;The note bears interest at 8% per annum and includes a redemption premium of $6,000 due on the maturity date.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On February 10, 2012, the Company entered into a loan agreement with an unaffiliated investor where the Company borrowed $50,000. &nbsp;The convertible promissory note bears interest at 5% per annum and matures on August 10, 2012. &nbsp;The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date and the investor has the option to convert the promissory note into shares of common stock at the closing bid price immediately prior to the conversion date. &nbsp;The Company also issued the investor a five-year warrant to purchase 500,000 shares of common stock at an exercise price of $0.01 per share. &nbsp;The warrant also includes a cashless net exercise provision. The Company granted piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note. &nbsp;&nbsp;&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>There were no other subsequent events that required recognition or disclosure in the financial statements.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>15</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p><a name=item2> <p style=MARGIN:0px><b>Item 2.&nbsp; Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><i>The following discussion and analysis of our financial condition and results of operations for the three and&nbsp;six months ended December&nbsp;31, 2011 should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report.</i></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center><b>FORWARD LOOKING STATEMENTS</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>The information in this discussion contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including but not limited, to statements regarding Technest Holdings, Inc.&#146;s capital needs, business strategy and expectations. These statements include, but are not limited to, statements about the receipt of the payment under the Settlement Agreement, the final amount of the payments under the CVR Agreement and all other statements regarding future performance.&nbsp;&nbsp;All such information and statements are subject to certain risks and uncertainties, the effects of which are difficult to predict and generally beyond the control of Technest, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements contained herein.&nbsp;&nbsp;These risks and uncertainties include, but are not limited to, whether Technest will realize the improvements in its operations that it expects from the reverse acquisition of AccelPath; whether the conditions triggering the payment to Technest under the Settlement Agreement will be achieved; the amount of expenses that will be deducted from, and reduce the amount of, payments pursuant to the CVR Agreement; general economic conditions; and those risks identified and discussed by Technest in its filings with the U.S. Securities and Exchange Commission.&nbsp;Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as &#147;may&#148;, &#147;should&#148;, &#147;expect&#148;, &#147;plan&#148;, &#147;intend&#148;, &#147;anticipate&#148;, &#147;believe&#148;, &#147;estimate&#148;, &#147;predict&#148;, &#147;potential&#148; or &#147;continue&#148;, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in the Risk Factors section below, and, from time to time, in other reports we file with the Securities and Exchange Commission (the &#147;SEC&#148;). These factors may cause our actual results to differ materially from any forward-looking statement. Readers are cautioned not to place undue reliance on any forward looking statements contained in this report. We will not update these forward looking statements unless the securities laws and regulations require us to do so.</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px align=center><b>OVERVIEW</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Technest Holdings, Inc. has two primary businesses: AccelPath, which is in the business of enabling pathology diagnostics and Technest, which is in the business of the design, research and development, integration, sales and support of three-dimensional imaging devices and systems.&nbsp;&nbsp;Each of the AccelPath and Technest businesses are described below.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b><i>AccelPath Business</i></b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We are a technology solutions company that delivers services that play a key role in the delivery of information for diagnosis of diseases and other pathologic conditions with and through our associated pathologists and strategic alliances. The experienced pathologists and medical institutions with whom we partner to manage slide and information delivery prepare comprehensive diagnostic reports of a patient&#146;s condition and consult with referring physicians to help determine the appropriate treatment. Such diagnostic reports often enable the early detection of disease, allowing referring physicians to make informed and timely treatment decisions that improve their patients&#146; health in a cost-effective manner. We seek out referring physicians and histology laboratories in need of pathology interpretations for our associated pathologists and manage slide delivery and develop services for managing the information.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We are focused on providing technology solutions for the anatomic pathology market. Our business model builds upon the expertise of experienced pathologists to provide seamless, reliable and comprehensive pathology and special test offerings to referring physicians using conventional and digital technologies.&nbsp;&nbsp;The pathologists with whom we contract seek to establish long-standing relationships with the referring physicians as a result of focused delivery of our diagnostic services, personalized responses and frequent consultations, and flexible information technology, or IT, solutions that are customizable to the referring physicians&#146; or laboratories as well as the pathologists&#146; needs. Our IT and communications platform enables us to deliver diagnostic reports to referring physicians generally within 24&nbsp;hours of slide receipt, helping to improve patient care. In addition, our IT platform enables us to closely track and monitor medical trends from referring physicians.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>16</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><b><i>Technest Business</i></b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Technest focuses on the design, research and development, integration, sales and support of three-dimensional imaging devices and systems primarily in the healthcare industries and intelligent surveillance devices and systems, and three-dimensional facial recognition in the security industries. Historically, the Company&#146;s largest customers have been the National Institutes of Health and the Department of Defense.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>After the acquisition of AccelPath LLC, the Company is considering strategic alternatives to maximize the value of Technest and its intellectual property, including those developed by Technest, Inc.&nbsp;&nbsp;The Company is actively pursuing licensing opportunities for the further commercialization of these products and the related intellectual property.</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px align=center><b>RESULTS OF OPERATIONS</b></p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><b>Three and six months ended December 31, 2011 compared with the three and six months ended December 31, 2010</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>On March 4, 2011, Technest Holdings, Inc. acquired AccelPath and AccelPath became a wholly-owned subsidiary of Holdings. Accounting principles generally accepted in the United States generally require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer for financial statement reporting purposes. The acquisition was accounted for as a reverse acquisition whereby AccelPath was deemed to be the accounting acquirer.&nbsp;&nbsp;Accordingly, the results of operations of Technest Holdings, Inc. have been included in the consolidated financial statements since the date of the reverse acquisition.&nbsp;&nbsp;The historical financial statements of AccelPath are presented as the historical financial statements of Holdings.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Revenues</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>The Company had $185,842 in revenues during the three months ended December 31, 2011 compared with $71,427 in revenues during the three months ended December 31, 2010. &nbsp;Revenues for the three months ended December 31, 2011 consisted of $50,588 of revenues generated by AccelPath&#146;s medical diagnostic services and $135,254 of revenues generated by Technest&#146;s Small Business Innovation Research grants in the field of 3-dimensional imaging compared with $71,427 of &nbsp;revenues generated by AccelPath&#146;s medical diagnostic services in the three months ended December 31, 2010. &nbsp;AccelPath exited the development stage and began generating revenue in October 2010. &nbsp;The increase in revenue is due to the Technest revenue recognized in the current period.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Company had $315,200 in revenues during the six months ended December 31, 2011 compared with $71,427 in revenues during the six months ended December 31, 2010. &nbsp;Revenues for the six months ended December 31, 2011 consisted of $79,555 of revenues generated by AccelPath&#146;s medical diagnostic services and $235,645 of revenues generated by Technest&#146;s Small Business Innovation Research grants in the field of 3-dimensional imaging compared with $71,427 of &nbsp;revenues generated by AccelPath&#146;s medical diagnostic services in the six months ended December 31, 2010. &nbsp;AccelPath exited the development stage and began generating revenue in October 2010. &nbsp;The increase in revenue is due to the Technest revenue recognized in the current period.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>At December 31, 2011, Technest&#146;s backlog of funded contracts was approximately $167,000.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Gross profit</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>The gross profit for the three months ended December 31, 2011 was $126,825 or 68% of revenues compared to a gross loss of $29,308 for the three months ended December 31, 2010. &nbsp;The increase in gross profit was primarily due to the addition of the Technest revenue in the current period. &nbsp;There was no Technest revenue in the three months ended December 31, 2010 as the reverse acquisition was completed on March 4, 2011. &nbsp;&nbsp;In addition, AccelPath&#146;s gross profit improved during the current period as AccelPath has changed its business model by charging a reduced fee for its services and eliminating certain costs of revenue.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The gross profit for the six months ended December 31, 2011 was $176,979 or 56% of revenues compared to a gross loss of $29,308 for the six months ended December 31, 2010. &nbsp;The increase in gross profit was primarily due to the addition of the Technest revenue in the current period. &nbsp;There was no Technest revenue in the six months ended December 31, 2010 as the reverse acquisition was completed on March 4, 2011. &nbsp;&nbsp;In addition, AccelPath&#146;s gross profit improved during the current period as AccelPath has changed its business model by charging a reduced fee for its services and eliminating certain costs of revenue.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>17</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px">&nbsp;</p> <p style=MARGIN:0px><b>Selling, general and administrative expenses</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Selling, general and administrative expenses for the three months ended December 31, 2011 were $427,095 compared to $335,808 for the three months ended December 31, 2010. &nbsp;During the three months ended December 31, 2011, these expenses consisted primarily of compensation expenses, professional fees related to filings with the SEC, consulting fees, occupancy expenses and travel expenses. In addition, stock-based compensation expense of $22,020 was recognized during the three months ended December 31, 2011. &nbsp;During the three months ended December 31, 2010, these expenses consisted primarily of compensation paid to managing members, professional fees, and travel expenses incurred by AccelPath. &nbsp;The increase in expenses is due to the additional costs of being a public company in 2011 and the inclusion of the expenses of the Technest business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Selling, general and administrative expenses for the six months ended December 31, 2011 were $1,005,002 compared to $472,310 for the six months ended December 31, 2010. &nbsp;During the six months ended December 31, 2011, these expenses consisted primarily of compensation expenses, professional fees related to filings with the SEC, consulting fees, occupancy expenses and travel expenses. In addition, stock-based compensation expense of $193,167 was recognized during the six months ended December 31, 2011. &nbsp;During the six months ended December 31, 2010, these expenses consisted primarily of compensation paid to managing members, professional fees, and travel expenses incurred by AccelPath. The increase in expenses is due to the additional costs of being a public company in 2011 and the inclusion of the expenses of the Technest business.</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><b>Amortization of customer contracts</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Amortization of intangible assets for the three months ended December 31, 2011 was $43,750 compared to no amortization expense for the three months ended December 31, 2010.&nbsp;&nbsp;Amortization expense consists of amortization of the definite-lived intangible assets recorded in the reverse acquisition.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Amortization of intangible assets for the six months ended December 31, 2011 was $87,500 compared to no amortization expense for the six months ended December 31, 2010.&nbsp;&nbsp;Amortization expense consists of amortization of the definite-lived intangible assets recorded in the reverse acquisition.</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><b>Operating loss</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The operating loss for the three months ended December 31, 2011 was $344,020 compared with $380,476 for the three months ended December 31, 2010. &nbsp;The decrease in the operating loss is primarily due to the increase in gross profit offset by the increases in selling, general and administrative expenses and amortization expense described above.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The operating loss for the six months ended December 31, 2011 was $963,681 compared with $516,978 for the six months ended December 31, 2010. &nbsp;The increase in the operating loss is primarily due to the increase in selling, general and administrative expenses described above, the increase in amortization expense, and a goodwill impairment loss of $48,158. &nbsp;The increased expense more than offset the increase in gross profit generated from increased revenue and lower cost of revenue by AccelPath. &nbsp;The goodwill impairment loss was recognized due to an increase in the contingent value rights payable liability during the three months ended September 30, 2011. &nbsp;Management had previously completed a discounted cash flow analysis of the reporting unit which concluded that there was no implied goodwill at June 30, 2011.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Other income (expense) </b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Net other income (expense) was $64,700 for the three months ended December 31, 2011 and consisted primarily of other income of $68,769. &nbsp;During the three months ended December 31, 2011, the Company had $4,069 in interest expense on late credit card payments and notes payable. &nbsp;In addition, the Company recognized other income of $68,769 related to the licensing of certain intellectual property in connection with a settlement agreement with a former employee. &nbsp;The Company had no other income (expense) in the three months ended December 31, 2010.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Net other income (expense) was $102,863 for the six months ended December 31, 2011 and consisted primarily of other income of $108,769. &nbsp;Also during the six months ended December 31, 2011, the Company had $5,906 in interest expense on late credit card payments and notes payable. &nbsp;In addition, the Company recognized other income of $108,769 related to the licensing of certain intellectual property in connection with a settlement agreement with a former employee. &nbsp;The Company has collected and recognized </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>18</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>all of the $120,000 licensing fee in the settlement as of December 31, 2011. &nbsp;The company had no other income (expense) in the six months ended December 31, 2010.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Net loss applicable to common shareholders</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The net loss applicable to common shareholders for the three months ended December 31, 2011 was $260,364 in comparison with a net loss of $380,476 applicable to common shareholders for the three months ended December 31, 2010. &nbsp;The net loss per share decreased to $0.002 per share for the three months ended December 31, 2011 from $0.004 per share for the three months ended December 31, 2010. &nbsp;Included in the net loss applicable to common shareholders for the three months ended December 31, 2011 are accrued cash dividends of&nbsp;$3,833 on the Series E 5% Convertible Preferred Stock. The decrease in net loss was primarily the result of other income recognized in 2011 and not in 2010.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The net loss applicable to common shareholders for the six months ended December 31, 2011 was $824,599 in comparison with a net loss of $516,978 applicable to common shareholders for the six months ended December 31, 2010. &nbsp;The net loss per share increased to $0.007 per share for the six months ended December 31, 2011 from $0.006 per share for the six months ended December 31, 2010. &nbsp;Included in the net loss applicable to common shareholders for the six months ended December 31, 2011 are accrued cash dividends of&nbsp;$7,666 on the Series E 5% Convertible Preferred Stock. The net loss increased due to increased selling, general and administrative costs which were partially offset by higher gross profit.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=center><b>LIQUIDITY AND CAPITAL RESOURCES</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><b>Cash and Working Capital</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On December 31, 2011, the Company had a working capital deficit of $1,263,154 due primarily to the operating losses incurred during the six months ended December 31, 2011 and the year ended June 30, 2011.&nbsp;&nbsp;AccelPath exited the development stage in October 2010. &nbsp;Our primary source of operating cash flows to date has been from financing activities.&nbsp; We received proceeds of $515,000 from the sale of common stock prior to the reverse acquisition and we received $300,000 from the sale of preferred stock during the year ended June 30, 2011. &nbsp;We also received proceeds of $335,000 from the sale of common stock during the year ended June 30, 2010. &nbsp;Cash used by operating activities was $22,001 for the six months ended December 31. 2011. &nbsp;We used cash of $869,824 and $279,378, respectively, to fund our operating activities during the years ended June 30, 2011 and 2010. &nbsp;Our primary uses of operating cash were for compensation payments to managing members of AccelPath, professional fees related to the reverse acquisition, consulting fees and travel expenses.</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><b>Sources of Liquidity</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>During the six months ended December 31, 2011 and the year ended June 30, 2011, we satisfied our operating cash requirements primarily from the remaining proceeds from the sale of common stock and Series E 5% Convertible Preferred Stock and collection of our accounts receivable. &nbsp;We have also increased our accounts payable, primarily for costs incurred in connection with the reverse acquisition. </p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On February 10, 2012, the Company borrowed $40,000 from Southridge Partners II LP under a promissory note which matures on August 31, 2012. &nbsp;The note bears interest at 8% per annum and includes a redemption premium of $6,000 due on the maturity date.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On February 10, 2012, the Company entered into a loan agreement with an unaffiliated investor where the Company borrowed $50,000. &nbsp;The convertible promissory note bears interest at 5% per annum and matures on August 10, 2012. &nbsp;The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date and the investor has the option to convert the promissory note into shares of common stock at the closing bid price immediately prior to the conversion date. &nbsp;The Company also issued the investor a five-year warrant to purchase 500,000 shares of common stock at an exercise price of $0.01 per share. &nbsp;The warrant also includes a cashless net exercise provision. The Company granted piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note. &nbsp;&nbsp;&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On March 7, 2011, Technest entered into an Equity Purchase Agreement with Southridge Partners II, LP.&nbsp;&nbsp;Pursuant to the Equity Purchase Agreement, Southridge shall commit to purchase up to $5,000,000 of Technest common stock over the course of 24 months commencing on the effective date of Technest&#146;s registration statement pursuant to the registration rights agreement.&nbsp;&nbsp;We filed the registration statement on November 8, 2011 and the registration statement was declared effective on February 9, 2012. &nbsp;The purchase </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>19</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>price of the common stock to be sold pursuant to the Equity Purchase Agreement will be 95% of the average of the lowest three closing bid prices, consecutive or inconsecutive, during the five trading day period commencing on the date a put notice requesting that Southridge purchase shares of common stock under the Equity Purchase Agreement is delivered.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Management believes that if Southridge purchases a sufficient amount of our common stock then the Company will have sufficient sources of liquidity to satisfy its obligations for at least the next 12 months. &nbsp;Alternatively, if the Company is not successful in selling a sufficient amount of its common stock to Southridge, then its expansion plans and software development efforts would need to be curtailed.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=center><b>COMMITMENTS AND CONTINGENCIES</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><b>Facilities</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Technest currently leases offices with approximately 1,957 square feet in Gaithersburg, Maryland, pursuant to a lease which expires on December 31, 2012. Monthly lease amounts for this facility total approximately $2,000.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Operating Lease</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>AccelPath currently leases certain equipment under a non-cancelable operating lease.&nbsp;&nbsp;The lease requires monthly rental payments of $3,698 and expires in May 2015.&nbsp;&nbsp;Future minimum lease payments remaining at December 30, 2011 for the years ending June 30, 2012, 2013, 2014 and 2015 are $22,188, $44,376, $44,376 and $36,980, respectively.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Off Balance Sheet Arrangements</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. As of December 31, 2011, Technest had warrants outstanding for the purchase of 75,000 shares of common stock. &nbsp;Technest does not expect any material cash proceeds from exercise of these warrants. &nbsp;As of December 31, 2011, Technest had stock options outstanding for the purchase of 45,720,000 shares of common stock. &nbsp;In addition, on March 7, 2011, Technest entered into an Equity Purchase Agreement with Southridge Partners II, LP.&nbsp;&nbsp;Pursuant to the Equity Purchase Agreement, Southridge shall commit to purchase up to $5,000,000 of Technest common stock over the course of 24 months commencing on the effective date of Technest&#146;s registration statement pursuant to the registration rights agreement.&nbsp;&nbsp;The registration statement &nbsp;was declared effective on February 9, 2012.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Effect of inflation and changes in prices</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>Management does not believe that inflation and changes in prices has had or will have a material effect on operations.</p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><b>Critical Accounting Policies and Estimates</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our critical accounting policies and use of estimates are discussed in, and should be read in conjunction with, the annual consolidated financial statements and notes included in the Company&#146;s Annual Report on Form 10-K for the year ended June 30, 2011as filed with the SEC.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>20</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p><a name=item4> <p style=MARGIN:0px><b>Item 4. Controls and Procedures</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px><b>Evaluation of Disclosure Controls and Procedures.</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our management, with the participation of our Chief Executive Officer (&#147;CEO&#148;) and our Principal Financial Officer (&#147;PFO&#148;), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2011. In designing and evaluating disclosure controls and procedures, we and our management recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of December 31, 2011, <font style=BACKGROUND-COLOR:#ffffff>based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls, the CEO and PFO concluded that our disclosure controls and procedures were not effective.</font></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>In light of the conclusion that our internal controls over financial reporting were ineffective as of December 31, 2011, we have applied procedures and processes as necessary to ensure the reliability of our financial reporting in regards to this quarterly report on Form 10-Q. Accordingly, management believes, based on its knowledge, that: (i) this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the periods covered by this report; and (ii) the financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations and cash flows as at, and for, the periods presented in this quarterly report.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Management&#146;s Report on Internal Control over Financial Reporting</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Under the supervision of our CEO and PFO, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2011 using the criteria established in Internal Control&#151;Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of June 30, 2011, we determined that control deficiencies existed that constituted material weaknesses, as described below:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td width=20> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>1)</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>lack of documented policies and procedures;</p></td></tr> <tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>2)</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>inadequate resources dedicated to the financial reporting function; and</p></td></tr> <tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>3)</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>ineffective separation of duties due to limited staff.</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Subject to the Company&#146;s ability to obtain financing and hire additional employees, the Company expects to be able to design and implement effective internal controls in the future that address these material weaknesses.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Accordingly, we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company's internal controls.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>As a result of the material weaknesses described above, our CEO and PFO have concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2011 and June 30, 2011 based on criteria established in Internal Control&#151;Integrated Framework issued by COSO.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>21</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><b>Changes in Internal Control Over Financial Reporting.</b></p> <p style=MARGIN:0px>&nbsp;</p> <p style=MARGIN:0px>There was no change in our internal control over financial reporting during the quarter ended December 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>22</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p><a name=partii> <p style=MARGIN:0px align=center><b>PART II. OTHER INFORMATION</b></p> <p style=MARGIN:0px><br></p><a name=item1apartii> <p style=MARGIN:0px><b>ITEM 1A. Risk Factors.</b></p> <p style=MARGIN:0px align=center><br></p> <p style="TEXT-INDENT:48px; MARGIN:0px"><i>Any investment in our common stock involves a high degree of risk. You should consider carefully the risks described below and elsewhere in this report and the information under &#147;Note Regarding Forward-Looking Statements,&#148; before you decide to buy our common stock. If any of the following risks, or other risks not presently known to us or that we currently believe are not material, develop into an actual event, then our business, financial condition and results of operations could be adversely affected. In that case, the trading price of our common stock could decline due to any of these risks and uncertainties, and you may lose part or all of your investment.</i></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Risks Related to our AccelPath Business</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We have a limited operating history in our services business, which may make it difficult to accurately evaluate our business and prospects.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We commenced providing our services in October 2010.&nbsp;&nbsp;As a result, we have a limited operating history upon which to accurately predict our potential revenue. Our revenues and income potential and our ability to expand our business into new markets for pathology services are still unproven. As a result of these factors, the future revenues and income potential of our business are uncertain. Any evaluation of our business and our prospects must be considered in light of these factors and the risks and uncertainties often encountered by companies in our stage of development. Our profitability may be adversely affected as we expand our infrastructure or if we incur increased selling expenses or other general and administrative expenses. Some of these risks and uncertainties include our ability to:</p> <p style=MARGIN:0px align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>execute our business model;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>create brand recognition;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>respond effectively to competition;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>manage growth in our operations;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>respond to changes in applicable government regulations and legislation;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>access additional capital when required; and</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>attract and retain key personnel.</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style=MARGIN:0px><b>If we cannot complete additional financing, our operating results and financial condition may suffer and the price of our stock may decline.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The development of our technologies will require additional capital.&nbsp;&nbsp;Although we believe with the availability of the proceeds from the Equity Purchase Agreement, we will have sufficient sources of liquidity to satisfy our obligations for at least the next 12 months, we may be unable to complete the financing or obtain additional funds, if needed, in a timely manner or on acceptable terms, which may render us unable to fund our operations or expand our business. If we are unable to obtain capital when needed, we may have to restructure our business or delay or abandon our development and expansion plans. If this occurs, the price of our common stock may decline and you may lose part or all of your investment.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We will have ongoing capital needs as we expand our business. &nbsp;If we raise additional funds through the sale of equity or convertible securities, your ownership percentage of our common stock will be reduced. In addition, these transactions may dilute the value of our common stock. &nbsp;We may have to issue securities that have rights, preferences and privileges senior to our common stock. &nbsp;The terms of any additional indebtedness may include restrictive financial and operating covenants that would limit our ability to compete and expand. Although we have been successful in the past in obtaining financing for working capital, there can be no assurance that we will be able to obtain the additional financing we may need to fund our business, or that such financing will be available on acceptable </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>23</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>terms. &nbsp;In addition, we may attempt to obtain financing by selling shares of our common stock, possibly at a discount to market. Such issuances will cause our security holders&#146; interests in our Company to be diluted, which may negatively affect the value of their shares.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>The market in which we participate is competitive and we expect competition to increase in the future, which will make it more difficult for us to sell our services and may result in pricing pressure, reduced revenue and reduced market share.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The market for anatomic pathology services is competitive and rapidly changing, barriers to entry are relatively low, and with the introduction of new technologies and market entrants, we expect competition to intensify in the future. If we fail to compete effectively, our operating results will be harmed.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>In addition, if one or more of our competitors were to merge or partner with another of our competitors, or if companies larger than we are enter the market through internal expansion or acquisition of one of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. These competitors could have established customer relationships and greater financial, technical, sales, marketing and other resources than we do, and could be able to respond more quickly to new or emerging technologies or devote greater resources to the development, promotion and sale of their services. This competition could harm our ability to provide our services, which may lead to lower prices, reduced revenue and, ultimately, reduced market share.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>If our arrangements with our associated pathologists or interpretation centers are found to violate state laws prohibiting the corporate practice of medicine or fee splitting, our business, financial condition and our ability to operate in those states could be adversely impacted.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The laws of many states, including states in which referring physicians and the pathologists at the interpretation centers with whom we contract are located, prohibit us from exercising control over the medical judgments or decisions of physicians and from engaging in certain financial arrangements, such as splitting professional fees with physicians. These laws and their interpretations vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion. We enter into independent contractor relationships with our interpretation centers and pathology departments of hospitals, pursuant to which their pathologists render professional medical services. We structure our relationships with these centers in a manner that we believe is in compliance with prohibitions against the corporate practice of medicine and fee splitting. However, state regulatory authorities or other parties could assert that we are engaged in the corporate practice of medicine. If such a claim were successfully asserted, we could be subject to civil and criminal penalties and could be required to restructure or terminate the applicable contractual arrangements. A determination that these arrangements violate state statutes, or our inability to successfully restructure our relationships with our associated pathologists to comply with these statutes, could eliminate referring physicians located in certain states from the market for our services, which would have a materially adverse effect on our business, financial condition and operations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our business entails the risk of medical liability claims against our associated pathologists and us. Successful medical liability claims could result in substantial damage awards, which could exceed the limits of our insurance coverage. In addition, medical liability insurance is expensive and insurance premiums may increase significantly in the future, particularly as we expand our services to include primary reads. As a result, adequate medical liability insurance may not be available to our associated pathologists or us in the future at acceptable costs or at all.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Any claims made against us that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us and divert the attention of our management and our associated pathologists from our operations, which could adversely affect our operations and financial performance. In addition, any claims might adversely affect our business or reputation.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Changes in the regulatory environment may constrain or require us to restructure our operations, which may harm our revenue and operating results.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Healthcare laws and regulations change frequently and may change significantly in the future. We monitor legal and regulatory developments and modify our operations from time to time as the regulatory environment changes. </p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>However, we may not be able to adapt our operations to address every new regulation, and new regulations may adversely affect our business. In addition, although we believe that we are operating in compliance with applicable foreign, federal and state laws, neither </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>24</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>our current nor anticipated business operations have been scrutinized or assessed by judicial or regulatory agencies. We cannot assure you that a review of our business by courts or regulatory authorities would not result in a determination that adversely affects our operations or that the healthcare regulatory environment will not change in a way that restricts our operations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Non-governmental third-party payors have taken steps to control the utilization and reimbursement of diagnostic services.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Efforts are being made by non-governmental third-party payors, including health plans, to reduce utilization of diagnostic testing services and reimbursement for diagnostic services. For instance, third-party payors often use the payment amounts under the Medicare fee schedules as a reference in negotiating their payment amounts. As a result, a reduction in volumes and reimbursement rates could result in a reduction in the fees we receive from our associated pathologists. Changes in test coverage policies of and reimbursement from other third-party payors may also occur independently from changes in Medicare. Such reimbursement and coverage changes in the past have resulted in reduced prices, added costs and reduced accession volume and have added more complex and new regulatory and administrative requirements.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The health care industry has also experienced a trend of consolidation among health insurance plans, resulting in fewer, larger health plans with significant bargaining power to negotiate fee arrangements with health care providers like our associated pathologists. In addition, some health plans have limited the preferred provider organization or point-of-service laboratory network to only a single national laboratory and its associated physicians to obtain improved fee-for-service pricing. The increased consolidation among health plans also has increased the potential adverse impact of ceasing to be a contracted provider with any such insurer.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We expect that efforts to reduce reimbursements, impose more stringent cost controls and reduce utilization of diagnostic testing services will continue. These efforts may have a material adverse effect on the fees we negotiate with our interpretation centers and our results of operations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Failure to adequately safeguard data, including patient data that is subject to regulations related to patient privacy, could adversely impact our business.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The success of our business depends on our ability to obtain, process, analyze, maintain and manage data, including sensitive information such as patient data. If we do not adequately safeguard that information and it were to become available to persons or entities that should not have access to it, our business could be impaired, our reputation could suffer and we could be subject to fines, penalties and litigation. Although we have implemented security measures, our infrastructure is vulnerable to computer viruses, break-ins and similar disruptive problems caused by our clients or others that could result in interruption, delay or cessation of service. Break-ins, whether electronic or physical, could potentially jeopardize the security of confidential client and supplier information stored physically at our locations or electronically in our computer systems. Such an event could damage our reputation, cause us to lose existing clients and deter potential clients. It could also expose us to liability to parties whose security or privacy has been infringed, to regulatory actions by the Centers for Medicare &amp; Medicaid Services, or CMS, part of the United States Department of Health and Human Services, or HHS, or by the Office of Civil Rights, also part of HHS, and to civil or criminal sanctions. The occurrence of any of the foregoing events could adversely impact our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The American Recovery and Reinvestment Act of 2009 imposed additional obligations on health care entities with respect to data privacy and security, including new notifications in case of a breach of privacy and security standards. We are unable to predict the extent to which these new obligations may prove technically difficult, time-consuming or expensive to implement.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We are an early-stage company that is in the process of building relationships with associated pathologists and referring physicians, and our business may be harmed by the loss of any one associated pathologist or customer of an associated pathologist.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We are an early-stage company that is in the process of building relationships with associated pathologists and referring physicians.&nbsp;&nbsp;We currently service a limited number of referring physicians through agreements with a limited number of associated pathologists, therefore the loss of any one customer of an associated pathologist may have a significant impact on our business, financial condition, results of operations and cash flows.&nbsp;&nbsp;No assurance can be given that we will continue to maintain our competitive position with our associated pathologists or their referring physicians.&nbsp;&nbsp;The loss of, or a significant curtailment of purchases by, one or more customers of an associated pathologist could cause our net sales to decline significantly, which would harm our business, financial condition, results of operations and cash flows.&nbsp;&nbsp;Similarly, delays in payments by our associated pathologists could have a significant impact on our cash flows.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>25</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>In addition, as a result of our dependence on a limited number of associated pathologists and referring physicians, we have significant concentrations of accounts receivable.&nbsp;&nbsp;These significant and concentrated receivables expose us to additional risks, including the risk of default by any of the associated pathologists representing a significant portion of our total receivables.&nbsp;&nbsp;If we were required to take additional accounts receivable reserves, our business, financial condition and results of operations could be materially adversely affected.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Failure to effectively continue or manage our strategic and organic growth could cause our growth rate to decline.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>To continue growth, we will need to continue to identify appropriate providers, such as laboratories, for which our associated pathologists can provide professional pathology services. Consolidation and competition within our industry, among other factors, may make it difficult or impossible to identify such providers on timely basis, or at all. In particular, the competition to acquire independent private labs and pathology groups has increased. In addition to historical competitors such as national lab companies, regional hospital centers and specialty lab companies, a number of private equity firms have recently made initial investments in the pathology and laboratory industry and may become potential competitors to our efforts to secure new customers for our associated pathologists. Our inability to continue our strategic growth would cause our growth rate to decline and could have a material adverse effect on our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We also seek to continue our organic growth through the expansion of our sales force, and the targeting of international customers for pathology services. Because of limitations in available capital and competition within our industry, among other factors, we may not be able to implement any or all of these organic growth strategies on a reasonable schedule, or at all. Our failure to continue our organic growth would cause our growth rate to decline and could have a material adverse effect on our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>To manage our growth, we must continue to implement and improve our operational and financial systems and to expand, train, manage and motivate our employees. We may not be able to effectively manage the expansion of our operations, and our systems, procedures or controls may not be adequate to support our operations. Our management may not be able to rapidly scale the infrastructure necessary to exploit the market opportunity for our services. Our inability to manage growth could have a material adverse effect on our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Our growth could strain our personnel, management and infrastructure resources, which may harm our business.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We are currently experiencing a period of rapid growth in our operations, which has placed, and will continue to place, a significant strain on our management, administrative, operational and financial infrastructure. We also anticipate that further growth will be required to address increases in the scope of our operations and size of our customer base. Our success will depend in part upon the ability of our current senior management team to manage this growth effectively.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>To effectively manage our anticipated growth, we will need to continue to improve our operational, financial and management processes and controls. If we fail to successfully manage our growth, our business and operating results will be harmed.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Failure to adequately scale our infrastructure to meet demand for our diagnostic services or to support our growth could create capacity constraints and divert resources, resulting in a material adverse effect on our business.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Increases in demand for diagnostic services, including unforeseen or significant increases in demand due to accession volume, could strain the capacity of our personnel and infrastructure. Any strain on our personnel or infrastructure could lead to inaccurate test results, unacceptable turn-around times or client service failures. Furthermore, although we are not currently subject to these capacity constraints, if demand increases for diagnostic services, we may not be able to scale our personnel or infrastructure accordingly. Any failure to handle increases in demand, including increases due to accession volumes, could lead to the loss of established clients and have a material adverse effect on our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We intend to expand by contracting with interpretation centers in additional geographic markets. In addition to development costs, this will require us to spend considerable time and money to expand our infrastructure and to hire and retain skilled laboratory and IT staff, experienced sales representatives, case coordination associates and other personnel for additional laboratories. We may also need federal, state and local certifications, as well as supporting operational, logistical and administrative infrastructure. Even after new centers are operational, it may take time for us to derive the same economies of scale we currently have. Moreover, we may suffer reduced economies of scale in our existing center as we seek to balance the amount of work allocated to each center. An expansion of our systems could divert resources, including the focus of our management, away from our current business.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>26</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><b>Our growth strategy depends on the ability of the interpretation centers with whom we contract to recruit and retain qualified pathologists and other skilled personnel. If they are unable to do so, our future growth would be limited and our business and operating results would be harmed.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our success is dependent upon the continuing ability of the interpretation centers with whom we contract to recruit and retain qualified pathologists at their facilities. An inability to recruit and retain pathologists and pathology departments in medical institutions would have a material adverse effect on our ability to grow and would adversely affect our results of operations. They face competition for pathologists from other healthcare providers, including pathology groups, research and academic institutions, government entities and other organizations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We must also identify, recruit and retain skilled executive, technical, administrative, sales, marketing and operations personnel. Competition for highly qualified and experienced personnel is intense due to the limited number of people available with the necessary skills. Failure to attract and retain the necessary personnel would inhibit our growth and harm our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Interruptions or delays in our information systems or in network or related services provided by third-party suppliers could impair the delivery of our services and harm our business.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our operations depend on the uninterrupted performance of our information systems, which are substantially dependent on systems provided by third parties over which we have little control. Failure to maintain reliable information systems, or disruptions in our information systems could cause disruptions and delays in our business operations which could have a material adverse effect on our business, financial condition and results of operations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We rely on broadband connections provided by third party suppliers to route digital images from laboratories within the United States to our associated pathologists at the interpretation centers with whom we contract. Any interruption in the availability of the network connections between the hospitals and our interpretation centers would reduce our revenue and profits. Frequent or persistent interruptions in our services could cause permanent harm to our reputation and brand and could cause current or potential referring physicians to believe that our systems are unreliable, leading them to switch to our competitors. Because referring physicians may use our services for critical healthcare services, any system failures could result in damage to the referring physicians&#146; businesses and reputation. These referring physicians could seek significant compensation from us for their losses, and our agreements with our customers do not limit the amount of compensation that they may receive. Any claim for compensation, even if unsuccessful, would likely be time-consuming and costly for us to resolve.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Although our systems have been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences and have multiple backups, they remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, terrorist attacks, computer viruses, break-ins, sabotage, and acts of vandalism. Despite any precautions that we may take, the occurrence of a natural disaster or other unanticipated problems at our interpretation centers or in the networks that connect our interpretation centers with laboratories could result in lengthy interruptions in our services. We do not carry business interruption insurance to protect us against losses that may result from interruptions in our service as a result of system failures.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Hospital privileging requirements or physician licensure laws may limit our market, and the loss of hospital privileges or state medical licenses held by our associated pathologists could have a material adverse affect on our business, financial condition and results of operations.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Each of our associated pathologists must be granted privileges to practice at each hospital from which the pathologist receives images and must hold a license in good standing to practice medicine in the state in which the hospital or laboratory is located. The requirements for obtaining and maintaining hospital privileges and state medical licenses vary significantly among hospitals and states. If a hospital or state restricts or impedes the ability of physicians located outside of the state to obtain privileges or a license to practice medicine at that hospital or in that state, the market for our services could be reduced. In addition, any loss of existing privileges or medical licenses held by our associated pathologists could impair our ability to serve our existing referring physicians and have a material adverse affect on our business, financial condition and results of operations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Changes in the healthcare industry or litigation reform could reduce the number of diagnostic procedures ordered by physicians, which could result in a decline in the demand for our services, pricing pressure and decreased revenue.</b></p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>27</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>Changes in the healthcare industry directed at controlling healthcare costs and perceived over-utilization of diagnostic pathology procedures could reduce the volume of biopsy procedures performed. For example, in an effort to contain increasing costs, some managed care organizations and private insurers are instituting pre-authorization policies, which require physicians to pre-clear orders for diagnostic biopsy procedures before those procedures can be performed. If pre-clearance protocols are broadly instituted throughout the healthcare industry, the volume of biopsy procedures could decrease, resulting in pricing pressure and declining demand for our services. Some payors have hinted at reducing the number of units of service that would be reimbursed in a connection with a single case.&nbsp;&nbsp;In addition, it is often alleged that many physicians order diagnostic procedures even when the procedures may have limited clinical utility in large part to establish a record for defense in the event of a medical liability claim. Changes in perceived malpractice risk could reduce the number of biopsy procedures ordered for this purpose and therefore reduce the total number of biopsy procedures performed each year, which could harm our operating results.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We may not have adequate intellectual property rights in our brand, which could limit our ability to enforce such rights.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our success depends in part upon our ability to market our services under the &#147;AccelPath&#148; brand and we have not secured registrations of this or other marks. Other businesses may have prior rights in the brand names that we market under or in similar names, which could limit or prevent our ability to use these marks, or to prevent others from using similar marks. If we are unable to prevent others from using our brand names, or if others prohibit us from using them, our revenue could be adversely affected. Even if we are able to protect our intellectual property rights in such brands, we could incur significant costs in doing so.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Any failure to protect our intellectual property rights in our workflow technology could impair its value and our competitive advantage.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We rely heavily on our workflow technology to distribute pathology slide images and information to the appropriately licensed and privileged associated pathologist best able to provide the necessary clinical insight in the least amount of turnaround time and reports to referring physicians. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology, and our business may be harmed. We currently do not hold any patents with respect to our technology, and we have not filed any applications for patents. Although we intend to file applications for patents covering our workflow technology, we may be unable to obtain patent protection for this technology. In addition, any patents we may obtain may be challenged by third parties. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We may in the future become subject to intellectual property rights claims, which could harm our business and operating results.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The information technology industry is characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. If a third party asserts that our technology violates that third-party&#146;s proprietary rights, or if a court holds that our technology violates such rights, we may be required to re-engineer our technology, obtain licenses from third parties to continue using our technology without substantial re-engineering or remove the infringing functionality or feature. In addition, we may incur substantial costs defending against any such claim. We may also become subject to damage awards, which could cause us to incur additional losses and hurt our financial position.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Monitoring potential infringement of and defending or asserting our intellectual property rights may entail significant expense. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Failure to attract and retain experienced and qualified personnel could adversely affect our business.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our success depends on our ability to attract, retain and motivate experienced IT staff, experienced sales representatives and other personnel and also on our ability to contract with affiliated pathologists and interpretation centers.&nbsp;&nbsp;Competition for these employees and pathologists is strong, and if we are not able to attract and retain qualified personnel or contract with qualified pathologists and interpretation centers it would have a material adverse effect on our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our sales representatives have developed and maintain close relationships with a number of health care professionals, and our specialized approach to marketing our services positions our sales representatives to have a deep knowledge of the needs of the </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>28</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>referring physicians they serve. Given the nature of the relationships we seek to develop with referring physicians, losses of sales representatives may cause us to lose clients.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We are dependent on our management team, and the loss of any key member of this team may prevent us from implementing our business plan in a timely manner.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our success depends largely upon the continued services of our executive officers and other key personnel, particularly Shekhar Wadekar, our Chief Executive Officer. The loss of Mr. Wadekar or other key personnel could have a material adverse effect on our business, financial condition, results of operations and the trading price of our common stock. In addition, the search for replacements could be time consuming and could distract our management team from the day-to-day operations of our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We may be unable to enforce non-compete agreements with our associated interpretation centers.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our independent contractor agreements with our associated pathologists typically provide that the pathologists may not compete with us for a period of time, typically one year, after the agreements terminate. These covenants not to compete are enforceable to varying degrees from jurisdiction to jurisdiction. In most jurisdictions, a covenant not to compete will be enforced only to the extent that it is necessary to protect the legitimate business interest of the party seeking enforcement, that it does not unreasonably restrain the party against whom enforcement is sought and that it is not contrary to the public interest. This determination is made based upon all the facts and circumstances of the specific case at the time enforcement is sought. It is unclear whether our interests will be viewed by courts as the type of protected business interest that would permit us to enforce a non-competition covenant against the pathologists. Since our success depends in substantial part on our ability to preserve the business of our associated pathologists, a determination that these provisions are not enforceable could have a material adverse effect on us.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Enforcement of state and federal anti-kickback laws may adversely affect our business, financial condition or operations.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Various federal and state laws govern financial arrangements among healthcare providers. The federal anti-kickback law prohibits the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or with the purpose to induce, the referral of Medicare, Medicaid, or other federal healthcare program patients, or in return for, or with the purpose to induce, the purchase, lease or order of items or services that are covered by Medicare, Medicaid, or other federal healthcare programs. Similarly, many state laws prohibit the solicitation, payment or receipt of remuneration in return for, or to induce the referral of patients in private as well as government programs. Violation of these anti-kickback laws may result in substantial civil or criminal penalties for individuals or entities and/or exclusion from participating in federal or state healthcare programs. We believe that we are operating in compliance with applicable law and believe that our arrangements with our affiliated pathologists and referring physicians would not be found to violate the anti-kickback laws. However, these laws could be interpreted in a manner inconsistent with our operations.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Because referring physicians submit claims to the Medicare program based on the services provided by our affiliated pathologists, it is possible that a lawsuit could be brought against us, our affiliated pathologists or the referring physicians under the federal False Claims Act, and the outcome of any such lawsuit could have a material adverse effect on our business, financial condition and operations<i>.</i></b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The Federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved. The government has taken the position that claims presented in violation of the federal anti-kickback law may be considered a violation of the Federal False Claims Act. The Federal False Claims Act further provides that a lawsuit brought under that act may be initiated in the name of the United States by an individual who was the original source of the allegations, known as the relator. Actions brought under the Federal False Claims Act are sealed by the court at the time of filing. The only parties privy to the information contained in the complaint are the relator, the federal government and the court. Therefore, it is possible that lawsuits have been filed against us that we are unaware of or which we have been ordered by the court not to discuss until the court lifts the seal from the case. Penalties include fines ranging from $5,500 to $11,000 for each false claim, plus three times the amount of damages that the federal government sustained because of the act of that person. We believe that we are operating in compliance with the Medicare rules and regulations, and thus, the Federal False Claims Act. However, if we were found to have violated certain rules and regulations and, as a result, submitted or caused the submission of allegedly false claims, any sanctions imposed under the Federal False Claims Act could result in substantial fines and penalties or exclusion from participation in federal and state healthcare programs which could have a material adverse effect on our business and financial condition.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Risks Related to our Technest Business and Contracting with the United States Government</b></p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>29</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><b>Although we are currently actively pursuing licensing opportunities for the commercialization of our Technest products and intellectual property as well as products developed by Technest, Inc., if we are not able to enter into such licensing arrangements, our financial condition could suffer.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Following the acquisition of AccelPath LLC, the Company is considering strategic alternatives to maximize the value of the Technest and its products and intellectual property, including those developed by Technest, Inc.&nbsp;&nbsp;The Company is actively pursuing licensing opportunities for the further commercialization of these products and the related intellectual property. If the Company is not successful in these efforts, the financial condition of the Company could suffer.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Our current revenues from Technest operations are derived from a small number of contracts within the U.S. government set aside for small businesses.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Substantially all of our revenue from our Technest operation is derived from Small Business Innovation Research contracts with the U.S. Government<b>&nbsp;</b>such that the loss of any one contract could materially reduce our revenues. As a result, our financial condition and our stock price would be adversely affected.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>In order to receive these Small Business Innovation Research contracts, we must satisfy certain eligibility criteria established by the Small Business Administration. If we do not satisfy these criteria, we would not be eligible for these contracts and thus, our primary source of revenue would no longer be available to us.&nbsp;&nbsp;As a result, our financial condition would be adversely affected.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Our business could be adversely affected by changes in budgetary priorities of the Government.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Because Technest derives a substantial majority of our revenue from contracts with the Government, we believe that the success and development of our business will continue to depend on our successful participation in Government contract programs. Changes in Government budgetary priorities could directly affect our financial performance. A significant decline in government expenditures, or a shift of expenditures away from programs that we support, or a change in Government contracting policies, could cause Government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts. Any such actions could cause our actual results to differ materially from those anticipated. Among the factors that could seriously affect our Government contracting business are:</p> <p style=MARGIN:0px align=justify><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=27> <td width=20> <td /> </tr><tr> <td width=27 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-FAMILY:Symbol" align=justify>&#183;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=justify>changes in Government programs or requirements;</p></td></tr> <tr> <td width=27 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=27 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-FAMILY:Symbol" align=justify>&#183;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=justify>budgetary priorities limiting or delaying Government spending generally, or specific departments or agencies in particular, and changes in fiscal policies or available funding, including potential Governmental shutdowns (as occurred during the Government&#146;s 1996 fiscal year);</p></td></tr> <tr> <td width=27 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=27 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=20 style=MARGIN-TOP:0px valign=top> <p style="MARGIN:0px; FONT-FAMILY:Symbol" align=justify>&#183;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=justify>curtailment of the Government&#146;s use of technology solutions firms.</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Our contracts and administrative processes and systems are subject to audits and cost adjustments by the Government, which could reduce our revenue, disrupt our business or otherwise adversely affect our results of operations.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Government agencies, including the Defense Contract Audit Agency, or DCAA, routinely audit and investigate Government contracts and Government contractors&#146; administrative processes and systems. These agencies review our performance on contracts, pricing practices, cost structure and compliance with applicable laws, regulations and standards. They also review our compliance with regulations and policies and the adequacy of our internal control systems and policies, including our purchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed, and any such costs already reimbursed must be refunded. Moreover, if any of the administrative processes and systems is found not to comply with requirements, we may be subjected to increased government oversight and approval that could delay or otherwise adversely affect our ability to compete for or perform contracts. Therefore, an unfavorable outcome to an audit by the DCAA or another agency could cause actual results to differ materially from those anticipated. If an investigation uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines and suspension or debarment from doing business with the Government. In addition, we could suffer serious reputational harm if allegations of impropriety were made against us. Each of these results could cause actual results to differ materially from those anticipated.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>30</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><b>Unfavorable government audit results could force us to adjust previously reported operating results and could subject us to a variety of penalties and sanctions.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The federal government audits and reviews our performance on awards, pricing practices, cost structure, and compliance with applicable laws, regulations, and standards. Like most large government vendors, our awards are audited and reviewed on a continual basis by federal agencies, including the Defense Contract Management Agency and the Defense Contract Audit Agency. An audit of our work, including an audit of work performed by companies we have acquired or may acquire or subcontractors we have hired or may hire, could result in a substantial adjustment in our operating results for the applicable period. For example, any costs which were originally reimbursed could subsequently be disallowed. In this case, cash we have already collected may need to be refunded and our operating margins may be reduced. To date, we have not experienced any significant adverse consequences as a result of government audits.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>If a government audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with U.S. Government agencies.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Failure to attract and retain experienced and qualified personnel could adversely affect our business.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Within the last year, we have had significant employee turnover. &nbsp;Our success depends on our ability to attract, retain and motivate experienced personnel in the field of three-dimensional imaging. Competition for these employees is strong, and if we are not able to attract and retain qualified personnel, it would have a material adverse effect on our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Risks Related To &#147;Controlled Companies&#148;</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Technest&#146;s controlling stockholder has significant influence over the Company.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>As of December 31, 2011, Shekhar Wadekar, the Company&#146;s Chief Executive Officer owns 21.61% of the outstanding Common Stock, which becomes 20.46% upon the conversion of the Series E 5% Convertible Preferred Stock. &nbsp;As a result, Mr. Wadekar possesses significant influence over our affairs.&nbsp;&nbsp;His stock ownership and relationships with members of Technest&#146;s board of directors may have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of Technest, which in turn could materially and adversely affect the market price of Technest&#146;s common stock.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>A very small number of investors hold a controlling interest in our stock. As a result, the ability of minority shareholders to influence our affairs is extremely limited.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>A very small number of investors collectively owned a controlling interest in Technest&#146;s outstanding common stock on a primary basis. &nbsp;As a result, those investors have the ability to control all matters submitted to the stockholders of Technest for approval (including the election and removal of directors).&nbsp;&nbsp;A significant change to the composition of our board could lead to a change in management and our business plan. Any such transition could lead to, among other things, a decline in service levels, disruption in our operations and departures of key personnel, which could in turn harm our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Moreover, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, which in turn could materially and adversely affect the market price of the common stock.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Minority shareholders of Technest will be unable to affect the outcome of stockholder voting as these investors or any other party retains a controlling interest.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Risks related to our Common Stock</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Any additional funding we arrange through the sale of our common stock will result in dilution to existing security holders.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We will have to raise additional capital in order for our business plan to succeed. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. Therefore, our most likely source of additional capital will be through the </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>31</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>sale of additional shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized 495,000,000 shares.&nbsp;&nbsp;In addition, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. Such issuances will cause our security holders&#146; interests in our Company to be diluted, which may negatively affect the value of their shares.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>It may be difficult for you to resell shares of our common stock if an active market for our common stock does not develop.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our common stock is not actively traded on a securities exchange and we do not meet the initial listing criteria for any registered securities exchange or the Nasdaq National Market System. It is quoted on the less recognized OTCBB.&nbsp;&nbsp;This factor may further impair your ability to sell your shares when you want and/or could depress our stock price. As a result, you may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities because smaller quantities of shares could be bought and sold, transactions could be delayed and security analyst and news coverage of our company may be limited. These factors could result in lower prices and larger spreads in the bid and ask prices for our shares.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>The market price of our common stock may be volatile. As a result, you may not be able to sell our common stock in short time periods, or possibly at all.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our stock price has been volatile.&nbsp;&nbsp;From July 2007 to December 2011, the trading price of our common stock ranged from a low price of $0.0051 per share to a high price of $0.64 per share. Many factors may cause the market price of our common stock to fluctuate, including:</p> <p style=MARGIN:0px align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>variations in our quarterly results of operations;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>the introduction of new products by us or our competitors;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>acquisitions or strategic alliances involving us or our competitors;</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>future sales of shares of common stock in the public market; and</p> <p style="MARGIN:0px; CLEAR:left" align=justify><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px" align=justify>market conditions in our industries and the economy as a whole.</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style=MARGIN:0px>In addition, the stock market has recently experienced extreme price and volume fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our common stock. When the market price of a company&#146;s stock drops significantly, stockholders often institute securities class action litigation against that company. Any litigation against us could cause us to incur substantial costs, divert the time and attention of our management and other resources or otherwise harm our business.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Future sales of common stock by shareholders, or the perception that such sales may occur, may depress the price of our common stock.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The sale or availability for sale of substantial amounts of our shares in the public market, including shares eligible for resale upon expiration of a lock-up agreement, shares issuable upon conversion of outstanding preferred stock or exercise of common stock options, or the perception that such sales could occur, could adversely affect the market price of our common stock and also could impair our ability to raise capital through future offerings of our shares.&nbsp;In connection with the acquisition of AccelPath, LLC, the sellers of the membership interests and certain of our existing stockholders entered into a lock-up agreement which prohibits the transferring of shares of common stock held by them until January 4, 2012, the 10-month anniversary of the closing of the AccelPath transaction. &nbsp;As of December 31, 2011, we had 120,279,296 outstanding shares of common stock, and the following additional shares were reserved for issuance: 45,720,000 shares upon exercise of outstanding options and 6,754,173 shares upon conversion of preferred stock.&nbsp;&nbsp;Any decline in the price of our common stock may encourage short sales, which could place further downward pressure on the price of our common stock and may impair our ability to raise additional capital through the sale of equity securities.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Any trading market that may develop may be restricted by virtue of state securities &#147;Blue Sky&#148; laws, making it difficult or impossible for our security holders to sell shares of its common stock in those states.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>There is a limited public market for our shares of common stock, and there can be no assurance that any public market will develop in the foreseeable future.&nbsp;&nbsp;Transfer of our common stock may also be restricted under the securities regulations and laws promulgated by </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>32</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>various states and foreign jurisdictions, commonly referred to as &#147;Blue Sky&#148; laws, which prohibit trading absent compliance with individual state laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Technest&#146;s common stock is &#147;penny stock,&#148; with the result that trading of our common stock in any secondary market may be impeded.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Due to the current price of our common stock, many brokerage firms may not be willing to effect transactions in our securities, particularly because low-priced securities are subject to SEC rules imposing additional sales requirements on broker-dealers who sell low-priced securities (generally defined as those having a per share price below $5.00). These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock as it is subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities. &nbsp;These factors severely limit the liquidity, if any, of our common stock, and will likely continue to have a material adverse effect on its market price and on our ability to raise additional capital.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:</p> <p style=MARGIN:0px><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(a)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(b)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">contains a description of the broker&#146;s or dealer&#146;s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(c)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(d)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">contains a toll-free telephone number for inquiries on disciplinary actions;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(e)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(f)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">contains such other information and is in such form, including language, type, size and format, as the SEC may require by rule or regulation.</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style=MARGIN:0px>In addition, the broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:</p> <p style=MARGIN:0px><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(a)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">bid and ask quotations for the penny stock;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(b)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">the compensation of the broker-dealer and its salesperson in the transaction;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(c)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">(d)&nbsp;&nbsp;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">monthly account statements showing the market value of each penny stock held in the customer&#146;s account.</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style=MARGIN:0px>Also, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser&#146;s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We cannot predict the extent to which investor interest in our stock or a business combination, if any, will lead to an increase in our market price or the development of an active trading market or how liquid that market, if any, might become.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We do not expect to pay dividends to holders of our common stock in the foreseeable future. As a result, holders of our common stock must rely on stock appreciation for any return on their investment.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Other than the special &#147;return of capital&#148; cash distribution made in connection with the settlement agreement with EOIR Holdings, Inc., we have not declared any dividends since our inception, and we do not plan to declare any dividends in the foreseeable future. If </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>33</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>we were to become profitable, it would be expected that all of such earnings would be retained to support our business. Accordingly, holders of our common stock will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Risks Related To Market Conditions</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>The sale of material amounts of common stock could encourage short sales by third parties and further depress the price of our common stock. &nbsp;As a result, you may lose all or part of your investment.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The significant downward pressure on our stock price caused by the sale of a significant number of shares could cause our stock price to decline, thus allowing short sellers of our stock an opportunity to take advantage of any decrease in the value of our stock. The presence of short sellers in our common stock may further depress the price of our common stock.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>The Company may not have access to the full amount available under the Equity Purchase Agreement.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We have not drawn down funds and have not issued shares of our common stock under the Equity Purchase Agreement with Southridge. Our ability to draw down funds and sell shares under the Equity Purchase Agreement requires that the registration statement be declared effective by the SEC, and that the registration statement continue to be effective. The registration statement was declared effective on February 9, 2012. &nbsp;In addition, the registration statement registers 25,800,000 total shares of our common stock issuable under the Equity Purchase Agreement, and our ability to access the Equity Purchase Agreement to sell any remaining shares issuable under the Equity Purchase Agreement is subject to our ability to prepare and file one or more additional registration statements registering the resale of these shares, which we may not file until the later of 60 days after Southridge and its affiliates have resold substantially all of the common stock registered for resale under the current registration statement, or six months after the effective date of the current registration statement.&nbsp;&nbsp;These subsequent registration statements may be subject to review and comment by the Staff of the SEC, and will require the consent of our independent registered public accounting firm.&nbsp;&nbsp;Therefore, the timing of effectiveness of these subsequent registration statements cannot be assured.&nbsp;&nbsp;The effectiveness of these subsequent registration statements is a condition precedent to our ability to sell the shares of common stock subject to these subsequent registration statements to Southridge under the Equity Purchase Agreement.&nbsp;&nbsp;Even if we are successful in causing one or more registration statements registering the resale of some or all of the shares issuable under the Equity Purchase Agreement to be declared effective by the SEC in a timely manner, we will not be able to sell shares under the Equity Purchase Agreement unless certain other conditions are met.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Assuming the sale of the entire 25,800,000 shares of our common stock being registered at a market price of $0.025 per share, Southridge will receive gross proceeds of $645,000, of which we will receive $612,500, or 95% of the sale price. &nbsp;Therefore, at the current market price, we would be required to register 174,200,000 additional shares to obtain the balance of the $5,000,000 available under the Equity Purchase Agreement. &nbsp;Our capital stock currently consists of 495,000,000 authorized shares of common stock and 5,000,000 shares of preferred stock. &nbsp;Therefore, in the event that our share price does not increase, we may not have a sufficient number of shares of common stock authorized to register the entire amount of shares required to draw down the full $5,000,000 available under the Equity Purchase Agreement in addition to shares that are then outstanding or reserved for issuance upon exercise or conversion of outstanding options or other convertible securities. &nbsp;In addition, Securities and Exchange Commission rules limit the number of shares that we may register for resale in connection with the Equity Purchase Agreement, which may also limit our ability to draw down the full $5,000,000 available under the Equity Purchase Agreement unless our share price increases substantially. &nbsp;Our ability to access the entire amount available under the Equity Purchase Agreement is therefore significantly influenced by our ability to increase our share price such that we would be required to register and sell fewer shares than would be required at our current market price.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>In addition, our ability to draw down funds under the Equity Purchase Agreement is subject to a number of additional conditions in the Equity Purchase Agreement, including, without limitation:</p> <p style=MARGIN:0px><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">That no statute, rule, regulation, executive order, decree, ruling or injunction has been, commenced, entered or adopted by any court or governmental authority that prohibits or materially adversely affects any of the transactions contemplated by the Equity Purchase Agreement;</p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left; CLEAR:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that there is no material adverse change in our business or financial condition since the date of the Company<font style="FONT-FAMILY:Arial Unicode MS,Times New Roman">&#146;</font>s most recently filed report under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;</p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left; CLEAR:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that the trading of our common stock has not been suspended by the Securities and Exchange Commission, the Financial Industry Regulatory Authority, Inc. or the principal exchange which is at the time the principal trading exchange or market for our common stock;</p> <p style="MARGIN:0px; CLEAR:left" align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>34</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that the number of Put Shares to be purchased by Southridge plus all other securities beneficially owned by Southridge does not exceed 9.99% of our outstanding common stock on the closing date of any Put;</p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left; CLEAR:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that the issuance of the put shares does not exceed the aggregate number of shares of that we may issue without breaching the Company&#146;s obligations under the rules or regulations of the OTCBB or other principal exchange which is at the time the principal trading exchange or market for our common stock;</p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left; CLEAR:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that the Company has no knowledge of any event more likely than not to have the effect of causing the registration statement to be suspended or otherwise ineffective within 15 days from delivery of the Put Notice;</p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left; CLEAR:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that issuance of shares of common Stock at any closing does not violate the shareholder approval requirements of the OTCBB or other principal exchange which is at the time the principal trading exchange or market for our common stock; and</p> <p style="MARGIN-TOP:0px; TEXT-INDENT:24px; WIDTH:48px; FONT-FAMILY:Symbol; MARGIN-BOTTOM:-2px; FLOAT:left; CLEAR:left">&#183;</p> <p style="TEXT-INDENT:-2px; MARGIN:0px; PADDING-LEFT:48px">that no stock split or combination, payment of a dividend or distribution in shares of common stock, payment of a dividend or distribution of other assets to the holders of our common stock issuance of shares of our common stock or options or other security exercisable for or convertible into shares of our common stock at a price per share that is less than the price paid by Southridge, has occurred between the date a Put Notice is delivered and the associated closing date.</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style=MARGIN:0px>Accordingly, because our ability to draw down amounts under the Equity Purchase Agreement is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the $5 million available to us under the Equity Purchase Agreement.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We are registering an aggregate of 25,800,000 shares of common stock to be issued under the Equity Purchase Agreement. The sale of such shares could depress the market price of our common stock.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>We are registering an aggregate of 25,800,000 shares of common stock under a registration statement for issuance pursuant to the Equity Purchase Agreement. The 25,800,000 shares of our common stock will represent approximately 17.7% of our shares outstanding immediately after our exercise of the put right. Our common stock is thinly traded. The sale of these shares into the public market by Southridge may result in a greater number of shares being available for trading than the market can absorb and therefore, could depress the market price of our common stock.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Because Southridge will be paying less than the then-prevailing market price for our common stock, your ownership interest may be diluted and the value of our common stock may decline by exercising the put right pursuant to the Equity Purchase Agreement.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The common stock to be issued to Southridge pursuant to the Equity Purchase Agreement will be purchased at&nbsp;an 5%&nbsp;discount to the average of the lowest closing price of the common stock of any three trading days, consecutive or inconsecutive, during the five consecutive trading days immediately following the date of our notice to Southridge of our election to put shares pursuant to the Equity Purchase Agreement. Because the put price is lower than the prevailing market price of our common stock, to the extent that the put right is exercised, your ownership interest may be diluted.&nbsp;&nbsp;Southridge has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Southridge sells the shares, the price of our common stock could decrease. If our stock price decreases, Southridge may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>The Equity Purchase Agreement&#146;s pricing structure may result in dilution to our stockholders.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Pursuant to the Equity Purchase Agreement, Southridge committed to purchase, subject to certain conditions, up to the $5 million of our common stock over a two-year period. If we sell shares to Southridge under the Equity Purchase Agreement, or issue shares in lieu of any blackout payment (as described below), it will have a dilutive effect on the holdings of our current stockholders, and may result in downward pressure on the price of our common stock. If we draw down amounts under the Equity Purchase Agreement, we will issue shares to Southridge at a discount of 5% from the average price of our common stock. If we draw down amounts under the Equity Purchase Agreement when our share price is decreasing, we will need to issue more shares to raise the same amount than if our stock price was higher. Issuances in the face of a declining share price will have an even greater dilutive effect than if our share price were stable or increasing, and may further decrease our share price. In addition, we are entitled in certain circumstances to deliver a &#147;blackout&#148; notice to Southridge to suspend the use of the registration statements that we have filed or may in the future file with the SEC registering for resale the shares of common stock to be issued under the Equity Purchase Agreement. If we deliver a blackout notice in the fifteen trading days following a settlement of a draw down, then we must issue Southridge additional shares of our common stock.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>35</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px><b>Certain provisions of our articles of incorporation could discourage potential acquisition proposals or change in control.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our board of directors, without further stockholder approval, may issue preferred stock that would contain provisions that could have the effect of delaying or preventing a change in control or which may prevent or frustrate any attempt by stockholders to replace or remove the current management. The issuance of additional shares of preferred stock could also adversely affect the voting power of the holders of our common stock, including the loss of voting control to others.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this prospectus. </b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our report from our independent registered public accounting firm for the year ended June 30, 2011 includes an explanatory paragraph stating that our recurring losses from operations, negative cash flows from operations, stockholders&#146; deficit and working capital deficit raise substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our consolidated financial statements, and it is likely that investors will lose all or a part of their investment. After the sale of the shares registered hereunder, future reports from our independent registered public accounting firm may also contain statements expressing doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. </p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><b>We have identified weaknesses in our internal controls.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our management has concluded that our internal control over financial reporting was not effective as of June 30, 2011, as a result of several material weaknesses in our internal control over financial reporting. </p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of June 30, 2011, we determined that control deficiencies existed that constituted material weaknesses, as described below:</p> <p style=MARGIN:0px><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">1)</p> <p style="TEXT-INDENT:-2px; MARGIN:0px">lack of documented policies and procedures;</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">2)</p> <p style="TEXT-INDENT:-2px; MARGIN:0px">inadequate resources dedicated to the financial reporting function; and</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style="MARGIN-TOP:0px; WIDTH:48px; MARGIN-BOTTOM:-2px; FLOAT:left">3)</p> <p style="TEXT-INDENT:-2px; MARGIN:0px">ineffective separation of duties due to limited staff.</p> <p style="MARGIN:0px; CLEAR:left"><br></p> <p style=MARGIN:0px>As a result of these material weaknesses, we performed additional procedures to obtain reasonable assurance regarding the reliability of our financial statements.&nbsp;&nbsp; Material weaknesses could result in a misstatement of accounts and disclosures, which would result in a misstatement of annual or interim financial statements that would not be prevented or detected. Errors in our financial statements could require a restatement or prevent us from timely filing our periodic reports with the Securities and Exchange Commission. Additionally, ineffective internal control over financial reporting could cause investors to lose confidence in our reported financial information.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>Our inability to remediate all weaknesses or any additional material weaknesses that may be identified in the future could, among other things, cause us to fail to timely file our periodic reports with the SEC and require us to incur additional costs and divert management resources. Additionally, the effectiveness of our or any system of disclosure controls and procedures is subject to inherent limitations, and therefore we cannot be certain that our internal control over financial reporting or our disclosure controls and procedures will prevent or detect future errors or fraud in connection with our financial statements.</p> <p style=MARGIN:0px><br></p><a name=item2partii> <p style="MARGIN:0px; FONT-SIZE:11pt"><b>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On February 10, 2012, Technest Holdings, Inc. entered into a loan agreement (the &#147;Loan Agreement&#148;) with Mr. Albert Friesen pursuant to which the Company entered into a convertible promissory note to borrow $50,000 (the &#147;Note&#148;) from Mr. Friesen and agreed to issue Mr. Friesen a five-year warrant to purchase 500,000 shares of Technest Common Stock, par value $.001 per share (the &#147;Warrant&#148;) at an exercise price of $0.01 per share. &nbsp;The Note bears an interest rate of 5% per annum and shall be paid on or before </p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>36</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p> <p style=MARGIN:0px>August 10, 2012. The entire principal amount of the Note may be converted into shares of Technest Common Stock at the election of Mr. Friesen at any time. The number of shares into which the entire principal amount of the Note may be converted into is determined by dividing the entire principal amount of the Note outstanding by the closing bid price on the trading day immediately prior to the Company&#146;s receipt of the conversion notice; provided that in no event shall the per share price be less than $0.01 per share. The Company has the option of paying the accrued and unpaid interest on the Note with shares of Technest Common Stock at the closing bid price immediately prior to the due date. &nbsp;&nbsp;The Company granted piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the Note. &nbsp;&nbsp;&nbsp;</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The issuance and sale of the securities to Mr. Friesen will not be registered under the Securities Act of 1933, and will be made in reliance upon the exemptions from the registration requirements of the Securities Act set forth in Section 4(2) thereof.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, the Note and the Warrant, a copy of which is filed as Exhibit 10.2, Exhibit 10.3 and Exhibit 4.1 to this quarterly report on Form 10-Q, each of which are incorporated herein by reference.</p> <p style=MARGIN:0px><br></p><a name=item5partii> <p style="MARGIN:0px; FONT-SIZE:11pt"><b>Item 5. Other Information.</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>On February 10, 2012, the Company borrowed $40,000 from Southridge Partners II LP under a promissory note which matures on August 31, 2012. &nbsp;The note bears interest at 8% per annum and includes a redemption premium of $6,000 due on the maturity date.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the promissory note, a copy of which is filed as Exhibit 10.4 to this quarterly report on Form 10-Q, and is incorporated herein by reference.</p> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>37</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p><a name=item6partii> <p style=MARGIN:0px><b>ITEM 6.&nbsp; Exhibits</b></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=48> <td> <td width=97> <td width=41> <td width=76> <td width=62 /> </tr><tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Exhibit</p> <p style=MARGIN:0px align=center>No.</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom><p style=MARGIN:0px align=center>Description</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style=MARGIN:0px align=center>Filed&nbsp;with&nbsp;this</p> <p style=MARGIN:0px align=center>Quarterly&nbsp;Report</p></td> <td width=181 colspan=3 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Incorporated&nbsp;by&nbsp;reference</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>Form</p></td> <td width=76 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px> <p style=MARGIN:0px>Filing&nbsp;Date</p></td> <td width=62 style=MARGIN-TOP:0px> <p style=MARGIN:0px>Exhibit&nbsp;No.</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>4.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Technest Common Stock Warrant issued to Mr. Albert Friesen dated February 10, 2012</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>10.1</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Industrial Lease Agreement among Technest Holdings, Inc., Technest, Inc. and PS Business Parks, L.P. dated December 7, 2011.</p></td> <td width=97 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>8-K</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>December 13, 2011</p></td> <td width=62 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>10.1</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>10.2</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Loan Agreement dated February 10, 2012 between Technest Holdings, Inc. and Albert Friesen</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>10.3</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Promissory Note dated February 10, 2012 payable to Mr. Friesen</p></td> <td width=97 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>10.4</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Promissory Note dated February 10, 2012 payable to Southridge Partners II, LP</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>31.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Certification by CEO of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a).</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>31.2</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Certification by PFO of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a).</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>32.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Certification by CEO and PFO of Periodic Report Pursuant to 18 U.S.C. Section 1350.</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>38</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p><a name=signature> <p style=MARGIN:0px align=center><b>SIGNATURES</b></p> <p style=MARGIN:0px><br></p> <p style="TEXT-INDENT:48px; MARGIN:0px">In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</p> <p style=MARGIN:0px align=center><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=64> <td width=226> <td width=106 /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=290 colspan=2 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>TECHNEST HOLDINGS, INC.</b></p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=226 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Date:&nbsp; February 16, 2012</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>By:</p></td> <td width=226 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>/s/&nbsp;Shekhar Wadekar</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=226 style=MARGIN-TOP:0px valign=bottom> <p style=MARGIN:0px>Shekhar Wadekar</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=226 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Chief Executive Officer and President</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=226 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Date:&nbsp;February 16, 2012</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>By:</p></td> <td width=226 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>/s/&nbsp;Bruce Warwick</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=226 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Bruce Warwick</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=64 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=226 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Principal Financial Officer</p></td> <td width=106 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>39</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px><br><br></p> <p style="PAGE-BREAK-BEFORE:always; MARGIN:0px"><br></p><a name=exhibitindex> <p style=MARGIN:0px align=center><b>Exhibit</b> <b>Index</b></p> <p style=MARGIN:0px align=center><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=48> <td> <td width=97> <td width=41> <td width=76> <td width=62 /> </tr><tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Exhibit</p> <p style=MARGIN:0px align=center>No.</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom><p style=MARGIN:0px align=center>Description</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px"> <p style=MARGIN:0px align=center>Filed&nbsp;with&nbsp;this</p> <p style=MARGIN:0px align=center>Quarterly&nbsp;Report</p></td> <td width=181 colspan=3 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=bottom> <p style=MARGIN:0px align=center>Incorporated&nbsp;by&nbsp;reference</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>Form</p></td> <td width=76 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px> <p style=MARGIN:0px align=center>Filing&nbsp;Date</p></td> <td width=62 style=MARGIN-TOP:0px> <p style=MARGIN:0px align=center>Exhibit&nbsp;No.</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>4.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Technest Common Stock Warrant issued to Mr. Albert Friesen dated February 10, 2012</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>10.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Industrial Lease Agreement among Technest Holdings, Inc., Technest, Inc. and PS Business Parks, L.P. dated December 7, 2011.</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>8-K</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>December 13, 2011</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>10.1</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>10.2</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Loan Agreement dated February 10, 2012 between Technest Holdings, Inc. and Albert Friesen</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>10.3</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>Promissory Note dated February 10, 2012 payable to Mr. Friesen</p></td> <td width=97 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=97 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>10.4</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Promissory Note dated February 10, 2012 payable to Southridge Partners II, LP</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>31.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Certification by CEO of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a).&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>31.2</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Certification by PFO of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a).&nbsp;</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr> <tr> <td width=48 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>32.1</p></td> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px>Certification by CEO and PFO of Periodic Report Pursuant to 18 U.S.C. Section 1350.</p></td> <td width=97 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px align=center>X</p></td> <td width=41 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=76 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=62 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td></tr></table> <p style=MARGIN:0px align=center><br></p> <p style="MARGIN:0px; FONT-SIZE:12pt" align=center>40</p> <p style=MARGIN:0px align=center><br></p> <p style=MARGIN:0px align=center><br><br></p></div></a></body>
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<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>2
<FILENAME>tn_ex4z1.htm
<DESCRIPTION>WARRANT TO PURCHASE COMMON STOCK
<TEXT>
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<TITLE>THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE <font style='font-family:Arial Unicode MS,Times New Roman'>&#8220;</font>ACT<font style='font-family:Arial Unicode MS,Times New Roman'>&#8221;</font>), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGIS</TITLE>
<META NAME="author" CONTENT="Suzette O'Connor">
<META NAME="date" CONTENT="02/13/2012">
</HEAD>
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<DIV style="width:697.933px"><P style="margin:0px"><BR></P>
<P style="margin:0px" align=justify>THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;ACT&#148;), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=center><B>TECHNEST HOLDINGS, INC.</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><B>WARRANT TO PURCHASE COMMON STOCK</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt" align=justify>This certifies that, for value received, Albert Friesen (the &#147;<U>Holder</U>&#148;) is entitled to subscribe for and purchase up to<B> Five Hundred Thousand (500,000)</B> shares (subject to adjustment from time to time pursuant to the provisions of Section 5 hereof) of fully paid and nonassessable Common Stock of &nbsp;Technest Holdings, Inc., a Nevada corporation (the &#147;<U>Company</U>&#148;), at the Warrant Price (as defined in Section 2 hereof), subject to the provisions and upon the terms and conditions hereinafter set forth.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt" align=justify>As used herein, the term &#147;<U>Common Stock</U>&#148; shall mean the Company&#146;s Common Stock, $.001<B> </B>par value per share, and any stock into or for which such Common Stock may hereafter be converted or exchanged.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Term of Warrant</U>. &nbsp;The purchase or conversion right represented by this warrant (hereinafter the &#147;<U>Warrant</U>&#148;) is exercisable, in whole or in part at any time during the period commencing on the date hereof and continuing until the fifth anniversary hereof.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">2.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Warrant Price</U>. &nbsp;The initial exercise price of this Warrant shall be equal to $0.01 per share, subject to adjustment from time to time pursuant to the provisions of Section 5 hereof (the &#147;<U>Warrant Price</U>&#148;). </P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">3.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Method of Exercise or Conversion; Payment; Issuance of New Warrant.</U></P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Exercise</U>. &nbsp;Subject to Section 1 hereof, the purchase right represented by this Warrant may be exercised by the Holder hereof, in whole or in part, by the surrender of this Warrant (with the notice of exercise form attached hereto as <U>Exhibit 1</U> duly executed) at the principal office of the Company and (i) by the payment to the Company, by check or wire transfer, of an amount equal to the then applicable Warrant Price per share multiplied by the number of shares then being purchased; or (ii) by exercise of the Conversion Right under paragraph (b) below. &nbsp;The Company agrees that the shares so purchased shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment (or exercise of the Conversion Right) made for such shares as aforesaid. &nbsp;In the event of any exercise of this Warrant and, &nbsp;in any event, certificates for the shares of stock so purchased shall be delivered promptly to the Holder hereof (and, in any event, within 15 days thereafter) and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the shares, if any, with respect to which this Warrant shall not then have been exercised, shall also be issued promptly to </P>
<P style="margin:0px; clear:left" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center>1</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; padding-left:48px; font-size:12pt; page-break-before:always" align=justify>the Holder hereof (and, in any event, within fifteen (15) days).</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Conversion</U>. &nbsp;Subject to Section 1 hereof, the Holder may convert this Warrant (the &#147;<U>Conversion Right</U>&#148;), in whole or in part, into the number of shares of Common Stock of the Company calculated pursuant to the following formula by surrendering this Warrant (with the notice of exercise form attached hereto as <U>Exhibit 1</U> duly executed) at the principal office of the Company specifying the number of shares of Common Stock of the Company, the rights to purchase which the Holder desires to convert:</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=27.933 /><TD width=48.867 /><TD width=69.8 /><TD width=272.067 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=27.933><P style="margin:0px; font-size:12pt">X</P>
</TD><TD style="margin-top:0px" valign=top width=48.867><P style="margin:0px; font-size:12pt">=</P>
</TD><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; font-size:12pt" align=center><U>Y (A - B)</U></P>
</TD><TD style="margin-top:0px" valign=top width=272.067><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=27.933><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=48.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; font-size:12pt" align=center>A</P>
</TD><TD style="margin-top:0px" valign=top width=272.067><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=55.867 /><TD width=111.667 /><TD width=34.867 /><TD width=34.867 /><TD /></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; font-size:12pt" align=justify>where:</P>
</TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>X</P>
</TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>=</P>
</TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=justify>the number of shares of Common Stock to be issued to the Holder;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>Y</P>
</TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>=</P>
</TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=justify>the number of shares of Common Stock subject to this Warrant for which the Conversion Right is being exercised;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>A</P>
</TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>=</P>
</TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=justify>the fair market value of one share of Common Stock; and</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=55.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=111.667><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>B</P>
</TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt" align=justify>=</P>
</TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=justify>the Warrant Price.</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=justify>As used herein, the fair market value of a share of Common Stock with respect to each share of Common Stock means (a) the average of the Closing Bid Prices per share of the Common Stock on the OTC Bulletin Board or other principal stock exchange or quotation system on which the Common Stock is then listed or quoted for the five Trading Days immediately prior to the delivery of this Warrant to the Company together with the Notice of Exercise, or (b) if the Common Stock is not listed then on the OTC Bulletin Board or any stock exchange or quotation system, the average of &nbsp;the Closing Bid Prices for a share of Common Stock in such other over-the-counter market, as reported by the Nasdaq Stock Market or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices for the five Trading Days immediately prior to the delivery of this Warrant to the Company together with the Notice of Exercise, or (c) if the Common Stock is not then reported by the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices, then the average of the &quot;Pink Sheet&quot; quotes as determined in good faith by the Board of Directors for the five Trading Days immediately prior to the delivery of this Warrant to the Company together with the Notice of Exercise, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined in good faith by the Board of Directors. &#147;Closing Bid Price&#148; shall mean the closing bid price (as reported by Bloomberg L.P.) of the Common Stock on the OTC Bulletin Board or such other exchange or trading facility on which the Common Stock is traded. &#147;Trading Day&#148; shall mean (a) a day on which the Common Stock is traded on the OTC Bulletin Board or other stock exchange or market on which the Common Stock has been listed, or (b) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices).</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=center>2</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px; font-size:12pt">The Company agrees that the shares so converted shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered as aforesaid. &nbsp;In the event of any conversion of this Warrant, certificates for the shares of stock so converted shall be delivered promptly to the holder hereof (and, in any event, within 15 days thereafter) and, unless this Warrant has been fully converted or expired, a new Warrant representing the portion of the shares, if any, with respect to which this Warrant shall not then have been converted, shall also be issued promptly to the holder hereof (and, in any event, within fifteen (15) days).</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">4.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Stock Fully Paid; Reservation of Shares</U>. &nbsp;All Common Stock which may be issued upon the exercise or conversion of this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. &nbsp;During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issuance upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. &nbsp;</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">5.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Adjustment of Purchase Price and Number of Shares</U>. &nbsp;The kind of securities purchasable upon the exercise of this Warrant, the Warrant Price and the number of shares purchasable upon exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events as follows:</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Reclassification, Consolidation or Merger</U>. &nbsp;In case of any reclassification, recapitalization, reorganization or change of outstanding securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any consolidation or merger of the Company with or into another corporation, other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant, or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall execute a new Warrant, providing that the Holder of this Warrant shall have the right to exercise suc h new Warrant and procure upon such exercise, in lieu of each share of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, recapitalization, reorganization, change, consolidation, or merger by a holder of one share of Common Stock. &nbsp;Such new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5. &nbsp;No consolidation or merger of the Company with or into another corporation referred to in the first sentence of this paragraph (a) shall be consummated unless the successor or purchasing corporation referred to above shall have agreed to issue a new Warrant as provided in this Section 5. &nbsp;The provisions of this subsection (a) shall similarly apply to successive reclassification, changes, consolidations, mergers and transfers.</P>
<P style="margin:0px; clear:left" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center>3</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Subdivision or Combination of Shares</U>. &nbsp;If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the Warrant Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Stock Dividends</U>. &nbsp;If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in, or make any other distribution with respect to Common Stock (except any distribution specifically provided for in the foregoing subparagraphs (b) or (c)) of, Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution and (b) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Cash Dividends and Distributions.</U> &nbsp;If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, any cash, stock, other securities or property, the holder hereof shall, upon the exercise of this Warrant, receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of cash, stock, other securities and property which such holder would have received had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such cash, stock, other securities and property.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(e)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Adjustment of Number of Shares</U>. &nbsp;Upon each adjustment in the Warrant Price pursuant to any of Sections 5 (a) through (c), the number of shares of Common Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">6.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Notice of Adjustments</U>. &nbsp;Whenever any Warrant Price shall be adjusted pursuant to Section 5 hereof, the Company shall prepare a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, the Warrant Price after giving effect to such adjustment and the number of shares then purchasable upon exercise of this Warrant, and shall cause copies of such certificate to be mailed (by first class mail, postage prepaid) to the holder of this Warrant at the address specified in Section 10(d) hereof, or at such other address as may be provided to the Company in writing by the holder of this Warrant.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">7.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Fractional Shares</U>. &nbsp;No fractional shares of Common Stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>4</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">make a cash payment therefor upon the basis of the Warrant Price then in effect.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Compliance with the Act</U>. &nbsp;The holder of this Warrant, by acceptance hereof, agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired for investment for such holder&#146;s own account and not with a view toward distribution thereof, and that it will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock to be issued upon exercise hereof unless this Warrant has been registered under the Act and applicable state securities laws or registration under applicable state securities laws is not required and (ii) if reasonably requested by the Company, an opinion of counsel reasonably satisfactory to the Company is furnished to the Company to the effect that registration under the Act is not required.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">9.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Transfer of Warrant</U>. This Warrant may be transferred to or succeeded by any person; <U>provided</U>, <U>however</U>, that the Company is given prior written notice by the transferee at the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned; <U>provided</U>, <U>further</U> that the transferee shall not be deemed to be a competitor of the Company. </P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">10.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify><U>Miscellaneous</U>.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>No Rights as Shareholder</U>. &nbsp;Except as provided in the Agreement, no holder of the Warrant or Warrants shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant or Warrants shall have been exercised and the shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Replacement</U>. &nbsp;On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu of this Warrant, a new Warrant of like tenor.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Notice of Capital Changes</U>. &nbsp;In case:</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(i)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:12pt" align=justify>the Company shall declare any dividend or distribution payable to the holders of its Common Stock;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(ii)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:12pt" align=justify>there shall be any capital reorganization or reclassification of the capital stock of the Company (other than for purposes of a change in domicile), or</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>5</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px; padding-left:96px; font-size:12pt" align=justify>consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or business organization in which the holders of the Company&#146;s voting securities before the transaction beneficially own less than 50% of the voting securities of the surviving entity; or</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(iii)</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:12pt">there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; padding-left:48px; font-size:12pt" align=justify>then, in any one or more of said cases, the Company shall give the holder of this Warrant written notice, in the manner set forth in subparagraph (d) below, of the date on which a record shall be taken for such dividend, or distribution or for determining stockholders entitled to vote upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and of the date when any such transaction shall take place, as the case may be. &nbsp;Such written notice shall be given at least 10 days prior to the transaction in question and not less than 10 days prior to the record date in respect thereof.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:138px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Notice</U>. &nbsp;Any notice given to either party under this Warrant shall be in writing, and any notice hereunder shall be deemed to have been given upon the earlier of delivery thereof by hand delivery, by courier, or by standard form of telecommunication or three (3) business days after the mailing thereof if sent registered mail with postage prepaid, addressed to the Company at its principal executive offices and to the holder at its address set forth in the Company&#146;s books and records or at such other address as the holder may have provided to the Company in writing.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(e)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Governing Law</U>. &nbsp;This Warrant shall be governed by and construed under the laws of the State of Delaware.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:138px; font-size:12pt; float:left">(f)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Issue Tax</U>. &nbsp;The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made without charge to the holder of the Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then holder of the Warrant being exercised.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:138px; font-size:12pt; float:left">(g)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Amendments and Waiver</U>. Any term of this Warrant may be amended or waived only with the written consent of the Company and by the holder of the Warrant. &nbsp;In the event that such required consent is obtained, such amendment or waiver shall be binding on the holder of this Warrant and such holders&#146; assigns. &nbsp;Any such waiver of a breach of any provision of this Warrant shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Warrant.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(h)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify><U>Legend</U>. &nbsp;Certificates for shares of Common Stock delivered to the holder shall bear the following legend or a legend in substantially similar form<FONT style="font-size:10pt">:</FONT></P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; padding-left:96px; font-size:12pt" align=justify>&#147;THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>6</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px; padding-left:96px; font-size:12pt" align=justify>OTHER SECURITIES LAWS. &nbsp;THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE. &nbsp;SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE SECURITIES LAWS, UNLESS THE HOLDER SHALL HAVE OBTAINED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.&#148;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; padding-left:48px; font-size:12pt" align=justify><B>IN WITNESS WHEREOF</B>, this Warrant is executed as of this 10<SUP>th</SUP> day of February, 2012.</P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=314.067 /><TD /></TR>
<TR><TD style="margin-top:0px" valign=top width=314.067><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt">Technest Holdings, Inc.</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=46.667 /><TD width=275.267 /><TD width=65.867 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=46.667><P style="margin:0px; font-size:12pt">By:</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=275.267><P style="margin:0px; font-size:12pt">/s/ Shekhar Wadekar</P>
</TD><TD style="margin-top:0px" valign=top width=65.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=46.667><P style="margin:0px; font-size:12pt">Name:&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=275.267><P style="margin:0px; font-size:12pt">Shekhar Wadekar</P>
</TD><TD style="margin-top:0px" valign=top width=65.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=46.667><P style="margin:0px; font-size:12pt">Title:</P>
</TD><TD style="margin-top:0px" valign=top width=275.267><P style="margin:0px; font-size:12pt">Chief Executive Officer</P>
</TD><TD style="margin-top:0px" valign=top width=65.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>7</P>
<P style="margin:0px" align=right><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=right><BR></P>
<P style="margin:0px; font-size:12pt" align=right><B>EXHIBIT 1</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center><B>NOTICE OF EXERCISE</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:12pt; float:left">TO:</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt">Technest Holdings, Inc.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>Check Box that Applies:</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">__</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>The undersigned hereby elects to purchase <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;shares of Common Stock of Technest Holdings, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">__</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>The undersigned hereby elects to convert the attached warrant into _________ shares of Common Stock of Technest Holdings, Inc. pursuant to the terms of the attached Warrant.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">2.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=139.6 /><TD /><TD width=139.6 /></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=center>(Name)</P>
</TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=center>(Address)</P>
</TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">3.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=348.933 /><TD /></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt">Signature</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>8</P>
<P style="margin:0px" align=center><BR>
<BR></P>
</DIV></BODY>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>tn_ex10z2.htm
<DESCRIPTION>LOAN AGREEMENT
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>LOAN AGREEMENT</TITLE>
<META NAME="author" CONTENT="Suzette O'Connor">
<META NAME="date" CONTENT="02/13/2012">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
<DIV style="width:697.933px"><P style="margin:0px" align=right><BR></P>
<P style="margin:0px; font-size:12pt" align=center>LOAN AGREEMENT</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">This Loan Agreement (the &#147;Agreement&#148;), effective as of February 10, 2012 (the &#147;Effective Date&#148;), is entered into by and among Technest Holdings, Inc., a Nevada corporation (the &#147;Company&#148;); and Albert Friesen (collectively, the &#147;Lenders&#148; and individually, a &#147;Lender&#148;).</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center><U>PRELIMINARY STATEMENT</U></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">WHEREAS, the Company has requested that the Lenders make loans to the Company in the aggregate principal amount of $50,000; and</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">WHEREAS, the Lenders are willing to make such loans under the terms and conditions set forth in this Agreement.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">NOW, THEREFORE, in consideration of the premises and promises set forth in this Agreement, the parties hereto agree as follows:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>1. &nbsp;The Loans</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>The Loans</U>. &nbsp;Subject to the terms and conditions of this Agreement and the prior satisfaction of the conditions precedent set forth in Section 5 hereof, each Lender agrees to make loans (collectively, the &#147;Loans&#148; and individually a &#147;Loan&#148;) in an aggregate principal amount set forth opposite the name of each Lender on <U>Exhibit A</U> hereto (each such amount being hereinafter referred to as such Lender&#146;s &#147;Commitment&#148;) to the Company at the Closing (as defined). The closing shall take place at the offices of the Company at 10:00 a.m., local time, on February 10, 2012, or at such other location, date and time as many be agreed upon between the Company and the Lenders (the &#147;Closing&#148;).</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.2</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>The Notes</U>. &nbsp;The Loans made by the Lenders shall each be evidenced by a unsecured convertible promissory note of the Company (collectively, the &#147;Notes&#148; and individually, a &#147;Note&#148;) in principal face amount of each Loan, payable to the order of each Lender and otherwise substantially in the form attached hereto as <U>Exhibit B</U>.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.3</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Interest</U>. &nbsp;The Company will pay interest on the unpaid principal balance of each Loan, accrued from the date such Loan is first made hereunder, until the principal amount thereof is paid in full, at a rate of 5% per annum and in accordance with such other terms specified in the Notes. Interest shall be computed on the basis of a 365-day year for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. At the option of the Company, the accrued interest shall be paid in either cash or Common Stock as provided in Section 1.4. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.4</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Principal and Interest Repayment</U>. &nbsp;The outstanding principal balance of the Notes, together with all accrued and unpaid interest thereon, shall be payable in full on the earlier to occur of (i) &nbsp;August 10, 2012 (the &#147;Maturity Date&#148;), (ii) the occurrence of an Event of Default (defined herein), or (iii) the occurrence of a Change of Control (defined herein) (collectively, the &#147;Due Date&#148;); provided that the Company shall extend the Maturity Date with the written consent </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>1</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; font-size:12pt; page-break-before:always">of at least the holders of a majority of the principal amount of the Notes then outstanding (the &#147;Majority Holders&#148;). If the Company elects to pay the all or a portion of the accrued interest in shares of Common Stock, the number of shares of Common Stock of the Company to be issued to the Lenders shall be determined by dividing (i) the unpaid accrued interest on the Notes being converted by (ii) the Per Share Market Price (defined herein) on the Trading Day immediately prior to the Due Date; provided the Per Share Market Price shall not be less than $0.01 per share.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>2. &nbsp;Conversion</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">2.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Conversion at Option of Lender</U>. &nbsp;At the option of the Majority Holders, the entire outstanding principal amount of the Notes shall be convertible upon surrender to, and cancellation thereof by, the Company into shares of Common Stock, at any time and from time to time, from and after the issuance of the Notes determined by dividing (i) the entire outstanding principal amount of the Notes by (ii) the Per Share Market Price (defined below) on the Trading Day (defined below) immediately prior to the Company&#146;s receipt of the Conversion Notice (defined below); provided in no event shall the Per Share Market Price be less than $0.01 per share. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">2.2.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Conversion on the Event of Default or Change of Control</U>. &nbsp;If (i) an Event of Default (defined herein) has occurred and remains uncured beyond any applicable cure period, or (ii) a Change of Control has occurred, and the Majority Holders elect to convert all amounts due under the Notes, then, upon notice to the Company of such election and upon surrender to, and cancellation thereof by, the Company, the entire outstanding principal amount shall be converted into the number of shares of Common Stock of the Company determined by dividing &nbsp;(i) the entire outstanding principal amount of the Notes by (ii) the Per Share Market Price on the Trading Day immediately prior to the Company&#146;s receipt of the Conversion Notice; provided the Per Share Market Price shall not be less than $0.01 per share.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">2.3</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Mechanics and Effect of Conversion</U>. &nbsp;The conversion of the outstanding principal amount of the Notes is subject to the following provisions:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">A Lender shall effect a conversion by surrendering to the Company or its transfer agent the original Note(s), duly endorsed, together with a completed form of conversion notice attached hereto as <U>Exhibit &nbsp;C</U> (the &#147;Conversion Notice&#148;). &nbsp;Each Conversion Notice shall specify the principal amount to be converted and once given, shall be irrevocable. Not later than five (5) Trading Days after the Company&#146;s receipt of the Conversion Notice, the Company will deliver to the Lender a certificate or certificates representing the number of shares of Common Stock being issued upon the conversion of the outstanding principal amount of the Notes. &nbsp;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of outstanding principal amount and unpaid accrued interest on the Notes, as herein provided, free from preemptive rights or any other actual or contingent purchase rights of persons other than the Lenders, not less than 100% of such number of shares of Common Stock as shall be issuable upon the conversion of the Notes hereunder. &nbsp;The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issuance, be duly and validly </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>2</P>
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<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">authorized, issued and fully paid and nonassessable.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>&nbsp;Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted and unless waived by the Lender, make a cash payment in respect of any final fraction of a share based on the Per Share Market Price at such time. &nbsp;If the Company elects not, or is unable, to make such cash payment, the Lender shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>The issuance of certificates for shares of Common Stock on conversion of the Notes shall be made without charge to the Lenders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Lender of the Notes so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(e)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">Upon conversion of the Notes, the Company will be forever released from all of its obligations and liabilities under the Notes with regard to that portion of the principal amount and accrued interest being converted including, without limitation, the obligation to pay such portion of the principal amount and accrued interest.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">2.4</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Definitions</U>. &nbsp;For the purposes hereof, the following terms shall have the following meanings: </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>&#147;Business Day&#148; means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&#147;Change of Control&#148; shall mean any one of the following events:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(i)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify>the acquisition by any &#147;person&#148; (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934) of any amount of the Company&#146;s Common Stock so that it holds or controls fifty percent (50%) or more of the Company&#146;s Common Stock; </P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(ii)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt" align=justify>a merger or consolidation after which fifty percent (50%) or more of the voting stock of the surviving corporation is held by persons who were not stockholders of the Company immediately prior to such merger or consolidation; </P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(iii)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt">the sale or disposition by the Company of all or substantially all of the Company&#146;s assets to an entity in which immediately after such sale or disposition, the Company&#146;s stockholders hold less than 50% of the combined voting power of such entity&#146;s outstanding securities; </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; padding-left:48px; font-size:12pt" align=center>3</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(iv)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt">such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term &#147;Continuing Director&#148; means a member of the Board who was a member of the Board on the date of the execution of this Agreement; or</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:144px; width:192px; font-size:12pt; float:left">(v)</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt">approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>&#147;Closing Bid Price&#148; shall mean the closing bid price (as reported by Bloomberg L.P.) of the Common Stock on the OTC Bulletin Board or such other exchange or trading facility on which the Common Stock is traded.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt" align=justify>&#147;Common Stock&#148; means the common stock, $.001 par value per share, of the Company, and stock of any other class into which such shares may hereafter have been reclassified or changed.</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">(e)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&#147;Per Share Market Price&#148; means on any particular date (a) the Closing Bid Price per share of the Common Stock on such date on the OTC Bulletin Board or other principal stock exchange or quotation system on which the Common Stock is then listed or quoted or if there is no such price on such date, then the Closing Bid Price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on the OTC Bulletin Board or any stock exchange or quotation system, the Closing Bid Price for a share of Common Stock in such other over-the-counter market, as reported by the Nasdaq Stock Market or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices at the close of business on such date, or (c) if the Common Stock is not then reported by the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices, then the &quot;Pink Sheet&quot; quotes for the relevant date, as determined in good faith by the Board of Directors, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined in good faith by the Board of Directors.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">(f)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&#147;Trading Day&#148; means (a) a day on which the Common Stock is traded on the OTC Bulletin Board or other stock exchange or market on which the Common Stock has been listed, or (b) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices).</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; padding-left:192px; text-indent:48px; font-size:12pt">3. &nbsp;Warrants</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">3.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Issuance.</U> Subject to the terms and conditions of this Agreement and the prior satisfaction of the conditions precedent set forth in Section 5 hereof, the Company agrees to issue and deliver warrants for the purchase of Common Stock, par value $0.001, of the Company, in substantially the form attached as <U>Exhibit D</U> hereto (collectively, the &#147;Warrants&#148; and individually, a &#147;Warrant&#148;), to each Lender for such number of shares of Common Stock as are </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>4</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">set forth opposite the name of each Lender on <U>Exhibit A</U> hereto. The issuance of the Warrants shall take place on the Closing.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>4. &nbsp;Representations and Warranties</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">4.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Representations and Warranties of the Company</U>. &nbsp;The Company hereby represents and warrants that:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Organization, Standing</U>. &nbsp;The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Nevada, is duly qualified and authorized to do business in every jurisdiction in which the failure to be so qualified could reasonably be expected to have a material adverse effect on the assets, liabilities, condition (financial or other), business, results of operations or prospects of the Company (a &#147;Material Adverse Effect&#148;), and has the requisite power and authority necessary to own its assets, carry on its business and enter into and perform its obligations under this Agreement, the Notes, the Warrants and all other documents, agreements or instruments entered into as defined in connection therewith (collectively, the &#147;Loan Documents&#148; and individually a &#147;Loan Document&#148;).</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Corporate Authority, Etc</U>. &nbsp;The execution, delivery and performance of the Loan Documents are within the Company&#146;s power and authority and have been duly authorized by all necessary action. &nbsp;The making and performance of the Loan Documents do not and under present law will not require any consent or approval of any of the Company&#146;s shareholders or any other person, do not and will not under present law violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to the Company, do not violate any provision of the Company&#146;s Articles of Incorporation or bylaws, do not and will not result in any breach of any material agreement, lease or instrument to which the Company is a party or by which the Company or any of its assets are bound and which could reasonably be expected to have a Material Adverse Effect, and do not and will not give rise to any lien or charge upon any of the Company&#146;s assets.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Validity of Documents</U>. &nbsp;Each Loan Document, when executed and delivered, will be the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as the enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors&#146; rights. &nbsp;No authorization, consent, approval, license, exemption of or filing or registration with any court, governmental agency or other tribunal, or any third party is or under present law will be necessary to the validity or performance by the Company of any Loan Document.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Capitalization</U>. &nbsp;The authorized capital stock of the Company consists of (i) 495,000,000 shares of Common Stock, par value $.001 per share, of which 120,279,296 are issued and outstanding, fully paid and non-assessable and (ii) 5,000,000 shares of Preferred Stock, par value $.001 per share, 300 of which have been designated as Series E 5% Convertible Preferred Stock and are issued and outstanding, fully paid and non-assessable, with 3,850,125 shares of Preferred Stock available for future issuance. &nbsp;As of the date hereof, the 300 shares of Series E 5% Convertible Preferred Stock are convertible into 6,754,173 shares of Common </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>5</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">Stock. As of the date hereof, Technest has issued options to purchase 45,720,000 shares of Technest Common Stock under its 2011 Equity Incentive Plan (the &#147;Technest Equity Plan&#148;), with 4,280,000 shares of Technest Common Stock available for future grants under the Technest Equity Plan. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(e)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>SEC Filings</U>. &nbsp;Each report, schedule, registration statement and definitive proxy statement filed by the Company with the Securities and Exchange Commission (the &#147;Commission&#148;) under the Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), since January 1, 2009 is available on EDGAR (as such documents have since the time of their filing been amended, the &#147;Information Documents&#148;), which are all the documents (other than preliminary material) that the Company was required to file with the Commission since such date. &nbsp;Except as disclosed to the Lenders, as of their respective dates, the Information Documents complied in all material respects with &nbsp;the requirements of the Exchange Act and the rules and regulations of the Commission thereunder applicable to the Information Documents, and none of the Information Documents contained at the time they were filed, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. &nbsp;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:102px; width:144px; font-size:12pt; float:left">(f)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Financial Statements</U>. &nbsp;Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Information Documents (the &#147;Technest Financials&#148;), (i) complied as to form in all material respects with the published rules and regulations of the Securities and Exchange Commission (&#147;SEC&#148;) with respect thereto, (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 10-Q, 8-K or any successor form under the Exchange Act and except that unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end audit adjustments which will not, individually or in the aggregate, be material in amount) and (iii) fairly presented in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as at the respective dates thereof and the consolidated results of the Company&#146;s operations and cash flows for the periods indicated (subject in the case of any unaudited financial statements to normal and recurring year-end adjustments). &nbsp;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">4.2</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Representations and Warranties of Lenders</U>. &nbsp;Each Lender represents and warrants to the Company that it:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(a) is an &#147;accredited investor&#148; as such term is defined in Rule 501 under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;).</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(b) is acquiring the Notes and Warrants for its own account for investment only and not with a view to the distribution or public offering thereof within the meaning of the Securities Act.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(c) understands that the Notes and Warrants are being, and the shares of the Company&#146;s Common Stock issuable upon the conversion of the Notes and/or exercise of the Warrants (the &#147;Conversion Shares&#148;) will be, upon such conversion or exercise, to it in reliance </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>6</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Lender&#146;s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Lender set forth herein in order to determine the availability of such exemptions and the eligibility of the Lender to acquire the Notes and Warrants.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(d) understands that the Notes and Warrants have not been and are not being, and the Conversion Shares will not be, upon such conversion or exercise will not be, registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (i) subsequently registered thereunder, (ii) the Lender shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that the Notes, Warrants or Conversion Shares may be sold, assigned or transferred pursuant to an exemption from such registration, or (iii) the Notes, Warrants or Conversion Shares can be sold, assigned or transferred pursuant to Rule 144 promulgated under the Securities Act (or a successor rule thereto).</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(e) is aware of the provisions of Rule 144 promulgated under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, (i) the availability of certain current public information about the Company, (ii) the resale occurring following the required holding period under Rule 144 and (iii) the number of shares being sold during any three-month period not exceeding specified limitations.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(f) if the Lender is not a United States person (as defined by Section 7701(a)(30) of the U.S. Internal Revenue Code), hereby represents that Lender is satisfied as to the full observance of the laws of its jurisdiction in connection with any invitation to acquire the Notes, the Warrants and the Conversion Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the acquisition of the Notes, Warrants and Conversion Shares, (ii) any foreign exchange restrictions applicable to such issuance, (iii) any government or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the acquisition, holding, redemption, sale or transfer of the Notes, the Warrants and the Conversion Shares. &nbsp;The Company&#146;s issuance and Lender&#146;s acquisition and continued ownership of the Notes, the Warrants and the Conversion Shares will not violate any applicable securities or other laws of Lender&#146;s jurisdiction.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(g) has received, has had ample opportunity to review and has reviewed, a copy of this Agreement and such other documents and information as it has deemed appropriate to make its own analysis and decision to enter into this Agreement. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(h) has, in connection with such Lender&#146;s decision to acquire the Notes and the Warrants, not relied upon any representations or other information (whether oral or written) other than as set forth in the representations and warranties of the Company contained herein.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(i) has had an opportunity to discuss (i) the Company&#146;s business, management and financial affairs with directors, officers and management of the Company and (ii) this investment with representatives of the Company and ask questions of them and such questions have been answered to such Lender&#146;s full satisfaction.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>7</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(j) &nbsp;if Lender is an individual, then Lender resides in the state or province identified in the address of Lender set forth on Exhibit A; if Lender is a partnership, corporation, limited liability company or other entity, then the office or offices of Lender in which its investment decision was made is located at the address or addresses of Lender set forth on Exhibit A.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(k) has the requisite power and authority, and in the case of any Lender that is a natural person, is competent, to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to comply with the provisions of this Agreement. &nbsp;The execution, delivery and performance of this Agreement by the Lender, the consummation by the Lender of the transactions contemplated hereby and the compliance by the Lender with the provisions of this Agreement have been duly authorized by all necessary action on the part of the Lender, and no other action or proceeding on the part of the Lender is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. &nbsp;This Agreement has been duly executed and delivered by the Lender and, assuming due execution and delivery by the Company, constitutes the valid and binding obligations of the Lender, enforceable against such Lender in accordance with its terms.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>5. &nbsp;Conditions Precedent</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">5.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>The Loans</U>. &nbsp;The obligation of the Lenders to make each Loan is conditioned upon the following:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Notes</U>. With respect to each Loan set forth on <U>Exhibit A</U> hereto, the Lenders shall have received the Notes duly executed and delivered by the Company.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Warrants.</U> With respect to each Loan set forth on <U>Exhibit A</U> hereto, the Lenders shall have received the Warrants duly executed and delivered by the Company.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>No Default</U>. &nbsp;Immediately after giving effect to each Loan, no Event of Default (as defined in Section 6.1), or condition which with the giving of notice and/or passage of time, or both, would constitute an Event of Default, shall exist.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Secretary&#146;s Certificate</U>. &nbsp;The Lenders shall have received a certificate of the secretary or assistant secretary of the Company certifying (i) as to true and correct copies of the Company&#146;s Articles of Incorporation, bylaws and authorizing resolutions, and (ii) as to the name, title and specimen signature of the authorized officers executing this Agreement and any Note and Warrant.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>6. &nbsp;Default</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">6.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Events of Default</U>. &nbsp;The Company shall be in default if any one or more of the following events (each an &#147;Event of Default&#148;) occurs:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Payments</U>. &nbsp;The Company fails to pay the principal of or interest on any Note when due and payable, or any other amount payable under any Note and such failure continues for ten (10) Business Days after receipt of written notice thereof from the Majority Holders.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>8</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Bankruptcy</U>. &nbsp;The Company generally fails to pay its debts as its debts become due, is dissolved or liquidated, makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any receiver or trustee, commences any proceeding relating to itself under any bankruptcy, reorganization, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, has commenced against it any such proceeding which remains undismissed for a period of ninety (90) days, or indicates its consent to, approval of or acquiescence in any such proceeding, or any receiver of or trustee for the Company or any substantial part of the property of the Company is appointed, or if any such receivership or trusteeship continues undischarged for a period of ninety (90) days.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Covenants</U>. &nbsp;The Company fails to observe or perform any term, condition or covenant contained in the Loan Documents, and such failure continues for thirty (30) Business Days after receipt of written notice thereof from the holders of a majority of the principal amount of the Notes then outstanding.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Misrepresentations</U>. &nbsp;Any representation made by the Company herein shall have been incorrect in any material respect when made.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">6.2</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Termination upon Default</U>. &nbsp;In every event set forth in subsections 6.1(a)-(d) above, upon the written notice of the Lenders the outstanding principal amount of and any unpaid accrued interest on the Notes shall, at the option of the Majority Holders, (a) become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company or (b) be converted pursuant to Section 2.2 above. Upon the occurrence of an Event of Default, the Company hereby agrees to pay all reasonable costs which may be incurred by the Lenders in enforcing their rights under the Loan Documents.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>7. Change of Control</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">7.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Termination upon Change of Control</U>. In the event of a Change of Control, upon written notice by the Company of the occurrence thereof to the Lenders, the outstanding principal amount of and any unpaid accrued interest on the Notes shall, at the option of the Majority Holders, (a) become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company or (b) be converted pursuant to Section 2.2 above.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>8. Registration Right</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Piggyback Registration Right</U>. The Lenders shall be entitled to one piggyback registration statement right as more fully described in <U>Exhibit E</U> attached hereto.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>8. &nbsp;Miscellaneous</P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.1</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Amendments</U>. &nbsp;No amendment, modification, termination or waiver of this Agreement or any provision hereof nor any consent to any departure by the Company herefrom shall be effective unless the same is in writing and signed by each Lender and the Company and </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>9</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided however that this Agreement may be amended without the consent of any of the Lenders for the inclusion of additional parties whom will make loans to the Company pursuant to the terms and conditions of this Agreement and whom shall be deemed &#147;Lenders&#148; hereunder.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.2</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Governing Law</U>. &nbsp;This Agreement and all rights and obligations of the parties hereunder shall be governed by and be construed and enforced in accordance with the laws of the State of Delaware without regard to Delaware or federal principles of conflict of laws.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.3</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Notices</U>. &nbsp;All notices, requests, demands, directions, declarations and other communications between the Lenders and the Company provided for in this Agreement, except as otherwise expressly provided, shall be mailed by registered or certified mail, return receipt requested, or by overnight courier or telegraphed, or faxed, or delivered in hand to the applicable party at its address indicated opposite its name on the signature pages hereto. &nbsp;The foregoing shall be effective and deemed received three days after being deposited in the mails, postage prepaid, addressed as aforesaid and shall whenever sent by telegram, telegraph or fax delivered in hand, or by overnight courier be effective when sent. &nbsp;Any party may change its address by a communication in accordance herewith.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.4</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Severability</U>. &nbsp;The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Agreement shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Agreement or of such provision or obligation in any other jurisdiction.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.5</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Counterparts</U>. &nbsp;This Agreement and any amendment hereto or waiver hereof may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.6</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Entire Agreement</U>. &nbsp;The Loan Documents embody the entire agreement and understanding between the Company and the Lenders and supersede all prior agreements and understandings between the Company and the Lenders relating to the subject matter thereof.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.7</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Expenses</U>. &nbsp;Each party hereto shall be responsible for their own expenses incurred in connection with the preparation, execution and delivery of this Agreement and the Loan Documents and all related instruments and documents executed and delivered in connection herewith. &nbsp;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.9</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>WAIVER OF JURY TRIAL</U>. &nbsp;THE LENDERS AND THE COMPANY HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.10</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Further Assurances</U>. &nbsp;The Company, at its own expense, shall do, make, execute and deliver all such additional and further acts, deeds, assurances, documents, instruments and certificates as the Lenders may reasonably require, including, without limitation, obtaining </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>10</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">governmental and other third party consents and approvals.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.11</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Successors and Assigns</U>. &nbsp;The terms and provisions of this Agreement and the Loan Documents shall be binding upon and inure to the benefit of the Company and the Lenders and their respective successors and assigns, except that any transfer by the Lenders to a non-affiliated entity shall require the written consent of the Company. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.12</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Maximum Rate</U>. &nbsp;All agreements between the Company and the Lenders are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Lenders for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. &nbsp;As used herein, the term &#147;applicable law&#148; shall mean the law in effect as of the date hereof. &nbsp;If, from any circumstance whatsoever, fulfillment of any provision hereof or the Agreement at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if from any circumstances the Lenders should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. &nbsp;This provision shall control every other provision of all agreements between the Company and the Lenders.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed on the date first above written.</P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=348.933 /><TD /></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt"><U>COMPANY</U>:</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt">Technest Holdings, Inc.</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=34.867 /><TD width=314.067 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By:</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; font-size:12pt">/s/ Shekhar Wadekar</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Name: Shekhar Wadekar</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Title: President</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center>11</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=34.867 /><TD width=314.067 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt"><U>LENDERS</U>:</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By: &nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; font-size:12pt">/s/ Albert Friesen</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Name: Albert Friesen</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Title: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt"><U>Address</U>: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By: &nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Name:</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Title: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt"><U>Address</U>: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By: &nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Name:</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Title: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt"><U>Address</U>: &nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center>12</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=34.867 /><TD width=314.067 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By: &nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Name:</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Title: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt"><U>Address</U>: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By: &nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Name:</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt">Title: &nbsp;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=348.933 colspan=2><P style="margin:0px; font-size:12pt"><U>Address:</U> &nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center>13</P>
<P style="margin:0px" align=center><BR>
<BR></P>
<P style="margin:0px; font-size:12pt; page-break-before:always" align=center><U>EXHIBIT A</U></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center><U>LENDERS&#146; COMMITMENTS</U></P>
<P style="margin:0px" align=center><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=69.8 /><TD /><TD width=7 /><TD width=7 /><TD width=139.6 /><TD width=7 /><TD width=7 /><TD width=7 /><TD width=139.6 /><TD width=69.8 /></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom><P style="margin:0px; font-size:12pt" align=center><B>Lender&nbsp;Name&nbsp;and</B></P>
<P style="margin:0px; font-size:12pt" align=center><B>Address</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=146.6 colspan=2><P style="margin:0px; font-size:12pt" align=center><B>Commitment&nbsp;(US&nbsp;$)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=146.6 colspan=2><P style="margin:0px; font-size:12pt" align=center><B>Warrants&nbsp;(Number</B></P>
<P style="margin:0px; font-size:12pt" align=center><B>of&nbsp;Shares&nbsp;of</B></P>
<P style="margin:0px; font-size:12pt" align=center><B>Common&nbsp;Stock)</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=center><U>Albert Friesen</U></P>
</TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; font-size:12pt">$</P>
</TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; font-size:12pt" align=right>50,000</P>
</TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; font-size:12pt" align=right>500,000</P>
</TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt" align=center><U>TOTAL</U></P>
</TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; font-size:12pt">$</P>
</TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; font-size:12pt" align=right>50,000</P>
</TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=7><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=bottom width=139.6><P style="margin:0px; font-size:12pt" align=right>500,000</P>
</TD><TD style="margin-top:0px" valign=bottom width=69.8><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>14</P>
<P style="margin:0px" align=center><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center><B>EXHIBIT C</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px; font-size:12pt" align=center><B>NOTICE OF CONVERSION</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=justify>(To be executed by the registered holder to convert the outstanding principal of the Notes dated February 10, 2012)</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=justify>The undersigned hereby elects, in accordance with the terms and conditions of the Loan Agreement dated February 10, 2012 and the Promissory Note dated February 10, 2012 (the &#147;Note&#148;), to convert the outstanding principal amount of the Note into shares of Common Stock, par value $0.001 per share (the &#147;<U>Common Stock</U>&#148;), of Technest Holdings, Inc. (the &#147;<U>Company</U>&#148;), as of the date written below. &nbsp;If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. &nbsp;No fee will be charged to the undersigned for any conversion, except for such transfer taxes, if any.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=justify>Conversion calculations:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=209.333 /><TD /><TD width=139.6 /></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Date to effect conversion</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Amount of principal to be converted</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Number of shares of Common Stock to be issued</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Applicable conversion price</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Name of Holder</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Address of Holder</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top colspan=2><P style="margin:0px; font-size:12pt">Authorized Signature</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>15</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt" align=center><U>EXHIBIT E</U></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:12pt; float:left"><B>1.</B></P>
<P style="margin:0px; padding-left:48px; text-indent:-2px; font-size:12pt"><B>Piggyback Registration Right</B></P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">1.1<U> Definitions</U>. &nbsp;For purposes of this Section, the following terms shall have the meanings set forth below:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">&nbsp;(a) A &#147;Blackout Event&#148; means any of the following: (a) the possession by the Company of material information that is not ripe for disclosure in a registration statement or prospectus, as determined reasonably and in good faith by the Chief Executive Officer or the Board of Directors of the Company or that disclosure of such information in the Registration Statement or the prospectus constituting a part thereof would be materially detrimental to the business and affairs of the Company; or (b) any material engagement or activity by the Company which would, in the reasonable and good faith determination of the Chief Executive Officer or the Board of Directors of the Company, be materially adversely affected by disclosure in a registration statement or prospectus at such time. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(b) &#147;Included &nbsp;Shares&#148; shall mean any Registrable Shares included in a Registration.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">&nbsp;(c) &#147;Registrable Shares&#148; shall mean the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants and shares or securities issued as a result of stock split, stock dividend or reclassification of such shares.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(d) &#147;Registration&#148; shall mean a registration of securities under the Securities Act. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(e) &#147;Registration Period&#148; with respect to any Registration Statement the period commencing the effective date of the Registration Statement and ending upon withdrawal or termination of the Registration Statement.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:96px; font-size:12pt">(f) &#147;Registration Statement&#148; shall mean the registration statement, as amended from time to time, filed with the Commission in connection with a Registration. </P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.2</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Piggyback Registration</U>. Unless the Registrable Shares can be sold under the provisions of Rule 144 of the Securities Act, if the Company shall determine to register any Common Stock under the Securities Act for sale in connection with a public offering of Common Stock (other than pursuant to an employee benefit plan or a merger, acquisition or similar transaction on Form S-8 or S-4 or their equivalent), the Company will give written notice thereof to the Lenders and will include in such Registration Statement any of the Registrable Shares which Lender may request be included by a writing delivered to the Company within five (5) Business Days after the notice given by the Company to the Lenders; <U>provided</U>, <U>however</U>, that if the offering is to be firmly underwritten, and the representative of the underwriters of the offering refuse in writing to include in the offering all of the shares of Common Stock requested by the Company and others, the shares to be included shall be allocated first to the Company and any shareholder who initiated such Registration and then among the others based on the respective number of shares of Common Stock held by such persons. &nbsp;If the Company decides </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>16</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">not to, and does not, file a Registration Statement with respect to such Registration, or after filing determines to withdraw the same before the effective date thereof, the Company will promptly so inform the Lenders, and will not be obligated to complete the registration of the Registrable Shares included therein. &nbsp;The Company shall not be required to effect more than one Registration pursuant to this Section. &nbsp;The Company will pay all costs and expenses of such registration other than underwriting discounts or brokerage fees or commissions in connection with the sale of the Included Shares and fees and costs of accountants, attorneys or others retained by Lender.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.3</P>
<P style="margin:0px; padding-left:96px; text-indent:-2px; font-size:12pt"><U>Certain Covenants</U>. In connection with any Registration: </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:103px; width:144px; font-size:12pt; float:left">(a)</P>
<P style="margin:0px; padding-left:6px; text-indent:-2px; font-size:12pt">At least three Business Days prior to the filing with the Commission of the Registration Statement (or any amendment thereto) or the prospectus forming a part thereof (or any supplement thereto), the Company shall provide draft copies thereof to the participating Lenders and shall consider incorporating into such documents such comments as the participating Lenders (and its counsel) may propose to be incorporated therein. &nbsp;Notwithstanding the foregoing, no prospectus supplement, the form of which has previously been provided to the participating Lenders, need be delivered in draft form to Lender.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:103px; width:144px; font-size:12pt; float:left">(b)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">The Company shall promptly notify the participating Lenders upon the occurrence of any of the following events in respect of the Registration Statement or the prospectus forming a part thereof: (i) the receipt of any request for additional information from the Commission or any other federal or state governmental authority, the response to which would require any amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; or (iii) the receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:103px; width:144px; font-size:12pt; float:left">(c)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">The Company shall furnish to Lender with respect to the Included Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such number of copies of prospectuses and such other documents as Lender may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Included Shares by Lender pursuant to the Registration Statement.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:103px; width:144px; font-size:12pt; float:left">(d)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">The Company shall bear and pay all expenses incurred by it and Lender (other than underwriting discounts, brokerage fees and commissions and fees and expenses of more than one law firm) in connection with the registration of the Included Shares pursuant to the Registration Statement. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:103px; width:144px; font-size:12pt; float:left">(e)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&nbsp;As a condition to including Registrable Shares in a Registration Statement, Lender must provide to the Company such information regarding itself, the Registrable Shares held by it and the intended method of distribution of such Shares as shall be required to effect the registration of the Registrable Shares and, if the offering is being underwritten, Lender must provide such powers of attorney, indemnities and other documents as may be reasonably requested by the managing underwriter including but not limited to an underwriting agreement.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>17</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:103px; width:144px; font-size:12pt; float:left">(f)</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">Following the effectiveness of the Registration Statement, upon receipt from the Company of a notice that the Registration Statement contains an untrue statement of material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, Lender will immediately discontinue disposition of Included Shares pursuant to the Registration Statement until the Company notifies Lender that it may resume sales of Included Shares and, if necessary, provides to Lender copies of the supplemental or amended prospectus. &nbsp;</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.4</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Blackout Event</U>. &nbsp;The Company shall not be obligated to file a post-effective amendment or supplement to the Registration Statement or the prospectus constituting a part thereof during the continuance of a Blackout Event; provided, however, that no Blackout Event may be deemed to exist for more than 90 days. &nbsp;Without the express written consent of Lender, if required to permit the continued sale of the Included Shares by Lender, a post-effective amendment or supplement to Registration Statement or the prospectus constituting a part thereof must be filed no later than the 91<SUP>st</SUP> day following commencement of a Blackout Event.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.5</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Indemnification by the Company</U>. &nbsp;The Company agrees to indemnify and hold harmless Lender, and its officers, directors and agents, and each person, if any, who controls Lender within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities caused by (i) any violation or alleged violation by the Company of the Securities Act, Exchange Act, any state Securities laws or any rule or regulation promulgated under the Securities Act, Exchange Act or any state Securities laws, (ii) any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Included Shares (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or (iii) caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company by Lender or on Lender&#146;s behalf expressly for use therein.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.6</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Indemnification by Lender</U>. &nbsp;Lender agrees to indemnify and hold harmless the Company, its officers, directors and agents and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to Lender, but only with respect to information furnished in writing by Lender or on Lender&#146;s behalf expressly for use in any registration statement or prospectus relating to the Registrable Shares, or any amendment or supplement thereto, or any preliminary prospectus. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.7</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Indemnification Procedures</U>. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section, such person (an &#147;Indemnified Party&#148;) shall promptly notify the person against whom such indemnity may be sought (the &#147;Indemnifying Party&#148;) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Party so to notify the Indemnifying Party </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>18</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">shall not relieve the Indemnifying Party of its obligations hereunder except to the extent (and only to the extent that) that the Indemnifying Party is materially prejudiced by such failure to notify. &nbsp;In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. &nbsp;It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties (including in the case of Lender, all of its officers, directors and controlling persons) and that all such fees and expenses shall be reimbursed as they are incurred. &nbsp;In the case of any such separate firm for the Indemnified Parties, the Indemnified Parties shall designate such firm in writing to the Indemnifying Party. &nbsp;The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. &nbsp;No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.</P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">1.8</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Contribution</U>. &nbsp;To the extent any indemnification by an Indemnifying Party is prohibited or limited by law, the Indemnifying Party agrees to make the maximum contribution with respect to any amounts for which, he, she or it would otherwise be liable under this Section to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under circumstances where a party would not have been liable for indemnification under this Section and (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning used in the Securities Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>19</P>
<P style="margin:0px" align=center><BR>
<BR></P>
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<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>tn_ex10z3.htm
<DESCRIPTION>CONVERTIBLE PROMISSORY NOTE
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
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<HEAD>
<TITLE>Converted by EDGARwiz</TITLE>
<META NAME="author" CONTENT="Suzette O'Connor">
<META NAME="date" CONTENT="02/13/2012">
</HEAD>
<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
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<P style="margin:0px; font-family:Times New Roman Bold,Times New Roman; font-size:7.2pt" align=center><B>CONVERTIBLE PROMISSORY NOTE</B></P>
<P style="margin:0px" align=center><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=232.667 /><TD width=232.533 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt"><B>$50,000.00</B></P>
</TD><TD style="margin-top:0px" valign=top width=232.667><P style="margin:0px; font-size:12pt" align=center><B>Gaithersburg, Maryland</B></P>
</TD><TD style="margin-top:0px" valign=top width=232.533><P style="margin:0px; font-size:12pt" align=right><B>&nbsp;February 10, 2012</B></P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:12pt; float:left">1.</P>
<P style="margin:0px; text-indent:-2px; font-size:7.2pt">FOR VALUE RECEIVED<FONT style="font-size:12pt">, the undersigned, Technest Holdings, Inc.</FONT><FONT style="font-family:Times New Roman Bold,Times New Roman"><B>, </B></FONT><FONT style="font-size:12pt">a</FONT><FONT style="font-family:Times New Roman Bold,Times New Roman"> </FONT><FONT style="font-size:12pt">Nevada corporation (the &#147;</FONT><FONT style="font-size:12pt"><I>Maker</I></FONT><FONT style="font-size:12pt">&#148;), hereby promises to pay to the order of Albert Friesen</FONT><FONT style="font-size:12pt"><B> </B></FONT><FONT style="font-size:12pt">(the &#147;</FONT><FONT style="font-size:12pt"><I>Payee</I></FONT><FONT style="font-size:12pt">&#148;), on August 10, 2012 &nbsp;(the &#147;</FONT><FONT style="font-size:12pt"><I>Maturity Date</I></FONT><FONT style="font-size:12pt">&#148;) or as otherwise set forth in Section 1.4 of that certain Loan Agreement (as defined below), in lawful money of the United States of America, the principal amount of </FONT><FONT style="font-size:12pt"><B>Fifty Thousand Dollars </B></FONT><FONT style="font-family:Times New Roman Bold,Times New Roman"><B>($50,000.00)</B></FONT><FONT style="font-size:12pt">, together with interest on the unpaid balance of said principal amount from time to time remaining outstanding, from the date hereof until maturity (howsoever such maturity shall occur), in like money, at said office, at a rate per annum equal to the Interest Rate and in accordance with that certain Loan Agreement (as defined below).</FONT></P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:12pt; float:left">2.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Interest.</U> &nbsp;The Maker shall pay interest on the unpaid principal amount of this Note from its date of issuance until this Note is paid in full. This Note shall bear interest at the rate of 5% per annum from the date of issuance until paid in full (the &#147;<I>Interest Rate</I>&#148;). &nbsp;Interest shall accrue and be payable on the Due Date. &nbsp;Interest on this Note shall be computed on the basis of &nbsp;a 365-day year for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. The Maker shall have the option to pay the accrued interest in shares of Common Stock as set forth in Section 1.4 of the Loan Agreement.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:12pt; float:left">3.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Conversion</U>. The Payee shall have the right to convert the outstanding principal amount of this Note in accordance with Section 2 of the Loan Agreement. The mechanics and effect of such conversion are set forth in Section 2.3 of the Loan Agreement.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:12pt; float:left">4.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&nbsp;<U>Voluntary Prepayment</U>. &nbsp;Upon not less than two Business Day&#146;s notice to the Payee, the Maker may prepay, without premium or penalty thereon, the unpaid principal amount of this Note, in whole or in part, together with accrued interest hereon to the date of such prepayment on the principal amount prepaid.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-size:12pt; float:left">5.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&nbsp;<U>Events of Default.</U> &nbsp;The occurrence of any of the following events shall constitute an &#147;<I>Event of Default</I>&#148; hereunder:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">Maker shall fail to pay timely when due, the principal of, or accrued unpaid interest on, this Note or any other of the obligations hereunder and such failure continues for ten (10) Business Days after receipt of written notice thereof from the Majority Holders; <I>or</I></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">Maker shall breach any representation made by Maker in any statement furnished concurrently herewith or hereafter to Payee by or on behalf of Maker; <I>or</I></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">There exists an Event of Default as defined in Section 6.1 of the Loan Agreement;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt">Upon the happening of any Event of Default, the Majority Holders, at their option, upon written notice to Maker, may declare the unpaid principal portion of this Note and all accrued, earned </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>1</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px; font-size:12pt">and unpaid interest on this Note to be forthwith due and payable, whereupon the said portion of this Note and all accrued, earned and unpaid interest shall become due and &nbsp;payable by Maker without demand, presentment for payment, notice of nonpayment, protest, notice of protest, notice of intent to accelerate maturity, or any other notice of any kind (other than notice of acceleration of maturity) to Maker or any other person liable hereon or with respect hereto, all of which are expressly waived by Maker and each other Person liable hereon or with respect hereto, anything contained herein or in any document or instrument to the contrary notwithstanding; provided however that if elected by the Majority Holders, the Payee may converted the outstanding principal amount of and the accrued, earned and unpaid interest on the Note pursuant to Section 2.2 of the Loan Agreement. </P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">6.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Change of Control</U>. In the event of a Change of Control, upon written notice by the Maker of the occurrence thereof to the Payee, the outstanding principal amount of and any unpaid accrued interest on this Note shall, at the option of the Majority Holders, (a) become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Maker or (b) be converted pursuant to Section 2.2 of the Loan Agreement.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">7.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Limitation on Interest.</U>&nbsp;&nbsp;The Maker and the Payee and the holder of this Note specifically intend and agree to limit contractually the amount of interest payable under this Note to the maximum amount of interest lawfully permitted to be charged under applicable law. &nbsp;Therefore, none of the terms of this Note shall ever be construed to create a contract to pay interest at a rate in excess of the maximum rate of permitted to be charged under applicable law, and neither the Maker nor any other party liable or to become liable hereunder shall ever be liable for interest in excess of the amount determined at such maximum rate, and the provisions of this Section 6<B> </B>shall control over any contrary provision of this Note.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">8.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Certain Waivers.</U>&nbsp;&nbsp;Maker waives demand, presentment for payment, notice of non-payment, protest, notice of protest, notice of intent to accelerate maturity, notice of acceleration of maturity and all other notice, filing of suit and diligence in collecting this Note and further agrees that it will not be necessary for any holder hereof, to enforce payment of this Note, to consent to any one or more extensions or postponements of time of payment of this Note on any terms or any other indulgences with respect hereto, without notice thereof to any of them.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">9.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Replacement of Note</U>. &nbsp;Upon receipt of the Maker of evidence reasonably satisfactory to it of ownership of and the loss, theft, destruction or mutilation of this Note, and (a)&nbsp;in the case of loss, theft or destruction thereof, delivery of an indemnity reasonably satisfactory to the Maker; or (b)&nbsp;in the case of mutilation, upon surrender and cancellation this Note, the Maker, at its own expense, shall execute and deliver a new Note, dated and bearing interest from the date to which interest shall have been paid on this lost, stolen, destroyed or mutilated Note or dated the date of this lost, stolen, destroyed or mutilated Note if no interest shall have been paid hereon.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">10.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt">&nbsp;<U>Governing Law.</U>&nbsp;&nbsp;This Note shall be governed by, and construed in accordance with, the laws of the State of Delaware.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">11.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Amendments</U>. &nbsp;Neither this Note nor any of its provisions may be changed, waived or modified without the written consent of the Payee and the Maker.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>2</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">12.</P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Successors</U>. This Note shall be a binding obligation of any successor of the Maker.</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:48px; width:96px; font-size:12pt; float:left">13. </P>
<P style="margin:0px; text-indent:-2px; font-size:12pt"><U>Defined Terms.</U> &nbsp;The terms set forth below shall have the meanings assigned to such terms as used in this Note:</P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">&#147;<I>Common Stock</I>&#148; means Common Stock, $.001 par value, of the Maker.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt" align=justify>&nbsp;&#147;<I>Loan Agreement</I>&#148; shall mean that certain Loan Agreement dated as of February 10, 2012 by and among the Maker and Albert Friesen.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Loan Agreement.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>3</P>
<P style="margin:0px"><BR>
<BR></P>
<P style="margin:0px; text-indent:48px; font-size:7.2pt; page-break-before:always">EXECUTED AND EFFECTIVE<FONT style="font-size:12pt"> as of the day and year first above written.</FONT></P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=348.933 /><TD /></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt"><B>MAKER:</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=348.933><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt">Technest Holdings, Inc.</P>
</TD></TR>
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<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=34.867 /><TD width=314.067 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; font-size:12pt">By:&nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top width=314.067><P style="margin:0px; font-size:12pt">/s/ Shekhar Wadekar</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=314.067><P style="margin:0px; font-size:12pt">Name: Shekhar Wadekar</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=34.867><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=314.067><P style="margin:0px; font-size:12pt">Title: Chief Executive Officer</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>4</P>
<P style="margin:0px" align=center><BR>
<BR></P>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>tn_ex10z4.htm
<DESCRIPTION>PROMISSORY NOTE
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
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<HEAD>
<TITLE>NOVA/HUBER PROMISSORY NOTE</TITLE>
<META NAME="author" CONTENT="KQUEEN">
<META NAME="date" CONTENT="02/13/2012">
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<BODY style="margin-top:0;font-family:Times New Roman; font-size:10pt; color:#000000">
<DIV style="width:697.933px"><P style="margin:0px; font-size:12pt">THIS NOTE HAS NOT BEEN THE SUBJECT OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAS BEEN ISSUED IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THIS NOTE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center><B><U>PROMISSORY NOTE</U></B></P>
<P style="margin:0px" align=center><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD /><TD width=221.533 /></TR>
<TR><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt">$40,000.00</P>
</TD><TD style="margin-top:0px" valign=top width=221.533><P style="margin:0px; font-size:12pt" align=center>Gaithersburg, MD</P>
</TD></TR>
</TABLE>
<P style="margin:0px; font-size:12pt">February 10, 2012</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">FOR VALUE RECEIVED, the undersigned, <B>TECHNEST HOLDINGS, INC.,</B> a Nevada corporation (the &#147;<U>Maker</U>&#148;), hereby promises to pay SOUTHRIDGE PARTNERS II LP or registered assigns (the &#147;<U>Holder</U>&#148;), the principal amount equal to Forty Thousand dollars ($40,000.00) (the &#147;<U>Principal Amount</U>&#148;) multiplied by a redemption premium equal to 115% of such Principal Amount, on or before August 31, 2012 (the &#147;<U>Maturity Date</U>&#148;), together with interest on such Principal Amount equal to eight percent (8%) per annum. &nbsp;All payments made hereunder shall be made in immediately available funds by wire transfer.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt" align=justify>The following shall constitute an &#147;Event of Default&#148;:</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">a.</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:12pt" align=justify>The Maker shall default in the payment of principal plus interest on this Note when due and same shall continue for a period of three (3) business days; or</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">b.</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:12pt" align=justify>The Maker shall (1) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (2) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">c.</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:12pt" align=justify>A trustee, liquidator or receiver shall be appointed for the Maker or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">d.</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:12pt" align=justify>Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Maker and shall not be dismissed within thirty (30) days thereafter; or</P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">e.</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:12pt" align=justify>any money judgment, writ or warrant of attachment, or similar process in excess of Five Hundred Thousand ($500,000) Dollars shall be entered or filed against the Maker or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days; or</P>
<P style="margin:0px; clear:left" align=center><BR></P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:96px; width:144px; font-size:12pt; float:left">f.</P>
<P style="margin:0px; padding-left:144px; text-indent:-2px; font-size:12pt" align=justify>Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Maker and, if instituted against the Maker, shall not be dismissed within thirty (30) days after such institution or the Maker shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; </P>
<P style="margin:0px; clear:left" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=justify>Then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) in the Holder's sole discretion, the Holder may consider all obligations under this Note immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Maker, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt"><U>Presentment</U>. &nbsp;Except as set forth herein, the Maker waives presentment, demand and presentation for payment, notice of nonpayment and dishonor, protest and notice of protest and expressly agrees that this Note or any payment hereunder may be extended from time to time by the Holder without in any way affecting the liability of the Maker.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt"><U>Maximum Rate</U>. &nbsp;All provisions herein made are expressly limited so that in no event whatsoever, whether by reason of advancement of proceeds hereof, acceleration of maturity of the unpaid balance hereof or otherwise, shall the amount paid or agreed to be paid to Holder for the use of the money advanced or to be advanced hereunder exceed the maximum rate of interest allowed to be charged under applicable law (the &#147;Maximum Rate&#148;), regardless of whether or not there has been an acceleration of the payment of principal as set forth herein. If, from any circumstances whatsoever, the fulfillment of any provision of this Note or any other agreement or instrument now or hereafter evidencing, securing or in any way relating to the indebtedness evidenced hereby shall involve the payment of interest in excess of the Maximum Rate, then, <U>ipso facto</U>, the obligation to pay interest hereunder shall be reduced to the Maximum Rate; and if from any circumstance whatsoever, Payee shall ever receive interest, the amount of which would exceed the amount collectible at the Maximum Rate, such amount as would be excessive interest shall be applied to the reduction of the principal balance remaining unpaid hereunder and not to the payment of interest. This provision shall control every other provision in any and all other agreements and instruments existing or hereafter arising between the Maker and Holder with respect to the indebtedness evidenced hereby. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt"><U>Collection</U>. &nbsp;In the event this Note is placed in the hands of an attorney for collection, or if Holder incurs any costs incident to the collection of the indebtedness evidenced hereby, the Maker agrees to pay to Holder an amount equal to all such costs, including without limitation all reasonable attorneys' fees and all court costs. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt" align=justify><U>Construction; Governing Law.</U> &nbsp;The validity and construction of this Note and all matters pertaining hereto are to be determined in accordance with the laws of the State of New York </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>2</P>
<P style="margin:0px" align=justify><BR>
<BR></P>
<P style="margin:0px; page-break-before:always" align=justify><BR></P>
<P style="margin:0px; font-size:12pt" align=justify>without regard to the conflicts of law principles thereof. &nbsp;&nbsp;Both parties hereby waive all right to a trial by jury in the event in connection with any legal action between the parties arising from this Note.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt"><U>Amendments</U>. &nbsp;Neither this Note nor any of its provisions may be changed, waived or modified without the written consent of the Holder.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt"><U>Successors</U>. &nbsp;This Note shall be a binding obligation of any successor of the Maker. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px; font-size:12pt">IN WITNESS WHEREOF, the Maker, by its appropriate officers thereunto duly authorized, has executed this Note as of this 10th day of February, 2012.</P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=209.333 /><TD /><TD width=139.6 /></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top><P style="margin:0px; font-size:12pt"><B>TECHNEST HOLDINGS, INC.</B></P>
</TD><TD style="margin-top:0px" valign=top width=139.6><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0 width=100%><TR height=0 style="font-size:0"><TD width=209.333 /><TD width=36.733 /><TD /><TD width=139.467 /></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=36.733><P style="margin:0px; font-size:12pt">By:&nbsp;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=top><P style="margin:0px; font-size:12pt">/s/ Shekhar Wadekar</P>
</TD><TD style="margin-top:0px" valign=top width=139.467><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=349.133 colspan=2><P style="margin:0px; font-size:12pt">Name: Shekhar Wadekar</P>
</TD><TD style="margin-top:0px" valign=top width=139.467><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
<TR><TD style="margin-top:0px" valign=top width=209.333><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD><TD style="margin-top:0px" valign=top width=349.133 colspan=2><P style="margin:0px; font-size:12pt">Title: Chief Executive Officer</P>
</TD><TD style="margin-top:0px" valign=top width=139.467><P style="margin:0px; padding:0px; font-size:12pt">&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-size:12pt" align=center>3</P>
<P style="margin:0px" align=center><BR>
<BR></P>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>6
<FILENAME>tn_ex31z1.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
<HTML>
<head><title>Exhibit 31</title> </head> <body style="MARGIN-TOP:0px; FONT-FAMILY:Times New Roman; COLOR:#000000; FONT-SIZE:10pt"> <div style=WIDTH:697px> <p style=MARGIN:0px align=right><br></p> <p style=MARGIN:0px align=right><b>Exhibit 31.1</b></p> <p style=MARGIN:0px align=right><br></p> <p style=MARGIN:0px align=center><b>CERTIFICATION</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>I, Shekhar Wadekar, certify that:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>1.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>I have reviewed this quarterly report on Form 10-Q of Technest Holdings, Inc.;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>2.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>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 statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>3.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>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;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>4.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>The registrant&#146;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:</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(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;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>5.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and to the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(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&#146;s ability to record, process, summarize and report financial information; and</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(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.</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=279 /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Date: February 16, 2012&nbsp;&nbsp;</b></p></td> <td width=279 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px><b>/s/ Shekhar Wadekar</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;</p></td> <td width=279 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Shekhar Wadekar</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=279 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Chief Executive Officer</b></p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p></div></body>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>7
<FILENAME>tn_ex31z2.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
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<head><title>Exhibit 31</title> </head> <body style="MARGIN-TOP:0px; FONT-FAMILY:Times New Roman; COLOR:#000000; FONT-SIZE:10pt"> <div style=WIDTH:697px> <p style=MARGIN:0px align=right><br></p> <p style=MARGIN:0px align=right>E<b>xhibit 31.2</b></p> <p style=MARGIN:0px align=right><br></p> <p style=MARGIN:0px align=center><b>CERTIFICATION</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>I, Bruce Warwick, certify that:</p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>1.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>I have reviewed this quarterly &nbsp;report on Form 10-Q of Technest Holdings, Inc.;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>2.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>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 statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>3.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>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;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>4.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>The registrant&#146;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:</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(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;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>5.</p></td> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and to the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(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&#146;s ability to record, process, summarize and report financial information; and</p></td></tr></table> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td width=34> <td /> </tr><tr> <td width=34 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td style=MARGIN-TOP:0px valign=top> <p style="TEXT-INDENT:24px; MARGIN:0px">(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.</p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=279 /> </tr><tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Date: February 16, 2012</b></p></td> <td width=279 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px><b>/s/ Bruce Warwick</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px>&nbsp;</p></td> <td width=279 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Bruce Warwick</b></p> <p style=MARGIN:0px><b>Principal Financial Officer</b></p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p></div></body>
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<TYPE>EX-32.1
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<head><title>Exhibit 32</title> </head> <body style="MARGIN-TOP:0px; FONT-FAMILY:Times New Roman; COLOR:#000000; FONT-SIZE:10pt"> <div style=WIDTH:697px> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=right><b>Exhibit 32.1</b></p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px align=center><b>CERTIFICATION PURSUANT TO</b></p> <p style=MARGIN:0px align=center><b>18 U.S.C. SS. 1350</b></p> <p style=MARGIN:0px align=center><b>AS ADOPTED PURSUANT TO</b></p> <p style=MARGIN:0px align=center><b>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p> <p style=MARGIN:0px><br></p> <p style="TEXT-INDENT:48px; MARGIN:0px">In connection with the quarterly report on Form 10-Q of Technest Holdings, Inc. (the &#147;Company&#148;) for the quarter ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;), the undersigned Chief Executive Officer and Principal Financial Officer of the Company do hereby certify, to their best knowledge and belief, pursuant to 18 U.S.C. &#167; 1350, as adopted pursuant to &#167; 906 of the Sarbanes-Oxley Act of 2002, that:</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px>(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</p> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br></p> <table width=100% style="MARGIN-TOP:0px; FONT-SIZE:10pt" cellpadding=0 cellspacing=0> <tr height=0 style=FONT-SIZE:0px> <td> <td width=209> <td width=244 /> </tr><tr> <td style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px><b>/s/ Shekhar Wadekar</b></p></td> <td width=209 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=244 style="BORDER-BOTTOM:#000000 1px solid; MARGIN-TOP:0px" valign=top> <p style=MARGIN:0px><b>/s/&nbsp;&nbsp;Bruce Warwick</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Shekhar Wadekar</b></p></td> <td width=209 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=244 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Bruce Warwick</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Chief Executive Officer&nbsp;</b></p></td> <td width=209 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=244 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Principal Financial Officer</b></p></td></tr> <tr> <td style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Date: February 16, 2012</b></p></td> <td width=209 style=MARGIN-TOP:0px valign=top> <p style="PADDING-BOTTOM:0px; MARGIN:0px; PADDING-LEFT:0px; PADDING-RIGHT:0px; PADDING-TOP:0px">&nbsp;</p></td> <td width=244 style=MARGIN-TOP:0px valign=top> <p style=MARGIN:0px><b>Date: February 16, 2012</b></p></td></tr></table> <p style=MARGIN:0px><br></p> <p style=MARGIN:0px><br><br></p></div></body>
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