Annual report pursuant to Section 13 and 15(d)

Statements of Cash Flows

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Statements of Cash Flows (USD $)
 12 Months Ended 48 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
OPERATING ACTIVITIES      
Net income (loss) $ (5,101,519) $ 494,377 $ (5,446,764)
Adjustments to reconcile net Income (loss) to net cash used by operating activities:      
Discontinued operations       (678,413)
Common stock issued for services 10,000 10,500 20,500
Fair value of warrants issued for services 123,170 129,691 551,424
Fair value of employee stock options 47,900 219,541 679,301
Gain (loss) on extinguishment of debt (49,179) (19,410) (68,589)
Gain on sale of asset (70,500)    (70,500)
(Gain) loss on warrant derivative liability 3,977,041 (1,480,586) 2,496,455
Depreciation 5,004 850 5,854
Amortization of patent costs 78,480 19,593 98,073
Changes in operating assets and liabilities      
Prepaid expenses and deposits 82,303 (34,889) (37,191)
Other receivables (119,236) (65,122) (99,333)
Accounts payable and accrued expenses 12,009 203,670 88,212
Net Cash (Used in) Operating Activities (1,004,527) (521,785) (2,460,971)
INVESTING ACTIVITIES      
Proceeds from sale of asset 70,500    70,500
Purchase of equipment    (25,018) (25,018)
Purchase of patents and other intellectual property       (300,000)
Discontinued operations       418,000
Net Cash Provided by (Used in) Investing Activities 70,500 (25,018) 163,482
FINANCING ACTIVITIES      
Proceeds from preferred stock and warrants       1,005,000
Proceeds from common stock, derivative liability and warrants 1,050,000    1,050,000
Proceeds of warrants exercised for cash    1,005,000 1,005,000
Proceeds from related party payables       125,453
Repayments of related party payables       (125,453)
Proceeds from short-term notes payable    64,408 64,408
Repayments of short-term notes payable (17,486) (46,922) (64,408)
Repayment of convertible debentures (51,115) (398,873) (490,000)
Net Cash Provided by Financing Activities 981,399 623,613 2,570,000
NET INCREASE IN CASH 47,372 76,810 272,511
CASH AT BEGINNING OF PERIOD 422,414 345,604 197,275
CASH AT END OF PERIOD 469,786 422,414 469,786
CASH PAID FOR:      
Interest 24,003 31,920 69,923
Income Taxes         
NON CASH FINANCING ACTIVITIES:      
Transfer of investment for dividends payable       186,000
Purchase of patents for debenture       500,000
Conversion of debenture    10,000 10,000
Options issued to settle accounts payable    $ 3,991 $ 3,991