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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 1.   Basis of Presentation</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The accompanying unaudited consolidated financial statements of Hypertension Diagnostics, Inc. (the “Company” or “HDI”) have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, these unaudited financial statements reflect all adjustments, consisting only of normal and recurring adjustments necessary for a fair presentation of the financial statements.  The results of operations for the three and nine months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the full year ending June 30, 2013.  For further information, refer to the financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2012, as amended.  The policies described in that report are used for preparing quarterly reports.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On July 14, 2011, the Company formed HDI Plastics, Inc. (“HDIP” or “Plastics”), as a wholly-owned subsidiary of the Company. HDIP commenced operations in October 2011.  HDIP is the principal operating business of the Company.  HDIP is engaged in the processing of recycled plastic material including re-processing into pellet-form for sale to manufacturing customers. </font></p> <p align="left" style="margin:0in;margin-bottom:.0001pt;text-align:left;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                                                </font></p>
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 3.   Summary of Significant Accounting Policies</font></b></p> <p align="left" style="margin:0in;margin-bottom:.0001pt;text-align:left;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Discontinued Operations- On August 26, 2011 (the “Effective Date”), the Company entered into and closed a definitive Asset Purchase Agreement (the “August 26, 2011 Agreement”) providing for the sale of selected assets from our Hypertension Diagnostics Business to Cohn Prevention Center, LLC (“CPC”), a Minnesota company, controlled by Jay Cohn, a director and stockholder of HDI as of the Effective Date. See additional terms of this agreement in Note 4. As a result of the sale of selected assets of our medical device business, we have reclassified our previously reported financial results to exclude those operations affected by the sale. These results are presented on a historical basis as a separate line in our statements of operations and balance sheets entitled “Discontinued Operations.”  HDI had previously retained rights to its intellectual property including the rights to royalty payments from CPC.  Ongoing royalty income derived from the Company's intellectual property is reflected as continuing operations.  All of the information in the financial statements and notes to the financial statements have been revised to reflect only the results of our continuing operations from our new recycled plastics process business. On January 25, 2013, the Company entered into and closed a second definitive Asset Purchase Agreement (the “January 25, 2013 Agreement”) with CVC-HD, LLC, a Minnesota limited liability company (“CVC”), controlled by Jay Cohn, effectively amending the August 26, 2011 Agreement and assigning to CVC the remaining assets related to the medical device business including intellectual property assets for an additional purchase price of $75,000. Additionally, at the time of this second agreement, HDI was still owed $200,000 from the first sale. In total, $275,000 is owed on these two sales and as of March 31, 2013, $75,000 has been received. The balance of the $200,000 is to be paid off in monthly installments with final payment due June 30, 2013. The royalty provisions of the August 26, 2011 Agreement were eliminated in this January 25, 2013 Agreement. </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></i></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Principles of Consolidation</font></i></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary (HDI Plastics, Inc.), after elimination of all intercompany accounts, transactions, and profits.</font></p> <p align="left" style="margin:0in;margin-bottom:.0001pt;text-align:left;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                </font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Recent Accounting Pronouncements</font></i></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. Under this standard, entities testing long-lived intangible assets for impairment now have an option of performing a qualitative assessment to determine whether further impairment testing is necessary. If an entity determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is more-likely-than-not less than the carrying amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is required. For HDI, this ASU was effective beginning January 1, 2013. The adoption of this standard did not have a material impact on the Company's consolidated results of operations or financial condition.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
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The terms of the Agreement provided for the sale of selected operating assets of the Company's medical device business (including inventory but excluding cash, accounts receivable, and intellectual property).  The Agreement does not limit the ability of CPC to sell the purchased inventory to any customer or in any market where they can be legally sold.  Additionally, CPC assumed all warranty and on-going product support required by regulatory agencies related to such inventory.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In connection with the Agreement, CPC paid the Company on the Effective Date a cash payment of $125,000 and issued a secured promissory note (non-interest bearing) to the Company in the amount of either $150,000 due in 12 months or $200,000 due in 18 months at the discretion of CPC (See Note 6). We received a letter on July 27, 2012 from CPC indicating the intent to pay $200,000 on February 26, 2013. Nearly all of the proceeds received on the Effective Date were allocated to cover severance and other costs related to the transactions contemplated by the Agreement. Severance costs included an agreement by the Company to pay to Greg Guettler, its former Chief Operating Officer, nine months' salary and health benefits. The Company paid Mr. Guettler $119,463 to fulfill the agreement on March 1, 2012. Pursuant to the Agreement, CPC agreed to pay to the Company a cash payment of $1,200 upon the sale of each of the first 50 units of inventory sold by CPC within 30 days of receipt of cash from such sale. The Company has agreed to pay Mr. Guettler 10% of the royalty proceeds received by the Company less applicable transaction expenses related to such sales.  The Company has earned royalty income of $0 and $6,000 less 10% due to Greg Guettler for the three and nine months ended March 31, 2013, respectively. </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company and CPC also entered into a Sublicense Agreement on the Effective Date (the “Sublicense Agreement”), pursuant to which the Company granted to CPC a limited license to use the Company's intellectual property, technology, and technical know-how related to the Company's arterial elasticity measurement technology exclusively in CPC clinics and research related exclusively to CPC clinics.  All other applications of the Company's intellectual property, technology and technical know-how will be retained by the Company for the benefit of the Company.  The Sublicense Agreement also provides that any development of a next generation arterial measurement device, however, would be limited exclusively to use and sale within the CPC network of clinics and to research exclusively related to CPC clinics.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">CPC and the Company also entered into a Sublease Agreement as of the Effective Date, which permits CPC to lease the Waters II Suite 108, Eagan, Minnesota facility of the Company during the remaining term of the Company's lease, which expires October 31, 2014, on the same pass-through economic terms as the underlying lease with HDI which remains as an obligation of the Company.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company recorded a loss on the sale transaction in the amount of $123,702 in the quarter ended September 30, 2011.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On January 25, 2013, (the “Effective Date”), the Company entered into and closed a second definitive Asset Purchase Agreement (the “Agreement”) modifying the August 26, 2011 Agreement, by selling the remaining medical device business assets to CVC-HD, LLC, a Minnesota limited liability company (“CVC”), controlled by Jay Cohn, for $75,000. This amount is in addition to the $200,000 owed to the Company by CPC as set forth above, which payment terms were modified as set forth below.  The Company has not recorded the revenue from this additional sale due to the collectability is not reasonably assured at this time, since the original $150,000 note from the first sale has not been paid following its original terms. The aggregate $275,000 consists of a cash payment in the amount of $37,500 due on the Effective Date which was received, and a promissory note in the amount of $237,500 payable in installments with the first payment of $37,500 due February 2013 and $50,000 due each subsequent month with the final payment due in June 2013. 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style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:0pt;width:0px;"> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Income from Discontinued Operations</font></b></p> </td> <td colspan="3" valign="bottom" width="32%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Three months ended March 31,</font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="3" valign="bottom" width="29%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Nine months ended March 31,</font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              2013 </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              2012 </font></p> </td> <td valign="bottom" width="6%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              2013 </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">            2012 </font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Revenue, net</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $                 - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $                 - </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">  $               - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$    248,923 </font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Cost of Goods Sold</font></p> </td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="6%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         10,557 </font></p> </td> </tr> <tr style="height:3.0pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Gross Profit</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">      238,366 </font></p> </td> </tr> <tr style="height:13.7pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="14%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="14%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="6%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:13.7pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Operating expenses (miscellaneous)</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">           13,687 </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         (15,335)</font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         31,824 </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">      265,645 </font></p> </td> </tr> <tr style="height:13.7pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Deferred compensation expense (benefit)</font></p> </td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">        135,994 </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       (393,750)</font></p> </td> <td valign="bottom" width="6%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">      165,000 </font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Income (loss) from discontinued operations</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       (149,681)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">        409,085 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       (31,824)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">     (192,279)</font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Gain (loss) on sale of selected assets to CPC</font></p> </td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="6%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">     (123,702)</font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Net income (loss) from discontinued operations</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $  (149,681)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $   409,085 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">  $  (31,824)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$  (315,981)</font></p> </td> </tr> </table> </div> <p align="left" style="margin:0in;margin-bottom:.0001pt;text-align:left;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company does not have any existing assets of discontinued operations at March 31, 2013. The only remaining liabilities of discontinued operations as of March 31, 2013 pertain to the deferred compensation of the former CEO. (See Note 9)</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 5. Inventory</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Inventory consisted of the following:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="left"><table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:6.75pt;margin-right:6.75pt;width:0px;"> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">March 31,</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="22%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">June 30,</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="23%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2013</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2012</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Raw materials</font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $   128,375</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $    96,142</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Finished goods</font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">           12,111</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">          76,081</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;text-indent:20.0pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total inventory</font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $   140,486</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $  172,223</font></p> </td> </tr> </table></div> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 6.   Notes Receivable - Related Parties</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In connection with the Asset Purchase Agreement between HDI and CPC on August 26, 2011, CPC paid HDI on the Effective Date a cash payment of $125,000 and issued a non-interest bearing secured promissory note due to HDI in the amount of either $150,000 due in 12 months or $200,000 due in 18 months, at the discretion of CPC. The promissory note was reflected at an imputed discount rate of 15% based upon the amount due 12 months following the Effective Date, and was originally recorded as a net note receivable of $127,500.  The Company received a letter from CPC on July 27, 2012 indicating CPC's intent to pay the $200,000 due February 26, 2013 instead of the original $150,000. The Company has elected to not recognize the additional income forthcoming on this Note until the cash is collected in the future. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On January 25, 2013, the Company sold the remaining intellectual property for an additional $75,000 (See Note 4). The Company received $37,500 in cash on January 25, 2013 which was applied to the original note, and a promissory note in the amount of $237,500 that replaces the existing note issued by CPC listed above. The Company has not recorded the revenue from this additional sale due to the collectability is not reasonably assured at this time, since the original $150,000 note from the first sale has not been paid following its original terms. The new note is payable in installments with the first payment due February 2013 for $37,500, which was received in March 2013, and $50,000 due per month beginning in March 2013, which was not received, with the final payment due June 2013. As of March 31, 2013 $75,000 has been received on the note. A subsequent payment of $25,000 on the note was received in April 2013.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 7.  Property and Equipment</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Property and Equipment is as follows:</font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr style="page-break-inside:avoid;"> <td valign="top" width="50%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">March 31,</font></p> </td> <td valign="bottom" width="6%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">June 30,</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="50%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2013</font></p> </td> <td valign="bottom" width="6%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2012</font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Equipment</font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $       707,413 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $        672,383 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Leasehold  improvements</font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">            213,103 </font></p> </td> <td valign="bottom" width="6%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               93,235 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Office furniture and equipment</font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                 9,006 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  7,923 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Vehicles</font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">              11,984 </font></p> </td> <td valign="bottom" width="6%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               11,984 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less accumulated depreciation</font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">          (209,591)</font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">           (107,194)</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="50%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">  Total equipment</font></p> </td> <td valign="bottom" width="22%" style="border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $       731,915 </font></p> </td> <td valign="bottom" width="6%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $        678,331 </font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Depreciation expense was $44,670 and $37,603 for the three months ended March 31, 2013 and 2012, respectively. For the nine months ended March 31, 2013 and 2012, depreciation expense was $116,659 and $67,560, respectively.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company recognized a net loss of $79,973 from the sale of equipment in the nine month period ended March 31, 2013 related to the abandonment of leasehold improvements associated with the property at 5330 Fleming Court, Austin, TX due to the termination of the lease and surrender of the property. </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 8.   Litigation</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company is involved in various legal actions in the ordinary course of its business.  </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN" style="font-family:Times New Roman,serif;font-size:10.0pt;">On March 28, 2012, HDIP received a Notice of Violation related to its former processing facility located at 5330 Fleming Court, Austin, Texas, from the City of Austin Code Compliance Department.  The Notice of Violation alleges violations of Austin's City Code and failures to obtain required permits and a Certificate of Occupancy based upon the current use of the processing facility. The violation primarily relates to the electrical design and capacity of the building. The Notice of Violation required HDIP to vacate the processing facility until such alleged violations are cured.  HDIP unsuccessfully attempted to negotiate temporary permits allowing it to continue operations while it addresses the alleged violations identified in the Notice of Violation.  On March 29, 2012, HDIP ceased processing operations at the processing facility.  On April 2, 2012, HDIP notified approximately 70 of its employees working at the facility of their termination and they were paid their outstanding vacation pay, however, no severance was paid. At this time, the Company has not been assessed any fines or penalties by the City of Austin, but no assurances can be made that they will not do so in the future. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN" style="font-family:Times New Roman,serif;font-size:10.0pt;">Because the City of Austin required HDIP to vacate the property at 5330 Fleming Court, the landlord, Flemtex Properties (“Flemtex”) denied access to the premises; therefore, the Company did not pay rent and utilities for April and May 2012. On May 30, 2012, the Company received a Notice of Termination of Lease from Flemtex, for failure to pay rent and reimbursable costs. The letter stated that the Lease was terminated effective May 31, 2012, and that HDI was to quit and surrender the Leased Premises to the landlord in accordance with the requirements of the Lease on May 31, 2012, and to remove all of the Tenant's personal property from the Leased Premises. The Company has accrued as of March 31, 2013, the utility and rent payments due for April and May 2012 totaling $139,493.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On July 12, 2012, a representative from  the Travis County, (Texas) Attorney Office, Texas Parks and Wildlife, and the Texas Commission on Environmental Quality (TEEQ) searched the Company's Austin offices pursuant to an affidavit signed by a representative of Texas Parks and Wildlife seeking evidence that the Company committed the offense of intentional or knowing unauthorized discharge of a pollutant under Section 7.145 of the Texas Water Code. No charge of illegal discharge has been made against the Company. The Company has not been contacted further relative to alleged discharge and strongly denies any such discharge occurred. As of October 31, 2012, the removal and disposal of the waste water at the Company's former facility in Austin was completed.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On December 14, 2012, Flemtex Properties filed a lawsuit alleging breach of the commercial lease at the Fleming Court location. The lawsuit seeks damages totaling $412,711 as of November 16, 2012 and future obligations due under the lease which extends to December 2017. The Company intends to vigorously defend itself and may seek compensation for losses resulting from the willful and malicious interference into its Fleming Court operations by the landlord and its agent. </font><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Due to the uncertainty regarding the outcome of this matter, the Company does not believe that it is probable that they will owe all of the damages claimed by Flemtex and have only accrued for the costs of the lease up until Flemtex terminated the lease on May 31, 2012, as noted above. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 9.   Deferred Compensation Liability</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company is a party to a Deferred Equity Compensation Agreement with its former CEO, Mark N. Schwartz (the “Agreement”), whereby the Company previously granted phantom shares of its common stock to Mr. Schwartz for every month of employment over the years of his employment. Mr. Schwartz resigned as the Company's CEO effective September 22, 2011 and as a result, agreed as of October 1, 2011 that no additional phantom shares will be granted to him under the Agreement. Under the Agreement, a cash payment will be made equal to the price per share of the Company's common stock times the number of phantom shares accrued at the earliest of certain events to occur.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company has accrued a total deferred compensation liability of $280,643 at March 31, 2013, which is the fair market value of 13,125,000 phantom shares outstanding as of March 31, 2013, $262,500 plus $18,143 of accrued payroll taxes and vacation pay related to the agreement.  Due to the fluctuations in the price of the Company's common stock during the nine months ended March 31, 2013, the Company recorded a net compensation expense of $135,994 and $0 for the three and nine months ended March 31, 2013, respectively. For the three and nine months ended March 31, 2012, the Company recorded a net compensation expense (benefit) of ($393,750) and $165,000, respectively. An increase in the Company's common stock price would cause an increase in the deferred compensation liability, while a decrease in the Company's stock price would cause a decrease in the deferred compensation liability. Expenses related to the Deferred Compensation arrangement with its former CEO are accounted for as part of Discontinued Operations.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Under the original terms of Mr. Schwartz's deferred equity compensation agreement, payment of the deferred compensation benefit would occur upon one of the following events: i) execution of a definitive agreement resulting in a change of control of the Company's common stock; ii) termination of employment; iii) death of the CEO; or iv) no later than January 1, 2012. Upon one of these events, a cash payment over 24 months was to be made to the CEO equal to the trading price per share of the Company's common stock times the number of phantom stock shares accrued to date.  Mr. Schwartz and the Company modified the original Agreement on March 31, 2012, whereby Mr. Schwartz agreed to eliminate the requirement for a cash payment as of a date certain pursuant to the Agreement. This deferred compensation is classified as a long-term liability with no definitive payout date specified. The Company and Mr. Schwartz are negotiating a permanent settlement to satisfy both parties.</font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 10.  Factoring Line of Credit </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On October 10, 2011, HDI Plastics, Inc. entered into an Accounts Receivable Discount line facility with Charter Capital Holdings, L.P.  (“Charter”). Under the terms of the full-recourse financing agreement, which is guaranteed by HDI, Charter advances to HDIP an amount equal to 80% of eligible pledged receivables up to a total advance of $1 million. Charter retains a priority and perfected security interest in all accounts receivable and inventory of HDI Plastics, Inc.  The financing cost under the agreement is 0.59% for each 10-day period or an approximate annualized interest cost of approximately 21.25%. HDIP began borrowing under this facility in November 2011.  The outstanding balance as of March 31, 2013 is $0 and $0 as of June 30, 2012. As of the date of this filing, the outstanding balance is $77,287.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 11. Notes Payable-short term</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><b><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Asher-Convertible Debt </font></i></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On January 2, 2013, HDI closed on a Securities Purchase Agreement entered into December 3, 2012 with Asher Enterprises, Inc., pursuant to which we issued to Asher an 8% Convertible Promissory Note in the original principal amount of $42,500 (the “Note”). The Note has a maturity date of September 12, 2013 and is convertible into our common stock at the Variable Conversion Price of 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Asher has the right to convert 180 days after the initial advance date. The shares of common stock issuable upon conversion of the Note are not registered shares under the Securities Act of 1933.  The Company has the right to prepay the outstanding Note for an amount equal to 115%, multiplied by the sum of the then outstanding principal amount of this Note plus accrued and unpaid interest on the unpaid principal amount of this Note. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                                                                                                                                                                                                             </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On March 1, 2013, HDI closed on a second Securities Purchase Agreement with Asher, pursuant to which we issued to Asher an 8% Convertible Promissory Note in the original principal amount of $32,500 with a maturity date of December 15, 2013. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Due to the discounted conversion price on the date of issuance of the notes, the Company recorded a discount to the notes in the amount of $54,310 for the beneficial conversion future. The discount is being amortized over the term of the debt using the effective interest method. Additionally, Asher held back $5,000 of the proceeds to cover its legal expenses. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">HDI closed on a third Note dated April 8, 2013 in the amount of $32,500 that matures on January 15, 2014. The other terms of the notes are the same as the note described above.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table summarizes the Asher - Convertible Debt at March 31, 2013:</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr> <td valign="top" width="78%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Net proceeds received</font></p> </td> <td valign="top" width="22%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  $       70,000 </font></p> </td> </tr> <tr> <td valign="top" width="78%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less value assigned to beneficial conversion feature</font></p> </td> <td valign="top" width="22%" style="border-bottom:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                         (54,310)</font></p> </td> </tr> <tr> <td valign="top" width="78%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"></td> <td valign="top" width="22%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                           15,690 </font></p> </td> </tr> <tr> <td valign="top" width="78%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Add: amortization of debt discount</font></p> </td> <td valign="top" width="22%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                             8,380 </font></p> </td> </tr> <tr> <td valign="top" width="78%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total Asher - convertible debt outstanding, net</font></p> </td> <td valign="top" width="22%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;border-top:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  $       24,070 </font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><b><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Senior Debt </font></i></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On February 4, 2013, HDI Plastics, Inc. executed a Secured Promissory Note (the “Note”) in a principal amount of $200,000 in favor of Mark Schwartz and Alan Stern, directors of the Company.  The Note bears interest at an annual rate of 18%, payable monthly, and is guaranteed by the Company.  The Note matures on February 1, 2014, at which time all principal and accrued and unpaid interest on the Note is due.  The Note is secured by certain equipment of HDI Plastics. In connection with the issuance of the Note, the Company issued to each of Messrs. Schwartz and Stern a warrant to purchase 3,333,333 shares of common stock of the Company for an exercise price of $0.03 per share, subject to appropriate adjustment for stock splits, combinations and similar recapitalization events.  The warrants expire on February 4, 2018. Pursuant to the terms of the Note and Security Agreement, HDI Plastics may borrow an additional $300,000 on the same terms and conditions as those set forth in the Note, Security Agreement and Warrants. The accrued interest on the Notes was $3,000 as of March 31, 2013.</font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The total estimated value of the warrants using the Black-Scholes Option Pricing Model, with a volatility of 209%, had an estimated fair value of $0.01 per warrant.  After calculating the relative fair value of the debt and warrants, $48,388 was recorded as a debt discount to the debt for the warrants.  This discount is being amortized over the term of the debt using the effective interest method.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table summarizes the Senior Debt at March 31, 2013:</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr> <td valign="top" width="67%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Cash proceeds received</font></p> </td> <td valign="top" width="33%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $         200,000 </font></p> </td> </tr> <tr> <td valign="top" width="67%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less value assigned to warrants</font></p> </td> <td valign="top" width="33%" style="border-bottom:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               (48,388)</font></p> </td> </tr> <tr> <td valign="top" width="67%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"></td> <td valign="top" width="33%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               151,612 </font></p> </td> </tr> <tr> <td valign="top" width="67%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Add: amortization of debt discount</font></p> </td> <td valign="top" width="33%" style="border-bottom:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                   8,065 </font></p> </td> </tr> <tr> <td valign="top" width="67%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total senior debt outstanding, net</font></p> </td> <td valign="top" width="33%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $         159,677 </font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 12. Notes Payable-long term</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;text-indent:.5in;"><b><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Taylor Economic Development</font></i></b></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On December 24, 2012, HDIP entered into a Letter of Agreement with the Taylor Economic Development Corporation (“TEDCO”).  Under the terms of the TEDCO Agreement, TEDCO agreed to advance up to $140,000 for improvements and upgrades to the Company's new facility located in Taylor, Texas. The advances are in the form of a forgivable loan which will convert to a grant in 10 years provided among other conditions, HDIP continues to operate in Taylor and maintain at least 50 full-time jobs at the Taylor facility.  Should HDIP default under its agreement with TEDCO, the Company may be required to repay the advances with interest at the prime rate plus 3%.  As of March 31, 2013, $140,000 had been advanced under the TEDCO Agreement. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><b><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Subordinated Debt </font></i></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In December 2011, the Company commenced a private placement offering of 14.5% Five Year Subordinated Notes (the “Notes”) with Warrants to its existing preferred shareholders, directors of the Company and certain other accredited investors. Interest is payable monthly in cash. The offering was completed February 10, 2012 and resulted in the issuance of $833,600 in notes and five-year warrants to purchase an aggregate of 11,908,572 shares of the Company's common stock with an exercise price of $0.07 per share. The notes are due</font><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">five years from the closing date at 105% of face value. The total estimated value of the warrants using the Black-Scholes Option Pricing Model, with a volatility rate of 153%, had an estimated fair value of $0.03 per warrant. After calculating the relative fair value of the debt and warrants, $252,393 was recorded as a debt discount to the notes for the warrants. The discount is being amortized over the term of the debt using the effective interest method. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Notes may be prepaid by the Company in accordance with the following schedule below at the redemption prices (expressed in percentages of principal amount to be repaid), plus unpaid accrued interest to the date of payment:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:41.4pt;width:0px;"> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Loan Year</font></u></p> </td> <td valign="top" width="48%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Redemption Price</font></u></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">1</font></p> </td> <td valign="top" width="48%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">125%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2</font></p> </td> <td valign="top" width="48%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">120%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3</font></p> </td> <td valign="top" width="48%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">115%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">4</font></p> </td> <td valign="top" width="48%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">110%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Maturity</font></p> </td> <td valign="top" width="48%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">105%</font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In August 2012, the Company initiated a second private placement of Subordinated Notes due October 31, 2014 (Series II Subordinated Notes) with terms otherwise similar to the offering in December 2011. Terms for the Series II Subordinated Notes also include the issuance of five-year warrants to purchase shares of the Company's common stock with an exercise price of $0.035 per share. As of March 31, 2013, the Company had issued to directors and other accredited investors of the Company, $360,000 in Series II Subordinated Notes which included warrants to purchase 10,285,714 shares of Company stock. The notes are due</font><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">two years from the closing date at 105% of face value. The total estimated value of the warrants using the Black-Scholes Option Pricing Model, with a volatility rate of 178%, had an estimated fair value from $0.01 to $0.05 per warrant. After calculating the relative fair value of the debt and warrants, $158,131 was recorded as a debt discount to the notes for the warrants. The discount is being amortized over the term of the debt using the effective interest method. Subsequent to March 31, 2013, on April 22, 2013, the Company received an additional $54,000 for private placement Series II Subordinated Notes.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table summarizes the entire subordinated debt balance at March 31, 2013:</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="#339966" style="display:none;font-family:Arial Narrow,sans-serif;"><font color="#339966" lang="EN-US" style="font-family:Arial Narrow,sans-serif;font-size:11.0pt;"> </font></font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:26.15pt;width:0px;"> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Schedule of Subordinated Debt</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font style="display:none;font-family:Arial Narrow,sans-serif;"><font color="windowtext" style="font-family:Arial Narrow,sans-serif;font-size:10.0pt;"> </font></font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font style="display:none;font-family:Arial Narrow,sans-serif;"><font color="windowtext" style="font-family:Arial Narrow,sans-serif;font-size:10.0pt;"> </font></font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Series I</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Series II</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Gross proceeds received</font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $           833,600 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"> <font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$    360,000 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $       1,193,600 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less value assigned to warrants</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              (252,393)</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">     (158,131)</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              (410,524)</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                581,207 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       201,869 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                783,076 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Add: amortization of debt discount</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  63,100 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         41,981 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                105,081 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         Interest accreted to redemption price</font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  10,420 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">             4,607</font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  15,027 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Subordinated Debt outstanding</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                654,727 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       248,457 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                903,184 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less current maturities</font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                              - </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                     - </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                             - </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total Subordinated Debt</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $           654,727 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"> <font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$    248,457 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $           903,184</font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On January 1, 2013, the Company's board of directors approved a 4-month “Payment-in-Kind” or “PIK” interest plan on the Company's currently outstanding Subordinated Debt Notes. The plan suspended the monthly cash payments of interest to the note holders for four months through April 1, 2013. The monthly interest will be added to the principal of the notes. We currently plan to resume monthly cash interest payments on such notes commencing May 1, 2013.  As of March 31, 2013, the accrued interest payable for the Notes was $56,913.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 13.   Related Party Transactions</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On February 4, 2013, HDI Plastics, Inc. executed a Secured Promissory Note (the “Note”) in a principal amount of $200,000 in favor of Mark Schwartz and Alan Stern, directors of the Company.  The Note bears interest at an annual rate of 18%, payable monthly, and is guaranteed by the Company.  The Note matures on February 1, 2014, at which time all principal and accrued and unpaid interest on the Note is due.  The Note is secured by certain equipment of HDI Plastics. In connection with the issuance of the Note, the Company issued to each of Messrs. Schwartz and Stern a warrant to purchase 3,333,333 shares of common stock, par value $0.01 per share, of the Company for an exercise price of $0.03 per share, subject to appropriate adjustment for stock splits, combinations and similar recapitalization events.  The warrants expire on February 4, 2018. Pursuant to the terms of the Note and Security Agreement, HDI Plastics may borrow an additional $300,000 on the same terms and conditions as those set forth in the Note, Security Agreement and Warrants. The accrued interest on the notes was $3,000 as of March 31, 2013.</font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The total estimated value of the warrants using the Black-Scholes Option Pricing Model, with a volatility of 209%, had an estimated fair value of $0.01 per warrant.  After calculating the relative fair value of the debt and warrants, $48,388 was recorded as a debt discount to the debt for the warrants.  This discount is being amortized over the term of the debt using the effective interest method.  See Note 11 for more information.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">As of March 31, 2013, the Company has issued the following Subordinated Notes to the following directors of the Company, subject to the terms set forth in Note 12: </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                                                                                                                                    </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr> <td valign="top" width="65%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Kenneth Brimmer</font></p> </td> <td valign="top" width="35%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $               60,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Mark Schwartz</font></p> </td> <td valign="top" width="35%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $             175,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Larry Leitner</font></p> </td> <td valign="top" width="35%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $             150,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Alan Stern</font></p> </td> <td valign="top" width="35%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $             185,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="35%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On April 22, 2013, the Company received an additional $54,000 from Kenneth Brimmer, the Company's CEO as part of the private placement of Series II Subordinated Notes (See Note 12). </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company has agreed to pay $500 per month for executive office space from STEN Corporation. Mr. Brimmer is also CEO of STEN Corporation. As of March 31, 2013, $4,500 is unpaid under the arrangement.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 14.   Net Income (Loss) Per Share</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during each period.  Diluted net income (loss) per share includes the dilutive effect of common shares potentially issuable upon the exercise of stock options, warrants, or the conversion of preferred stock and convertible debt.  </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share at March 31, 2013 and 2012.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:4.65pt;width:0px;"> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="4%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="4" nowrap="nowrap" width="32%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Three months ended March 31</font></p> </td> <td width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="5" width="31%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Nine months ended March 31,</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                2013 </font></p> </td> <td colspan="2" nowrap="nowrap" width="4%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                2012 </font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">              2013 </font></p> </td> <td colspan="2" valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">              2012 </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Basic earnings (loss) per share calculation:</font></b></p> </td> <td nowrap="nowrap" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-align:justify;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from continuing operations to common shareholders</font></p> </td> <td nowrap="nowrap" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (478,897)</font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (403,480)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,369,091)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (904,063)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-align:justify;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from discontinued operations  to common shareholders</font></p> </td> <td nowrap="nowrap" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (149,681) </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                  409,085 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (31,824) </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                (315,981)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) to common shareholders</font></p> </td> <td nowrap="nowrap" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (628,578)</font></p> </td> <td nowrap="nowrap" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $               5,605</font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,400,915)</font></p> </td> <td colspan="2" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $     (1,220,044)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Weighted average of common shares outstanding</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">      52,388,750 </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             48,305,462 </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">    52,388,750 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             44,973,644 </font></p> </td> </tr> <tr style="height:.25in;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="5%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Basic net earnings (loss) from continuing operations</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $            (0.01)</font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.02)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Basic net earnings (loss) from discontinued operations</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $              0.00 </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $                0.01 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$             0.00 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Basic net earnings (loss) per share</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $           (0.01) </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $                 0.00</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.03)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted earnings (loss) per share calculation:</font></b></p> </td> <td width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from continuing operations to common shareholders</font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (478,897)</font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (403,480)</font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,369,091)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (904,063)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from discontinued operations to common shareholders.</font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (149,681) </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                  409,085 </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (31,824) </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                (315,981)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) to common shareholders</font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (628,578)</font></p> </td> <td width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $               5,605</font></p> </td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,400,915)</font></p> </td> <td colspan="2" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $     (1,220,044)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Weighted average of common shares outstanding</font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">      52,388,750 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             48,305,462 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">    52,388,750 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             44,973,644 </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">     Series A Convertible Preferred Stock </font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">[1]</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                       - </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                               7,336,680 </font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                     - </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                              - </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">     Stock Options  </font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">[2]</font></p> </td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                       - </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                              - </font></p> </td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                     - </font></p> </td> <td colspan="2" valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">     Warrants </font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">[3]</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                       - </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                              - </font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                     - </font></p> </td> <td colspan="2" valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-18.05pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted weighted average common shares                                              outstanding</font></p> </td> <td width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">      52,388,750 </font></p> </td> <td width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             55,642,142 </font></p> </td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">    52,388,750 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             44,973,644 </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-18.05pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted net earnings (loss) from continuing operations</font></p> </td> <td width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $            (0.01)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.02)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-18.05pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted net earnings (loss) from discontinued operations</font></p> </td> <td width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $              0.00 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $                0.01 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.00)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> </tr> <tr style="height:.3in;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted net earnings (loss) per share</font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $           (0.01) </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.00)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.03)</font></p> </td> </tr> <tr style="height:0;"> <td width="29%"></td> <td width="5%"></td> <td width="14%"></td> <td width="3%"></td> <td width="1%"></td> <td width="14%"></td> <td width="3%"></td> <td width="13%"></td> <td width="1%"></td> <td width="2%"></td> <td width="1%"></td> <td width="14%"></td> </tr> </table> </div> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:6.0pt;"> </font></p> <div align="left"><table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:.5pt;width:0px;"> <tr style="height:.4in;page-break-inside:avoid;"> <td valign="top" width="4%" style="height:.4in;padding:0in .5pt 0in .5pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">[1] </font></p> </td> <td valign="top" width="96%" style="height:.4in;padding:0in .5pt 0in .5pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:8.0pt;">At March 31, 2013 and 2012, there were 611,390 shares of Series A Convertible Preferred Stock outstanding. Using the preferred stock conversion ratio of 12:1, the common stock equivalents attributable to these preferred shares are 7,336,680 at March 31, 2013 and 2012.  </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:8.0pt;"> </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="4%" style="padding:0in .5pt 0in .5pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">[2] </font></p> </td> <td width="96%" style="padding:0in .5pt 0in .5pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:8.0pt;">At March 31, 2013, there were common stock equivalents attributable to outstanding stock options of 4,299,105 common shares and 8,352,914 common shares at March 31, 2012. All of the remaining stock options are anti-dilutive at March 31, 2013 and 2012, due to the loss from continuing operations, and therefore have been excluded from diluted earnings (loss) per share.</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:8.0pt;"> </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="4%" style="padding:0in .5pt 0in .5pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">[3] </font></p> </td> <td width="96%" style="padding:0in .5pt 0in .5pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:8.0pt;">At March 31, 2013 and 2012, there were common stock equivalents of 28,860,952 and 30,407,208 common shares attributable to warrants, respectively. The warrants would not be common stock equivalents at March 31, 2013 and 2012 due to the loss from continuing operations and therefore have been excluded from diluted earnings (loss) per share.</font></p> </td> </tr> </table></div> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 15. Operating Lease</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On December 28, 2012, as part of the Company's plan to relocate its plastic recycling business and resume operations, HDIP entered into a four-year lease and purchase option agreement with Southern Mattress Company of Texas, Inc. for approximately 65,000 square feet of main building space, including an additional approximate 15,000 square feet of storage space in Taylor, Texas (“Taylor Lease”).  The Taylor Lease calls for minimum monthly rents as follows:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:9.9pt;width:0px;"> <tr> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><b><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Period</font></u></b></p> </td> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;text-align:center;"><b><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Minimum Monthly Rent</font></u></b></p> </td> </tr> <tr> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">12/28/12 - 2/9/2013</font></p> </td> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$3,000</font></p> </td> </tr> <tr> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3/1/2013 - 2/28/2015</font></p> </td> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$8,500</font></p> </td> </tr> <tr> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3/1/2015 - 2/28/16</font></p> </td> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$12,750</font></p> </td> </tr> <tr> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3/1/2016 - 2/29/17</font></p> </td> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$20,625</font></p> </td> </tr> </table> </div> <p style="margin:0in;margin-bottom:10.0pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" lang="EN-US" style="font-family:Calibri,sans-serif;font-size:11.0pt;line-height:115%;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In addition to rent, HDIP shall pay for insurance and property taxes effective March 1, 2013.  HDIP has the right to purchase the property for $700,000 at any time after February 28, 2016.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><b><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Note 16.   Subsequent Events</font></b></p> <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On April 15, 2013, HDI closed on a third note disbursement of the Securities Purchase Agreement entered into December 3, 2012 with Asher Enterprises, Inc., pursuant to which we sold to Asher an 8% Convertible Promissory Note in the amount of $32,500 (the “Note”). The Note has a maturity date of January 15, 2014 and is convertible into our common stock at the Variable Conversion Price of 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The shares of common stock issuable upon conversion of the Note are not registered shares under the Securities Act of 1933.  The Company has the right to prepay the outstanding Note for an amount equal to 115%, multiplied by the sum of the then outstanding principal amount of this Note plus accrued and unpaid interest on the unpaid principal amount of this Note. </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On April 22, 2013 the Company received an additional $54,000 from an entity controlled by Kenneth Brimmer as part of the private placement of Series II Subordinate Notes with the terms as stated in Note 12.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Beginning April 26, 2013, as the Company recommenced operations and started invoicing customers again, HDIP began borrowing under the terms of the full-recourse financing agreement with Charter Capital (See Note 10). As of the date of this filing, Charter has advanced the Company $77,287.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></b></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Principles of Consolidation</font></i></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary (HDI Plastics, Inc.), after elimination of all intercompany accounts, transactions, and profits.</font></p> <p align="left" style="margin:0in;margin-bottom:.0001pt;text-align:left;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><i><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Recent Accounting Pronouncements</font></i></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. Under this standard, entities testing long-lived intangible assets for impairment now have an option of performing a qualitative assessment to determine whether further impairment testing is necessary. If an entity determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is more-likely-than-not less than the carrying amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is required. For HDI, this ASU was effective beginning January 1, 2013. The adoption of this standard did not have a material impact on the Company's consolidated results of operations or financial condition.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Company has not included the results of operations of our former medical device business in the results from continuing operations.  The income (loss) from discontinued operations for the three and nine months ended March 31, 2013, and 2012 consists of the following:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:0pt;width:0px;"> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Income from Discontinued Operations</font></b></p> </td> <td colspan="3" valign="bottom" width="32%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Three months ended March 31,</font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="3" valign="bottom" width="29%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Nine months ended March 31,</font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              2013 </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              2012 </font></p> </td> <td valign="bottom" width="6%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              2013 </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">            2012 </font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Revenue, net</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $                 - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $                 - </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">  $               - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$    248,923 </font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Cost of Goods Sold</font></p> </td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="6%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         10,557 </font></p> </td> </tr> <tr style="height:3.0pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Gross Profit</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:3.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">      238,366 </font></p> </td> </tr> <tr style="height:13.7pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="14%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="14%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="6%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:13.7pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Operating expenses (miscellaneous)</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">           13,687 </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         (15,335)</font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         31,824 </font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">      265,645 </font></p> </td> </tr> <tr style="height:13.7pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Deferred compensation expense (benefit)</font></p> </td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">        135,994 </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       (393,750)</font></p> </td> <td valign="bottom" width="6%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.7pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">      165,000 </font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Income (loss) from discontinued operations</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       (149,681)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">        409,085 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       (31,824)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">     (192,279)</font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Gain (loss) on sale of selected assets to CPC</font></p> </td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> <td valign="bottom" width="6%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                    - </font></p> </td> <td valign="bottom" width="4%" style="height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="border-bottom:solid windowtext 1.0pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">     (123,702)</font></p> </td> </tr> <tr style="height:13.5pt;page-break-inside:avoid;"> <td valign="bottom" width="33%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Net income (loss) from discontinued operations</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $  (149,681)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $   409,085 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">  $  (31,824)</font></p> </td> <td valign="bottom" width="4%" style="background:#DBE5F1;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="12%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:13.5pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$  (315,981)</font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Inventory consisted of the following:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:6.75pt;margin-right:6.75pt;width:0px;"> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">March 31,</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td nowrap="nowrap" valign="bottom" width="22%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">June 30,</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="23%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2013</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2012</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Raw materials</font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $   128,375</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $    96,142</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Finished goods</font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">           12,111</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">          76,081</font></p> </td> </tr> <tr style="height:.1in;"> <td nowrap="nowrap" valign="bottom" width="45%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;text-indent:20.0pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total inventory</font></p> </td> <td nowrap="nowrap" valign="bottom" width="23%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $   140,486</font></p> </td> <td nowrap="nowrap" valign="bottom" width="10%" style="background:#DBE5F1;height:.1in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="22%" style="background:#DBE5F1;border-bottom:double windowtext 2.25pt;height:.1in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $  172,223</font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">Property and Equipment is as follows:</font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr style="page-break-inside:avoid;"> <td valign="top" width="50%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">March 31,</font></p> </td> <td valign="bottom" width="6%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">June 30,</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="50%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2013</font></p> </td> <td valign="bottom" width="6%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2012</font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Equipment</font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $       707,413 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $        672,383 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Leasehold  improvements</font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">            213,103 </font></p> </td> <td valign="bottom" width="6%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               93,235 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Office furniture and equipment</font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                 9,006 </font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  7,923 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Vehicles</font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">              11,984 </font></p> </td> <td valign="bottom" width="6%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               11,984 </font></p> </td> </tr> <tr style="height:12.15pt;page-break-inside:avoid;"> <td valign="bottom" width="50%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less accumulated depreciation</font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">          (209,591)</font></p> </td> <td valign="bottom" width="6%" style="background:#DBE5F1;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:12.15pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">           (107,194)</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="50%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">  Total equipment</font></p> </td> <td valign="bottom" width="22%" style="border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $       731,915 </font></p> </td> <td valign="bottom" width="6%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="22%" style="border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $        678,331 </font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table summarizes the Asher - Convertible Debt at March 31, 2013:</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr> <td valign="top" width="78%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Net proceeds received</font></p> </td> <td valign="top" width="22%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  $       70,000 </font></p> </td> </tr> <tr> <td valign="top" width="78%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less value assigned to beneficial conversion feature</font></p> </td> <td valign="top" width="22%" style="border-bottom:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                         (54,310)</font></p> </td> </tr> <tr> <td valign="top" width="78%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"></td> <td valign="top" width="22%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                           15,690 </font></p> </td> </tr> <tr> <td valign="top" width="78%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Add: amortization of debt discount</font></p> </td> <td valign="top" width="22%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                             8,380 </font></p> </td> </tr> <tr> <td valign="top" width="78%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total Asher - convertible debt outstanding, net</font></p> </td> <td valign="top" width="22%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;border-top:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  $       24,070 </font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table summarizes the Senior Debt at March 31, 2013:</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr> <td valign="top" width="67%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Cash proceeds received</font></p> </td> <td valign="top" width="33%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $         200,000 </font></p> </td> </tr> <tr> <td valign="top" width="67%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less value assigned to warrants</font></p> </td> <td valign="top" width="33%" style="border-bottom:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               (48,388)</font></p> </td> </tr> <tr> <td valign="top" width="67%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"></td> <td valign="top" width="33%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">               151,612 </font></p> </td> </tr> <tr> <td valign="top" width="67%" style="padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Add: amortization of debt discount</font></p> </td> <td valign="top" width="33%" style="border-bottom:solid black 1.0pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">                   8,065 </font></p> </td> </tr> <tr> <td valign="top" width="67%" style="background:#DBE5F1;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total senior debt outstanding, net</font></p> </td> <td valign="top" width="33%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 6.75pt 0in 6.75pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $         159,677 </font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The Notes may be prepaid by the Company in accordance with the following schedule below at the redemption prices (expressed in percentages of principal amount to be repaid), plus unpaid accrued interest to the date of payment:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-1.0in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:41.4pt;width:0px;"> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Loan Year</font></u></p> </td> <td valign="top" width="48%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Redemption Price</font></u></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">1</font></p> </td> <td valign="top" width="48%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">125%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">2</font></p> </td> <td valign="top" width="48%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">120%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3</font></p> </td> <td valign="top" width="48%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">115%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">4</font></p> </td> <td valign="top" width="48%" style="padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">110%</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="52%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Maturity</font></p> </td> <td valign="top" width="48%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">105%</font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table summarizes the entire subordinated debt balance at March 31, 2013:</font></p> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;page-break-after:avoid;"><font color="#339966" style="display:none;font-family:Arial Narrow,sans-serif;"><font color="#339966" lang="EN-US" style="font-family:Arial Narrow,sans-serif;font-size:11.0pt;"> </font></font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:26.15pt;width:0px;"> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Schedule of Subordinated Debt</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font style="display:none;font-family:Arial Narrow,sans-serif;"><font color="windowtext" style="font-family:Arial Narrow,sans-serif;font-size:10.0pt;"> </font></font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font style="display:none;font-family:Arial Narrow,sans-serif;"><font color="windowtext" style="font-family:Arial Narrow,sans-serif;font-size:10.0pt;"> </font></font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Series I</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Series II</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Gross proceeds received</font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $           833,600 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"> <font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$    360,000 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $       1,193,600 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less value assigned to warrants</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              (252,393)</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">     (158,131)</font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">              (410,524)</font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                581,207 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       201,869 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                783,076 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Add: amortization of debt discount</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  63,100 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         41,981 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                105,081 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">         Interest accreted to redemption price</font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  10,420 </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">             4,607</font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                  15,027 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Subordinated Debt outstanding</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                654,727 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">       248,457 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                903,184 </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Less current maturities</font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                              - </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                     - </font></p> </td> <td valign="top" width="5%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                             - </font></p> </td> </tr> <tr style="page-break-inside:avoid;"> <td valign="top" width="37%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">Total Subordinated Debt</font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $           654,727 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="15%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"> <font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">$    248,457 </font></p> </td> <td valign="top" width="5%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="19%" style="background:#DBE5F1;border-bottom:double windowtext 2pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $           903,184</font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">As of March 31, 2013, the Company has issued the following Subordinated Notes to the following directors of the Company, subject to the terms set forth in Note 12: </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">                                                                                                                                    </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;width:0px;"> <tr> <td valign="top" width="65%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Kenneth Brimmer</font></p> </td> <td valign="top" width="35%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $               60,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Mark Schwartz</font></p> </td> <td valign="top" width="35%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $             175,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Larry Leitner</font></p> </td> <td valign="top" width="35%" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $             150,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Alan Stern</font></p> </td> <td valign="top" width="35%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">   $             185,000</font></p> </td> </tr> <tr> <td valign="top" width="65%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="35%" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share at March 31, 2013 and 2012.</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:4.65pt;width:0px;"> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="4%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="4" nowrap="nowrap" width="32%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Three months ended March 31</font></p> </td> <td width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="5" width="31%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Nine months ended March 31,</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                2013 </font></p> </td> <td colspan="2" nowrap="nowrap" width="4%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                2012 </font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">              2013 </font></p> </td> <td colspan="2" valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">              2012 </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Basic earnings (loss) per share calculation:</font></b></p> </td> <td nowrap="nowrap" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-align:justify;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from continuing operations to common shareholders</font></p> </td> <td nowrap="nowrap" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (478,897)</font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (403,480)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,369,091)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (904,063)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-align:justify;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from discontinued operations  to common shareholders</font></p> </td> <td nowrap="nowrap" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (149,681) </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                  409,085 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (31,824) </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                (315,981)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) to common shareholders</font></p> </td> <td nowrap="nowrap" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (628,578)</font></p> </td> <td nowrap="nowrap" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $               5,605</font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,400,915)</font></p> </td> <td colspan="2" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $     (1,220,044)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Weighted average of common shares outstanding</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">      52,388,750 </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             48,305,462 </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">    52,388,750 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             44,973,644 </font></p> </td> </tr> <tr style="height:.25in;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="5%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:.25in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Basic net earnings (loss) from continuing operations</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $            (0.01)</font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.02)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Basic net earnings (loss) from discontinued operations</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $              0.00 </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $                0.01 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$             0.00 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Basic net earnings (loss) per share</font></p> </td> <td nowrap="nowrap" valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $           (0.01) </font></p> </td> <td nowrap="nowrap" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $                 0.00</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.03)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><b><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted earnings (loss) per share calculation:</font></b></p> </td> <td width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from continuing operations to common shareholders</font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (478,897)</font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (403,480)</font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,369,091)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $        (904,063)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-.25in;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) from discontinued operations to common shareholders.</font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (149,681) </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                  409,085 </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">         (31,824) </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                (315,981)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  Net income (loss) to common shareholders</font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $      (628,578)</font></p> </td> <td width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $               5,605</font></p> </td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$   (1,400,915)</font></p> </td> <td colspan="2" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $     (1,220,044)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Weighted average of common shares outstanding</font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">      52,388,750 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             48,305,462 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">    52,388,750 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             44,973,644 </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">     Series A Convertible Preferred Stock </font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">[1]</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                       - </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                               7,336,680 </font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                     - </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                              - </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">     Stock Options  </font></p> </td> <td valign="bottom" width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">[2]</font></p> </td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                       - </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                              - </font></p> </td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                     - </font></p> </td> <td colspan="2" valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">     Warrants </font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p align="right" style="margin:0in;margin-bottom:.0001pt;text-align:right;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">[3]</font></p> </td> <td valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                       - </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                                              - </font></p> </td> <td valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="top" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                     - </font></p> </td> <td colspan="2" valign="top" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="top" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;">                      - </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-18.05pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted weighted average common shares                                              outstanding</font></p> </td> <td width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td valign="bottom" width="14%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">      52,388,750 </font></p> </td> <td width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             55,642,142 </font></p> </td> <td valign="top" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">    52,388,750 </font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                             44,973,644 </font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-18.05pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted net earnings (loss) from continuing operations</font></p> </td> <td width="5%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $            (0.01)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.02)</font></p> </td> </tr> <tr style="height:15.0pt;page-break-inside:avoid;"> <td width="29%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:17.8pt;text-indent:-18.05pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted net earnings (loss) from discontinued operations</font></p> </td> <td width="5%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $              0.00 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $                0.01 </font></p> </td> <td valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.00)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="border-bottom:solid windowtext 1.0pt;height:15.0pt;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.01)</font></p> </td> </tr> <tr style="height:.3in;page-break-inside:avoid;"> <td valign="bottom" width="29%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">Diluted net earnings (loss) per share</font></p> </td> <td valign="bottom" width="5%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"></td> <td nowrap="nowrap" valign="bottom" width="14%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">  $           (0.01) </font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"></td> <td colspan="2" nowrap="nowrap" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.00)</font></p> </td> <td valign="bottom" width="3%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td valign="bottom" width="13%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">$            (0.03)</font></p> </td> <td colspan="2" valign="bottom" width="3%" style="background:#DBE5F1;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> </td> <td colspan="2" valign="bottom" width="15%" style="background:#DBE5F1;border-bottom:solid windowtext 1.0pt;height:.3in;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;"><font color="black" style="font-family:Times New Roman,serif;font-size:9.0pt;">                      $              (0.03)</font></p> </td> </tr> <tr style="height:0;"> <td width="29%"></td> <td width="5%"></td> <td width="14%"></td> <td width="3%"></td> <td width="1%"></td> <td width="14%"></td> <td width="3%"></td> <td width="13%"></td> <td width="1%"></td> <td width="2%"></td> <td width="1%"></td> <td width="14%"></td> </tr> </table>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --><p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;">On December 28, 2012, as part of the Company's plan to relocate its plastic recycling business and resume operations, HDIP entered into a four-year lease and purchase option agreement with Southern Mattress Company of Texas, Inc. for approximately 65,000 square feet of main building space, including an additional approximate 15,000 square feet of storage space in Taylor, Texas (“Taylor Lease”).  The Taylor Lease calls for minimum monthly rents as follows:</font></p> <p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color="windowtext" lang="EN-US" style="font-family:Times New Roman,serif;font-size:10.0pt;"> </font></p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse:collapse;margin-left:9.9pt;width:0px;"> <tr> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><b><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Period</font></u></b></p> </td> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p align="center" style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;text-align:center;"><b><u><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">Minimum Monthly Rent</font></u></b></p> </td> </tr> <tr> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">12/28/12 - 2/9/2013</font></p> </td> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$3,000</font></p> </td> </tr> <tr> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3/1/2013 - 2/28/2015</font></p> </td> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$8,500</font></p> </td> </tr> <tr> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3/1/2015 - 2/28/16</font></p> </td> <td valign="top" style="padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$12,750</font></p> </td> </tr> <tr> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.4in;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">3/1/2016 - 2/29/17</font></p> </td> <td valign="top" style="background:#DBE5F1;padding:0in 5.4pt 0in 5.4pt;"> <p style="margin:0in;margin-bottom:.0001pt;margin-left:12.6pt;margin-right:51.7pt;margin-top:0in;"><font color="windowtext" style="font-family:Times New Roman,serif;font-size:10.0pt;">$20,625</font></p> </td> </tr> </table>
30682216
857619
200000
300000
75000
200000
275000
25000
75000
125000
125000
0
0
0
248923
10557
238366
13687
-15335
31824
265645
135994
-393750
165000
150000
150000
200000
200000
200000
119463
1200
0.10
0
6000
123702
150000
37500
237500
37500
50000
128375
96142
12111
76081
0.15
127500
37500
50000
707413
672383
213103
93235
9006
7923
11984
11984
-209591
-107194
44670
37603
139493
412711
280643
262500
18143
135994
-393750
0
165000
0.80
1000000
0.0059
0.2125
77287
0
0
70000
-54310
15690
8380
24070
200000
-48388
151612
8065
159677
0.08
0.08
0.18
32500
32500
200000
42500
0.58
0.58
0.42
0.42
1.15
1.15
54310
5000
3333333
10285714
11908572
0.03
0.035
0.07
3000
2.09
1.78
1.53
0.01
0.03
48388
158131
252393
1.05
1.25
1.20
1.15
1.10
1193600
-410524
783076
105081
15027
54000
360000
833600
903184
833600
-252393
581207
63100
10420
654727
360000
-158131
201869
41981
4607
248457
140000
0.03
0.145
1.05
1.05
56913
0.01
0.05
60000
175000
150000
185000
0.01
500
4500
-149681
409085
-31824
-315981
-628578
5605
-1400915
-1220044
7336680
0.00
0.01
-0.00
-0.01
-0.01
-0.00
-0.03
-0.03
3000
8500
12750
20625
700000
[1] At March 31, 2013 and 2012, there were 611,390 shares of Series A Convertible Preferred Stock outstanding. Using the preferred stock conversion ratio of 12:1, the common stock equivalents attributable to these preferred shares are 7,336,680 at March 31, 2013 and 2012.