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RESTATEMENT OF FINANCIAL STATEMENTS
 
In August 2009, the Company was informed that the Public Company Accounting Oversight Board (“PCAOB”) revoked the registration of Moore & Associates Chartered who was serving as the Company’s independent auditor.  The revocation was a result of Moore’s violation of PCAOB rules and auditing standards.  This revocation of Moore’s registration required the Company to have re- audited the financial statements issued for the year ended December 31, 2008.

The re-audit produced material differences from the previously filed versions.  Originally the Company miscalculated the 2008 beneficial conversion feature which resulted in an understatement of liabilities amounting to $540,000 and a nominal change in the related interest expense.  Further, the Company miscalculated the fair value expense of stock options that were granted during 2008, resulting in an understatement of the fair value expense amounting to $129,912.   Included in this filing are the restated 2008 financial statements.  For comparative purposes, the table below presents the re-audited balance sheet and income statement compared to the original filing.
 
   
Restated
    
As Filed
  
   
December 31,
    
December 31
  
   
2008
    
2008
  
             
ASSETS
  
             
CURRENT ASSETS
  
Cash
  
$
37,822
    
$
37,822
  
Accounts Receivable
    
4,852
      
4,852
  
Inventory
    
443,978
      
443,978
  
Prepaid Expenses
    
91,671
      
91,671
  
                 
Total Current Assets
    
578,323
      
578,323
  
                 
EQUIPMENT, NET
    
77,638
      
77,638
  
                 
OTHER ASSETS
                
Deposits
    
2,460
      
2,460
  
                 
Total Other Assets
    
2,460
      
2,460
  
                 
Total Assets
  
$
658,421
    
$
658,421
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  
                 
CURRENT LIABILITIES
  
Accounts Payable
  
$
312,189
    
$
312,189
  
Accrued Expenses
    
77,098
      
82,041
  
Notes Payable - Related Parties
    
413,000
      
413,000
  
 Current Portion of Notes Payable
    
9,350
      
4,407
  
Accrued Interest Payable
    
134,414
      
134,414
  
Warranty Accrual
    
43,486
      
43,486
  
Customer Deposits
    
-
      
-
  
Total Current Liabilities
    
989,537
      
989,537
  
                 
LONG-TERM DEBT
  
Notes Payable
    
8,814
      
8,814
  
Convertible Debt
    
559,800
      
8,055
  
                 
Total Liabilities
    
1,558,151
      
1,006,406
  
                 
STOCKHOLDERS' EQUITY (DEFICIT)
                
Common Stock: 100,000,000 shares
                
authorized at $0.001par value;
                
Issued and outstanding 13,927,915 and
                
7,481,813 shares, respectively
    
13,928
      
13,928
  
Common Stock Subscribed
    
(24,000
)
    
(24,000
)
Additional Paid in Capital
    
14,317,969
      
14,728,057
  
Accumulated Deficit
    
(15,207,627
)
    
(15,065,970
)
                 
Total Stockholders' Equity (Deficit)
    
(899,730
)
    
(347,985
)
                 
TOTAL LIABILITIES AND
                
STOCKHOLDERS EQUITY (DEFICIT)
  
$
658,421
    
$
658,421
  
 
 
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RESTATEMENT OF FINANCIAL STATEMENTS - continued
 
   
Years Ended December 31,
  
   
2008 Restated
    
2008 as Filed
  
REVENUES
            
Product Sales
  
$
73,324
    
$
72,949
  
Other Income
    
254
      
254
  
                 
Total Revenues
    
73,578
      
73,203
  
                 
Cost of Goods Sold
    
54,545
      
54,170
  
                 
Gross Profit
    
19,033
      
19,033
  
                 
EXPENSES
                
Legal and Professional
    
1,604,420
      
1,507,766
  
General and Administrative
    
461,267
      
428,010
  
Research and Development
    
231,624
      
231,624
  
Advertising and Marketing
    
48,065
      
48,065
  
Depreciation
    
19,092
      
19,092
  
                 
Total Expenses
    
2,364,468
      
2,234,557
  
                 
Net (Loss) from Operations
    
(2,345,435
)
    
(2,215,524
)
                 
OTHER INCOME AND (EXPENSE)
                
Gain on Extinguishment of Debt
    
1,823,954
      
1,823,955
  
Interest Expense
    
(149,676
)
    
(137,931
)
                 
Total Other Income (Expense)
    
1,674,278
      
1,686,024
  
                 
Net (Loss) before Income Taxes
    
(671,157
)
    
(529,500
)
                 
Income Tax Expense
    
-
      
-
  
                 
NET (LOSS)
  
$
(671,157
)
  
$
(529,500
)
                 
Basic and diluted (loss) per share
  
$
(0.06
)
  
$
(0.05
)
                 
Weighted Average Number of Common
                
Shares Outstanding
    
10,704,864
      
10,704,864
  
 
 
 
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