Applied Visual Sciences (APVS) 10-Q 6 Nov 13 2013 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Nov. 05, 2013
Document And Entity Information	'	'
Entity Registrant Name	'Applied Visual Sciences, Inc.	'
Entity Central Index Key	'0000873198	'
Document Type	'10-Q	'
Document Period End Date	30-Jun-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'No	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	102,381,612
Document Fiscal Period Focus	'Q2	'
Document Fiscal Year Focus	'2013	'

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Jun. 30, 2013	Dec. 31, 2012
ASSETS	'	'
Cash and cash equivalents	$9,360	$3,445
Prepaid expenses	2,885	1,115
Total current assets	12,245	4,560
Equipment, net	74,626	116,135
Other Assets	'	'
Other noncurrent assets	'	11,122
Intangible assets, net	314,708	331,163
Total assets	401,579	462,980
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)	'	'
Accounts payable	1,610,339	1,570,639
Accrued wages and related	7,634,677	7,177,753
Other accrued liabilities	108,048	72,804
Note payable and advances, related parties	80,500	89,000
Notes payable, net of discount	694,917	559,704
Convertible debentures	2,025,846	2,025,846
Derivative liabilities - embedded conversion feature of debentures	540,226	202,585
Total current liabilities	12,694,553	11,698,331
Stockholder's Equity (Deficit)	'	'
Convertible preferred stock, $0.20 par value; authorized 1,000,000 shares Shares issued and outstanding at June 30, 2013 - none Shares issued and outstanding at December 31, 2012 - none	'	'
Common stock, $0.001 par value; authorized 200,000,000 shares Shares issued and outstanding at June 30, 2013 - 101,026,612 Shares issued and outstanding at December 31, 2012 - 95,318,279	101,027	95,318
Additional paid-in capital	82,659,150	82,117,522
Accumulated comprehensive income	63,354	63,354
Deficit accumulated during operating stage	-92,323,180	-92,323,180
Deficit accumulated during development stage	-2,793,325	-1,188,365
Total stockholder's equity (deficit)	-12,292,974	-11,235,351
Total liabilities and stockholder's equity (deficit)	$401,579	$462,980

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Stockholder's Equity (Deficit)	'	'
Preferred stock, par value	$0.20	$0.20
Preferred stock, Authorized	1,000,000	1,000,000
Preferred stock, Issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$0.00	$0.00
Common stock, Authorized	200,000,000	200,000,000
Common stock, Issued	101,026,612	95,318,279
Common stock, outstanding	101,026,612	95,318,279

Condensed_Consolidated_Stateme

Condensed Consolidated Statements Of Operations And Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		6 Months Ended		15 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013
Condensed Consolidated Statements Of Operations And Comprehensive Income Loss	'	'	'	'	'
Net revenues	'	'	'	'	'
Cost of sales	'	'	'	'	'
Gross profit	'	'	'	'	'
Selling, general and administrative expense	631,813	404,743	1,237,126	925,895	2,468,228
Operating loss	-631,813	-404,743	-1,237,126	-925,895	-2,468,228
Other income (expense)	-287,988	39,225	-367,834	-55,359	-325,097
Net loss	-919,801	-365,518	-1,604,960	-981,254	-2,793,325
Net loss per common share	'	'	'	'	'
Basic & Diluted	($0.01)	$0	($0.02)	($0.01)	'
Weighted average common shares outstanding	'	'	'	'	'
Basic & Diluted	101,026,612	92,555,328	100,322,940	91,233,016	'
Other comprehensive income	'	'	'	'	'
Comprehensive income - beginning of period	63,354	63,354	63,354	63,354	63,354
Cumulative translation adjustments	'	'	'	'	'
Comprehensive income - end of period	$63,354	$63,354	$63,354	$63,354	$63,354

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended		15 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES	'	'	'
Net loss	($1,604,960)	($981,254)	($2,793,325)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'	'
Depreciation and amortization	37,368	49,363	104,450
Amortization of debt discounts	3,063	21,787	33,232
Stock-based compensation expense	514,337	11,125	598,629
Revaluation of derivative instrument income	337,641	'	202,585
Noncash broker compensation expense	'	2,700	2,700
(Gain) / Loss on disposal of fixed assets	-8,338	'	3,949
Changes in operating assets and liabilities:	'	'	'
Decrease (Increase) in prepaid expenses	-1,770	1,275	-275
Decrease in other noncurrent assets	11,122	'	11,122
Increase in accounts payable	44,850	170,914	265,209
Increase in accrued wages and related	481,924	527,422	1,240,579
Increase in other accrued liabilities	35,244	30,872	84,656
Net cash flows used in operating activities	-149,519	-165,796	-246,489
CASH FLOWS FROM INVESTING ACTIVITIES	'	'	'
Investment in patents	'	-475	'
Proceeds from sale of fixed assets	28,934	'	64,584
Net cash provided by (used in) investing activities	28,934	-475	64,584
CASH FLOWS FROM FINANCING ACTIVITIES	'	'	'
Proceeds from issuance of common stock, net	'	25,000	'
Proceeds from short-term notes payable, net	135,000	135,000	195,000
Reduction of short-term notes payable, net of additional notes, related party	-8,500	'	-8,500
Net cash flows provided by financing activities	126,500	160,000	186,500
Net increase (decrease) in cash and cash equivalents	5,915	-6,271	4,595
Cash and cash equivalents at beginning of the period	3,445	6,490	4,765
Cash and cash equivalents at end of the period	9,360	219	9,360
Supplemental disclosure of cash flow information:	'	'	'
Conversion of accounts payable and other accrued liability to common stock	5,150	100,000	5,150
Conversion of accrued wages to common stock	$25,000	$170,417	$124,600

1_Description_of_Business

(1) Description of Business	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
(1) Description of Business	'
	Overview
	Applied Visual Sciences, Inc. was incorporated under the name Guardian Technologies International, Inc., in the Commonwealth of Virginia in 1989 and reincorporated in State of Delaware in February 1996. We changed our name to Applied Visual Sciences, Inc., on July 9, 2010. The Company, previously an operating stage company, became a development stage company on April 1, 2012, the date of inception as a development stage company for financial reporting. Applied Visual Sciences, Inc. and its subsidiaries are collectively referred to herein as the “Company,” “Applied Visual Sciences, Inc.,” “Applied Visual,” “us,” “we,” or “our.”
	Applied Visual Sciences is a software technology company that designs and develops imaging informatics solutions for delivery to its target markets, aviation/homeland security and healthcare. Our two product lines are offered through our two operating subsidiaries as follows: Guardian Technologies International, Inc. for aviation/homeland security products and Signature Mapping Medical Sciences, Inc., for healthcare. On March 23, 2012, the Company established a new entity; Instasis Imaging, Inc., for the development, marketing, and sales of a suite of imaging analytic applications for the automated detection of breast cancer. We may engage in one or more acquisitions of businesses that are complementary, and may form wholly-owned subsidiaries to operate within defined vertical markets products.
	The Company utilizes imaging technologies and analytics to create integrated information management technology products and services that address critical problems experienced by corporations and governmental agencies in healthcare and homeland security. Each product and service can improve the quality and response time of decision-making, organizational productivity, and efficiency within the enterprise. Our product suite integrates, streamlines, and distributes business and clinical information and images across the enterprise.
	Our Business Strategy
	Our strategic vision is to position our core technology as the de facto standard for digital image analysis, knowledge extraction, and detection. Our strategy is based upon the following principal objectives:
		·	Maintain product development and sales/marketing focus on large, underserved, and rapidly growing markets with a demonstrated need for intelligent imaging informatics.
		·	Leverage Applied Visual Sciences, Inc.’s technology, experienced management team, research and development infrastructure.
		·	Focus our talents on solving highly challenging information problems associated with digital imaging analysis.
		·	Establish an international market presence through the development of a significant OEM/Reseller network.
		·	Build and maintain a strong balance sheet to ensure the availability of capital for product development, acquisitions, and growth.
		·	Seek to broaden our investment appeal to large institutions.
	To achieve our strategic vision, we are aware of the need to exercise the financial and operational discipline necessary to achieve the proper blend of resources, products and strategic partnerships. These efforts can accelerate our ability to develop, deploy and service a broad range of intelligent imaging informatics solutions directly to our target markets and indirectly through OEM/value added reseller (“VAR”) partners. During 2012, we continued implementing changes across the spectrum of our business. We refined our marketing strategy for PinPoint™ and Signature Mapping™, and enhanced our Signature Mapping™ product offerings.
	We may engage in one or more acquisitions of businesses that are complementary, and may form wholly-owned subsidiaries to operate within defined vertical markets.
	Our Core Technology
	Our core technology is an “intelligent imaging informatics” (“3i™”) engine that is capable of extracting embedded knowledge from digital images, and has the capacity to analyze and detect image anomalies. The technology is not limited by type of digital format. It can be deployed across divergent digital sources such as still images, x-ray images, video and hyper-spectral imagery. To date, the technology has been tested in the area of threat detection for baggage scanning at airports, for bomb squad applications and the detection of tuberculosis by analyzing digital images of stained sputum slides captured through a photo microscopy system. Varying degrees of research and development have been conducted in the areas of detection for cargo scanning, people scanning, military target acquisition in a hyper-spectral environment, satellite remote sensing ground surveys and mammography CAD products and radiologists’ diagnostic imaging tools, and while product development in these areas is ongoing, there can be no assurance that we will successfully develop product offerings in these areas.
	We are currently focused on providing software technology solutions and services in two primary markets - aviation/homeland security with PinPoint™ and healthcare technology with Signature Mapping™ solutions. However, as new or enhanced solutions are developed, we expect to expand into other markets such as military and defense utilizing hyper-spectral technology, and imaging diagnostics for the medical industry.

2_Basis_of_Presentation

(2) Basis of Presentation	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
Basis of Presentation	'
	The Company, previously an operating stage company, became a development stage company on April 1, 2012, the date of inception as a development stage company for financial reporting. A development stage company, as defined by ASC-915-10 “Accounting and Reporting by Development Stage Enterprise”, is an entity that devotes substantially all of its efforts to establish a business and either of the following conditions exists: 1) the principal operations have not commenced, or 2) the principal operations have commenced, but there has been no significant revenue therefrom.
	The unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed consolidated financial statements do not include complete footnotes and financial statement presentations. As a result, these unaudited condensed consolidated financial statements should be read along with the audited consolidated financial statements and notes thereto for the year ended December 31, 2012, included in our 2012 Annual Report on Form 10-K. In our opinion, the unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial position, results of operations and cash flows for those periods presented. The preparation of financial statements in conformity with United States (U.S.) generally accepted accounting principles requires management to make estimates and assumptions that affect reported assets, liabilities, revenues and expenses, as well as disclosure of contingent assets and liabilities. Actual results could differ from those estimates and assumptions. Moreover, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire year.
	The Company maintains a website at www.appliedvs.com, which makes available free of charge our recent annual report and other filings with the SEC. In addition to its website, the Company also disseminates material non-public information on Facebook at https://www.facebook.com/appliedvs, and on Twitter at https://mobile.twitter.com/appliedvs.
	These unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. Our independent registered public accounting firm’s reports on the consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2012, contains an explanatory paragraph wherein it expressed an opinion that there is substantial doubt about our ability to continue as a going concern. Accordingly, careful consideration of such opinion should be given in determining whether to continue or become our stockholder.
	Summary of Significant Accounting Policies
	The Company, previously an operating stage company, became a development stage company on April 1, 2012, the date of inception as a development stage company for financial reporting. A development stage company, as defined by ASC-915-10 “Accounting and Reporting by Development Stage Enterprise”, is an entity that devotes substantially all of its efforts to establish a business and either of the following conditions exists: 1) the principal operations have not commenced, or 2) the principal operations have commenced, but there has been no significant revenue therefrom.
	As disclosed in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2012, the discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with United States (U.S.) generally accepted accounting principles. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in those financial statements. These judgments can be subjective and complex and, consequently, actual results could differ from those estimates and assumptions. Since December 31, 2012, there have been no significant changes to the assumptions and estimates related to those critical accounting policies. The Company has disclosed in Part I, Item 4. Controls and Procedures of this report that our disclosure controls and procedures were not effective during the period, as a result of the Company filing its December 31, 2012 Form 10-K on May 13, 2013, which was due on March 31, 2013, and the late filing of this report on Form 10-Q, which was due on August 14, 2013.
	The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, RJL Marketing Services, Guardian Technologies International, Inc., Signature Mapping Medical Sciences, Inc., Instasis Imaging, Inc., Guardian Healthcare Systems UK, Ltd., and Wise Systems Ltd., in which it has the controlling interest. Subsidiaries acquired are consolidated from the date of acquisition. All significant intercompany balances and transactions have been eliminated.
	The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and embedded conversion features and detachable warrants approximates fair value based on the liquidity of these financial instruments and their short-term nature.
	The Company reviews the terms of convertible debt and equity securities for indications requiring bifurcation, and separate accounting, for the embedded conversion feature. Under guidelines of ASC 815-40, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” public companies that are required, or that could be required, to deliver shares of common stock as part of a physical settlement or a net-share settlement, under a freestanding financial instrument, are required to initially measure the contract at fair value (or allocate on a fair value basis if issued as part of a debt financing), and report the value in permanent equity. However, in certain circumstances (e.g. the company could not ascertain whether sufficient authorized shares exist to settle the contract), permanent equity classification should be reassessed. The classification of the contract as permanent equity should be reassessed at each balance sheet date and, if necessary, reclassified as a liability on the date of the event causing the reclassification. If a reclassification occurs from permanent equity to a liability, the fair value of the financial instrument should be removed from permanent equity as an adjustment to stockholders’ equity. Any portion of the contract that could be net-share settled as of the balance sheet date would remain classified in permanent equity. Subsequent to the initial reclassification event, changes in fair value of the instrument are charged to expense until the conditions giving rise to the reclassification are resolved. When a company has more than one contract subject to reclassification, it must determine a method of reclassification that is systematic, rational, and consistently applied. The Company adopted a reclassification policy that reclassifies contracts with the latest inception date first. To the extent that changes in fair value of equity instruments relates to financings since November 8, 2006 (the date of first closing under the debenture financing with reset provisions that made the number of potentially issuable shares indeterminable), the increase or decrease in the fair value of the warrants is charged or credited to interest expense. To the extent the equity instruments relate to other transactions (e.g. consulting expense), the increases or decreases are charged or credited based on the nature of the transaction. The number of additional shares potentially issuable under the November 8, 2006, outstanding convertible debentures and related outstanding warrants and other subsequent warrants issued was determinable as of the debentures’ final milestone reset date on May 20, 2008, and, therefore, the outstanding fair value of the warrants issued to the debenture holders, other subsequent warrants issued through May 20, 2008, and the warrants’ related beneficial conversion feature were reclassified as stockholders’ equity in accordance with currently effective generally accepted accounting principles.
	Reclassifications
	Certain reclassifications of previously reported amounts have been made to conform to the current period presentation. These classifications had no effect on the previously reported net loss.
	Segment Data and Related Information
	ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information,” establishes standards for the manner in which public companies report information about operating segments in annual and interim financial statements. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The method for determining what information to report is based on the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. The Company’s chief operating decision-maker is considered to be the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an entity level basis accompanied by disaggregated information about revenues by product type and certain information about geographic regions for purposes of making operating decisions and assessing financial performance. The entity level financial information is identical to the information presented in the accompanying consolidated statements of operations.
	The Company has two groups of products and services - Security (PinPoint™) and Healthcare (Signature Mapping™ Medical Computer Aided Detection (“Medical CAD”), and operates in three geographic markets. The Company has determined that as of the balance sheet date, it operates as a single operating unit since the two products make up a slight revenue stream to the Company.
	The Company operates in North America, and Africa and Asia. In general, revenues are attributed to the country in which the contract originates. There were no revenues for the six months ended June 30, 2013. Our product and service categories would include software licenses, research funding, maintenance support, and hardware. The Company continues to focus efforts in developing the Signature Mapping™ imaging technologies, while at the same time pursuing opportunities for our security product/services. The following information represents software license activities. The Company continues to present the segmentation as they continue to develop their services by product and geographic location.
															Cumulative From
			Three Months Ended						Six Months Ended						1-Apr-12
	GEOGRAPHIC DATA		30-Jun						30-Jun						(date of inception)
			2013			2012			2013			2012			To June 30, 2013
	Net revenues
	The Americas		$	—		$	—		$	—		$	—		$	—
	Africa and Asia			—			—			—			—			—
	Total net revenue		$	—		$	—		$	—		$	—		$	—
	Cost of sales
	The Americas		$	—		$	—		$	—		$	—		$	—
	Africa and Asia			—			—			—			—			—
	Total cost of sales		$	—		$	—		$	—		$	—		$	—
	Operating (loss)
	The Americas		$	(631,813	)	$	(404,743	)	$	(1,237,126	)	$	(925,895	)	$	(2,468,228	)
	Africa and Asia			—			—			—			—			—
	Total operating loss		$	(631,813	)	$	(404,743	)	$	(1,237,126	)	$	(925,895	)	$	(2,468,228	)
	Depreciation and amortization
	The Americas		$	18,684		$	24,682		$	37,368		$	49,363		$	104,450
	Africa and Asia			—			—			—			—			—
	Total depreciation and amortiz		$	18,684		$	24,682		$	37,368		$	49,363		$	104,450
	Total assets
	The Americas								$	401,579		$	550,311
	Africa and Asia									—			—
	Total assets								$	401,579		$	550,311
	Long-lived assets, net
	The Americas								$	389,334		$	537,635
	Africa and Asia									—			—
	Total long-lived assets, net								$	389,334		$	537,635
	Long-lived assets, net: consists of software, goodwill, patents, property and equipment, and other noncurrent assets.
	Stock-Based Compensation
	The Company has two active equity compensation plans which include the Amended and Restated 2003 Stock Incentive Plan and the 2009 Stock Compensation Plan (collectively, the “Plans”). A total of 50,000,000 shares have been reserved for issuance under these Plans in the form of stock-based awards to employees, non-employee directors and outside consultants of the Company, of which 4,871,353 shares remain available for issuance thereunder as of June 30, 2013. The grant of awards under the Plans require approval by the Compensation Committee of the Board of Directors of the Company (or the Board of Directors, in the absence of such a committee) (the “Committee”), and the Committee is authorized under the Plans to take all actions that it determines to be necessary or appropriate in connection with the administration of the Plans.
	The Company adopted the provisions of ASC 718-10, “Share-Based Payment” to account for its share-based payments. ASC 718-10 requires all share-based payments to employees, or to non-employee directors as compensation for service on the Board of Directors, to be recognized as compensation expense in the consolidated financial statements based on the estimated fair values of such options as calculated using the Black-Scholes model, and the related expense is recognized on a straight-line basis over the service period to vesting for each grant, net of estimated forfeitures. The Company’s estimated forfeiture rates are based on its historical experience within separate groups of employees. In accordance with ASC 718-10, the Company recognized total stock-based compensation expense for employees and non-employee members of the Board of Directors for the six months ended June 30, 2013 of $508,837 and $0 for the same period during 2012.
	The Company accounts for stock options granted to non-employees in accordance with ASC 718-10 and ASC 505-50, “Accounting For Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling, Goods Or Services.” ASC 505-50 establishes the measurement principles for transactions in which equity instruments are issued in exchange for the receipt of goods or services. The Company has relied upon the guidance provided under ASC 505-50 to determine the measurement date and the fair value re-measurement principles to be applied, and recognizes as an expense the estimated fair value of such options as calculated using the Black-Scholes model. The fair value is remeasured during the service period at each balance sheet date, and is amortized over the remaining service period to vesting for each option or the remaining term of the recipient’s contractual arrangement, whichever is shorter. The Company recognizes compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate. Total stock-based compensation expense for consultants during the six months ended June 30, 2013 and the same period in 2012 were $5,500 and $11,125, respectively.
	The Black-Scholes Merton option valuation model (Black-Scholes model) was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are not transferable. The fair value of each option granted was estimated using the Black-Scholes model with the following weighted-average assumptions:
	Black-Scholes Model Assumptions		2013			2012
	Risk-free interest rate (1)			0.99	%	2.27	%
	Expected volatility (2)			163.6	%	136.7	%
	Dividend yield (3)			0	%	0	%
	Expected life (4)		5.4 years			6.5 years
	(1)	The risk-free interest rate is based on US Treasury debt securities with maturities similar to the expected term of the option.
	(2)	Expected volatility is based on historical volatility of the Company’s stock factoring in daily share price observations.
	(3)	No cash dividends have been declared on the Company’s common stock since the Company’s inception, and the Company currently does not anticipate paying cash dividends over the expected term of the option.
	(4)	The expected term of stock option awards granted is derived from historical exercise experience under the Company’s stock option plan and represents the period of time that stock option awards granted are expected to be outstanding. The expected term assumption incorporates the contractual term of an option grant, which is usually ten years, as well as the vesting period of an award, which is generally pro rata vesting over two years.
	The Amended and Restated 2003 Stock Incentive Plan
	The Board of Directors adopted the 2003 Stock Incentive Plan on August 29, 2003. The plan may be modified or terminated at any time, and any such amendment or termination will not affect outstanding options without the consent of the optionee. The Board of Directors amended and restated the plan on December 2, 2003. The Amended and Restated 2003 Stock Incentive Plan (“2003 Plan”) was approved by the shareholders on February 13, 2004, pursuant to which it grants stock-based compensation in the form of options, which will result in the issuance of up to an aggregate of 30,000,000 shares of the Company’s common stock. The 2003 Stock Incentive Plan terminates on August 29, 2013. The aggregate number of shares and the number of shares in an award (as well as the option price) may be adjusted if the outstanding shares of the Company are increased, decreased or exchanged through merger or other stock transaction. The Plan provides for options which qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986, as well as the issuance of Non-Qualified Options, which do not so qualify. Pursuant to the terms of the 2003 Plan, the Company, as determined by the Board of Directors or a committee appointed by the Board, may grant Non-Qualified Stock Options (“NQSOs”) to its executive officers, non-employee directors, or consultants of the Company and its subsidiaries at any time, and from time to time. The 2003 Plan also provides for Incentive Stock Options (“ISOs”) to be granted to any officer or other employee of the Company or its subsidiaries at any time, and from time to time, as determined by the Compensation Committee. Such stock options granted allow a grantee to purchase a fixed number of shares of the Company’s common stock at a fixed exercise price not be less than the quoted market price (or 110% thereof for Incentive Stock Options issued to a holder of 10% or greater beneficial ownership) of the shares on the date granted. The options may vest on a single date or over a period of time, but normally they do not vest unless the grantee is still employed by, or a director of, the Company on the vesting date. Generally for all employees, the options vest 50% after the first year from the date of grant and the remaining 50% after the second year from the date of grant. Stock options granted to independent board of directors vest 100% after the service period, which generally is one year from the date of grant.
	Factors considered in granting stock options included: (i) the general policy during the past five, and in the foreseeable future, of not increasing base salaries of all employees, (ii) the performance of employees, (iii) the employees’ increasing responsibilities in a dynamic, and shrinking organization, and (iv) the accomplishments achieved by the Company during the prior year. The 2003 Plan has been the principal method for our employees and executive officers to acquire equity interests in the Company. We believe that the annual aggregate value of these awards should be set near competitive median levels for comparable companies. We may provide a greater portion of total compensation to our executives and employees through stock options given the general policy of not increasing base salaries in the foreseeable future. Our Compensation Committee administers the 2003 Plan based on the above factors, and the Committee approved the grant of stock options to all current employees, including its named executives, during 2007 through 2009 as an incentive for continued contributions in moving our product development efforts forward. Stock options were not granted to employees, including its named executives, during 2012 and 2011, as the Company did not achieve the desired results during 2010 and 2011. Also, the Compensation Committee, based on management’s recommendation and discussions with the Committee, may grant stock options to new employees. There were no stock options granted to new employees during the first six months of 2013, since there were no new employees hired during this period.
	Options granted under the Plan must be evidenced by a stock option agreement in a form consistent with the provisions of the 2003 Plan. Each option shall expire on the earliest of (a) ten (10) years from the date it is granted, (b) sixty (60) days after the optionee dies or becomes disabled, (c) immediately upon the optionee's termination of employment or service or cessation of Board service, whichever is applicable, or (d) such date as the Committee shall determine, as set forth in the relevant option agreement; provided, however, that no ISO which is granted to an optionee who, at the time such option is granted, owns stock possessing more than ten (10) percent of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, shall be exercisable after the expiration of five (5) years from the date such option is granted.
To exercise an option, the 2003 Plan participant, in accordance with the relevant option agreement, must provide the Company a written notice setting forth the number of options being exercised and their underlying shares, and tender an amount equal to the total exercise value of the options being exercised. The right to purchase shares is cumulative so that once the right to purchase any shares has vested; those shares or any portion of those shares may be purchased at any time thereafter until the expiration or termination of the option. ISOs and NQSOs that are not exercised in accordance with the terms and provisions of the stock option agreement, or as amended, will expire as to any then unexercised portion. Stock options that expire, are cancelled, or forfeited will again become available for issuance under the 2003 Plan as described below. The aggregate number of shares and the number of shares in an award (as well as the option price) may be adjusted if the outstanding shares of the Company are increased, decreased or exchanged through merger or other stock transaction. The shares issued by the Company under the 2003 Plan may be either treasury shares or authorized but unissued shares as the Company’s board of directors or the Compensation Committee may determine from time to time. Except as specifically provided in an option agreement, options granted under the 2003 Plan may not be sold, pledged, transferred or assigned in any way, except by will or by the laws of descent and distribution, and during the lifetime of a participant to whom the ISOs is granted, and the ISOs may only be exercised by the participant.
The Board of Directors granted 14,650,000 stock options to all employees, including its named executives, under the 2003 Plan during the six months ended June 30, 2013, and the fair value of the options is $439,500, of which $402,875 was recognized as stock-based compensation expense during the six months ended June 30, 2013. The stock options were granted in consideration for the continued deferral of salaries during 2012 and 2013 to-date, as well as for the incentive for ongoing contributions in moving our product development efforts forward. The Company has reserved under the plan 24,159,347 shares to be issued upon exercise of outstanding options, and 3,536,353 remain available for future awards. Compensation expense for stock options granted is recognized over the requisite service period, which is typically the period over which the stock-based compensation awards vest.
Stock Options Exercised under the 2003 Plan
There were no stock options exercised during the first six months of 2013, and during the same period in 2012.
Summary of stock option activity under the 2003 Plan for the six months ended June 30, 2013 issued to employees, non-employee members of the Board of Directors and consultants is as follows:
		Weighted-
		Average
Fiscal Year and Activity		Exercise Price			Number of Options
Outstanding December 31, 2012		$	0.32			9,509,347
Fiscal 2013 activity
Granted			0.03			14,650,000
Exercised			-			-
Cancelled			-			-
Outstanding June 30, 2013			0.15			24,159,347
Reserved for future issuance at June 30, 2013						3,536,353
The following table summarizes additional information about the 2003 Plan stock options outstanding at June 30, 2013:
Issued and Outstanding														Exercisable
								Weighted-
								Average			Weighted-
								Remaining			Average						Weighted-
					Number of			Contractual			Exercise			Number of			Average
Type of Option and Range of Exercise Prices					Options			Life (Yrs)			Price			Options			Price
Nonqualified Stock Options		$	0.3	(1) (5)		850,000			0.5		$	0.3			850,000		$	0.3
Nonqualified Stock Options		$	0.3	(2) (5)		44,000			1.6			0.3			44,000			0.3
Incentive Stock Options		$	0.15 - $4.05	-3		649,300			4.3			0.98			649,300			0.98
Incentive Stock Options		$	0.03 - $0.30	(4) (5)		22,616,047			7.7			0.12			15,291,049			0.29
Total						24,159,347			7.4		$	0.15			16,834,349		$	0.34
(1)	Initially issued to employees below fair value during the period of July 2003 through February 2004.
(2)	Initially issued to directors below fair value during the period of February 2004 through September 2005.
(3)	Issued to consultants at fair value.
(4)	Issued to directors and employees at fair value, or above fair value for those individuals with greater than 10% beneficial ownership.
(5)	The exercise price reflects the repricing of stock options as approved by the Compensation Committee on April 24, 2010.
The 2009 Stock Compensation Plan
On June 4, 2009, the Board of Directors adopted the 2009 Stock Compensation Plan (“2009 Plan) which provides for the grant or issuance of up to an aggregate of 20,000,000 shares of the Company’s common stock pursuant to non-qualified stock options (“NQSOs”), restricted stock awards (“RSAs”), restricted stock rights (“RSRs”), or common stock awards (“Common Stock Awards”) (a NQSO, RSA, RSR or Common Stock Award, individually, an “Award;” collectively, “Awards”). Our Board of Directors has delegated its authority to administer the 2009 Plan to the Compensation Committee.
The purpose of the 2009 Plan is to foster our success and the success of our subsidiaries and affiliates by providing incentives to employees, directors, officers and consultants to promote our long-term financial success. The Plan complements our 2003 Amended and Restated Stock Incentive Plan (the “2003 Plan”) and provides greater flexibility to us in that it permits us to compensate and award employees, directors, officers and consultants through the issuance of certain options, RSAs, RSRs, and stock awards in addition, or as an alternative, to the incentive and non-qualified stock options that may be awarded under the 2003 Plan. The 2009 Plan terminates on June 4, 2019, and no award may be made after that date, however, awards made before that date may extend beyond that date. If an award under the 2009 Plan is cancelled, expires, forfeited, settled in cash or otherwise terminates without being exercised in full, the shares of common stock not acquired pursuant to the award will again become available for issuance under the 2009 Plan. The Board may amend, terminate, or modify the 2009 Plan at any time, without shareholder approval, unless required by the Internal Revenue Code of 1986, pursuant to Section 16 under the Securities Exchange Act of 1934, as amended, or by any national securities exchange or system on which our common stock is then listed or reported, or by any regulatory body.
Subject to the provisions of the 2009 Plan, the Compensation Committee has the power to:
	·	Prescribe, amend, and rescind rules and regulations relating to the 2009 Plan and to define terms not otherwise defined therein;
	·	Determine which persons are eligible to participate, to which of such participants, if any, awards shall be granted, and the timing of any such awards;
	·	Grant awards to participants and determine the terms and conditions thereof, including the number of shares subject to awards and the exercise or purchase price of such shares and the circumstances under which awards become exercisable or vested or are forfeited or expire;
	·	Establish any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any award;
	·	Prescribe and amend the terms of the agreements or other communications evidencing awards made under the 2009 Plan (which need not be identical) and the terms or form of any document or notice required to be delivered to us by participants under the 2009 Plan;
	·	Determine the appropriate adjustment, if any, required as a result of any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off or dividend (other than regular, quarterly cash dividends), or other changes in the number or kind of outstanding shares or any stock or other securities into which such shares shall have been exchanged;
	·	Interpret and construe the 2009 Plan, any rules and regulations under the 2009 Plan and the terms and conditions of any award granted thereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and
	·	Make all other determinations deemed necessary or advisable for the administration of the 2009 Plan.
Unless the Board expressly provides otherwise prior to a change of control or in an award agreement, in the event of a change of control of the Company, all outstanding options under the 2009 Plan vest and become exercisable on the date immediately before the change of control and all restrictions under RSAs and RSRs shall lapse or be deemed satisfied on the date immediately prior to the change of control. A change of control is deemed to have occurred upon the occurrence of one of the following events: (i) any person or group of persons becomes the beneficial owner of shares of the Company to which 50% or more of the total number of votes for the election of directors may be cast; (ii) as a result of a cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, persons who were directors immediately prior to the event cease to constitute a majority of the board; (iii) stockholders approve an agreement providing either that the Company will cease to be an independent publicly owned corporation or for sale or other disposition of all or substantially all the assets of the Company; or (iv) a tender offer or exchange offer is made for shares of our common stock (other than one made by us) and shares of common stock are acquired.
The Compensation Committee determines all awards to non-employee directors and such awards are not subject to management’s discretion. From time to time, the committee will set the amount and the type of award that will be granted to non-employee directors on a periodic, nondiscriminatory basis, including pursuant to any plan adopted by the Compensation Committee or Board for the compensation of non-employee directors. The committee may set additional awards to be granted to non-employee directors also on a periodic, nondiscriminatory basis based on one or more of the following criteria: (i) service as the chair of a Board committee; (ii) service as chairman of the Board; (iii) the number or type of Board committees on which a director serves; or (iv) the first selection or appointment of an individual to the Board.
Non-qualified stock options may be granted pursuant to non-qualified stock option award agreements and certificates adopted by the Board, as amended by the Compensation Committee. The Compensation Committee determines the terms of each stock option granted under the 2009 Plan, including the number of shares covered by an option, exercise price and means of payment, the vesting and exercisability of the option, and restrictions on transfer and the term. The exercise price of an option granted under the Plan may not be less than the fair market value on the date of option grant and may only be exercised at such times as may be specified by the Committee and provided for in an award agreement. The options expire on the earliest of ten years after the date of grant, 90 days after the death or disability of the recipient, immediately upon termination of employment or service other than by death or disability, or such date as the Compensation Committee determines. The Compensation Committee, in its sole discretion, may change by agreement the post-termination rights of a recipient, including accelerating the date or dates on which the option becomes vested and is exercisable following termination of employment or service, or extend the period. Options granted under the plan may be exercised by delivering cash, a cashless exercise, or by delivering to us the proceeds of shares of our common stock issuable under an option. Compensation expense for non-qualified stock options is recognized over the period they vest.
An award of restricted stock consists of a specified number of shares of our common stock that are, or may be, subject to restrictions, forfeiture conditions, and any other terms and conditions for periods determined by the Committee. The Compensation Committee has discretion to determine the terms of any award of restricted stock, including the number of shares subject to the award, and the minimum period over which the award may vest, and the acceleration of any vesting in the event of death, disability or change of control. RSAs are not transferable or assignable unless provided otherwise by the Compensation Committee with respect to certain specified family-related transfers. Unless the Committee determines otherwise, once the restricted stock vests, the shares of common stock specified in the Award will be free of restriction, subject to any applicable lock up period. Prior to the termination of the restrictions under a RSA, a participant may vote and receive dividends on the restricted stock unless the Committee determines otherwise, but may not sell or otherwise transfer the shares until such time as the restrictions of the award have been satisfied. Compensation expense for restricted stock awards is recognized over the period they vest.
An award of restricted stock rights entitles a participant to receive a specified number of shares of our common stock that are, or may be, subject to restrictions, forfeiture conditions, and any other terms and conditions for periods determined by the Committee. It may also include the right to dividend equivalents if and as so determined by the committee. The Compensation Committee has discretion to determine the terms of any award of restricted stock or RSRs, including the number of shares subject to the award, and the minimum period over which the award may vest, and the acceleration of any vesting in the event of death, disability or change of control. RSRs are not transferable or assignable unless provided otherwise by the Compensation Committee with respect to certain specified family-related transfers. Unless the committee determines otherwise, once a RSR vests, the shares of common stock specified in the award will be issued to the participant. A participant who has been awarded RSRs may not vote the shares of common stock subject to the rights until the shares are issued. Until the vesting period applicable to a RSRs award expires and the shares are issued, the participant also may not transfer or encumber any interest in the RSRs or in any related dividend equivalents. Compensation expense for restricted stock rights is recognized over the period they vest.
The Compensation Committee may also make stock awards of common stock without restrictions, except that if the award is in lieu of salary, service fee, cash bonus or other cash compensation, the number of shares covered by an award shall be based on the fair market value of such shares on the date of grant. Common Stock Awards under the plan may be issued free of restriction and may vest immediately; however, the Committee may impose vesting and other restrictions related to the grant of such common stock awards. Compensation expense for common stock awards is recognized over the period they vest, although generally the awards vest immediately.
The following is a summary of the number and type of awards granted to, or exercised or forfeited by, employees, non-employee members of the Board of Directors and consultants pursuant to the Company’s 2009 Stock Compensation Plan for the six months ended June 30, 2013:
	Weighted-Average
	Grant or Exercise
Fiscal Year and Activity		Price Per Share			Number of Shares
Reserved for future issuance as of December 31, 2012						6,668,333
Fiscal 2013 activity:
Common stock awards		$	0.03			5,333,333
Restricted stock awards			-			-
Restricted stock rights			-			-
Non-qualified stock options			-			-
Issued during 2013			0.03			5,333,333
Reserved for future issuance as of June 30, 2013						1,335,000
Stock options or restricted stock rights outstanding						-
Stock Issued under the 2009 Plan
In March 2013, an employee converted $25,001 of accrued wages for 833,333 shares of common stock. The shares were issued under the 2009 Stock Compensation Plan. Common stock was increased by $834 for the par value of the shares, and paid-in capital was increased by $24,167.
In January 2013, the Company issued 4,500,000 shares of common stock to three of its named executives, which vest 50% three months from the date of issuance and 50% upon six months from date of issuance. The shares were issued under the 2009 Stock Compensation Plan in consideration for the continued deferral of salaries during 2012 and 2013 to-date, as well as for the incentive for ongoing contributions in moving our product development efforts forward. Our Compensation Committee, under the direction of the Board of Directors, administers the 2009 Plan based on the above factors, and the Board approved the grant of stock options to all current employees, including its named executives. Common stock was increased by $4,500 for the par value of the shares, paid-in capital was increased by $130,500, and $135,000 was recorded as deferred stock compensation. During the six months ended June 30, 2013, $146,250 was expensed as stock compensation, and an aggregate of $41,250 was recorded for the revaluation of such shares outstanding at each period end until fully vested.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. For financial statement purposes, depreciation is provided on the straight-line method over the estimated useful life of the asset ranging from 3 to 10 years.
		(Unaudited)
Asset (Useful Life)		30-Jun-13			31-Dec-12
Software (3 years)		$	84,224		$	84,224
Computer equipment (3 to 5 years)			329,861			329,861
Furniture and fixtures (7 to 10 years)			231,033			323,639
Equipment (7 to 10 years)			80,727			80,727
			725,845			818,451
Less accumulated depreciation			651,219			702,316
Equipment, net		$	74,626		$	116,135
Depreciation expense for property and equipment was $20,913 and $32,907 in the six months ended June 30, 2013 and 2012, respectively, and is reflected in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company sold furniture in March 2013 for $28,934, which had a net book value of $20,596 and resulted in a gain from the sale of fixed assets of $8,338.
Goodwill and Other Intangible Assets
Intangible Assets – Intangible assets consist of acquired software and patents. Under ASC 350, “Goodwill and Other Intangible Assets,” such assets acquired including software technology is considered to have a finite life. Management has estimated the useful life of acquired software technology to be 5 years and amortized such costs on a straight-line basis over this period. In addition, ASC 985-20, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,” requires the Company to consider whether or not the software technology is impaired using a net realizable value analysis based on projected discounted cash flows. The Company prepared this analysis as of June 30, 2013, and concluded that the intangible assets are not impaired. Patent acquisition costs pertaining to the Company’s 3i technology that covers its PinPoint™ and Signature Mapping™ intellectual property (technology not acquired through acquisition), have been capitalized as of the date incurred, and are being amortized over the 20-year legal life of the patents. The Company has been granted by the United States Patent & Trademark Office (“USPTO”) six patents related to its 3i technology. The Company evaluates the periods of amortization continually to determine whether later events or circumstances require revised estimates of useful lives. The Company’s intangible acquired software technology was fully amortized as of December 31, 2009. Therefore, there was no amortization costs associated with acquired software during the six months ended June 30, 2013 and 2012, respectively. Amortization expense for patent acquisition costs was $16,455 and $16,456 during the six months ended June 30, 2013 and 2012, respectively, and is reflected in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company anticipates incurring additional patent acquisition costs during 2013.
		Six Months Ended June 30, 2013
		Beginning Period Cost									Net Book Value
						Additions			Reductions
Intangibles with finite lives:
Patent acquisition costs		$	331,163		$	0		$	16,455		$	314,708
Excess of Purchase Price over Net Assets Acquired (Goodwill) – The Company follows the provisions of ASC 805-10, “Business Combinations” and ASC 350-10, “Goodwill and Other Intangible Assets.” These statements establish financial accounting and reporting standards for acquired goodwill. Specifically, the standards address how acquired intangible assets should be accounted for both at the time of acquisition and after they have been recognized in the financial statements. Effective January 1, 2002, with the adoption of ASC 350-10, goodwill must be evaluated for impairment and is no longer amortized. Excess of purchase price over net assets acquired (“goodwill”) represents the excess of acquisition purchase price over the fair value of the net assets acquired. To the extent possible, a portion of the excess purchase price is assigned to identifiable intangible assets. There was no goodwill on the consolidated balance sheet of the Company during Fiscal 2012 and the six months ended June 30, 2013, as a net realizable value analysis was made for goodwill in prior years and such asset was considered fully impaired during those prior years. Therefore, there was no amortization expense of goodwill during the six months ended June 30, 2013, or during the same period in 2012.
Impairment of Excess Purchase Price over Net Assets Acquired – The Company follows the provisions of ASC 350-10 “Goodwill and Other Intangible Assets” for the impairment of goodwill. The Company determines impairment by comparing the fair value of the goodwill, using the undiscounted cash flow method, with the carrying amount of that goodwill. Impairment is tested annually or whenever indicators of impairment arise. There was no goodwill on the consolidated balance sheet of the Company during Fiscal 2012 and the six months ended June 30, 2013, as a net realizable value analysis was made for goodwill in prior years and such asset was considered fully impaired during those prior years.
Impairment of Long-Lived Assets – The Company evaluates the carrying value of long-lived assets for impairment, whenever events or changes in circumstances indicate that the carrying value of an asset within the scope of ASC 360-10, “Accounting of the Impairment or Disposal of Long-Lived Assets” may not be recoverable. The Company’s assessment for impairment of assets involves estimating the undiscounted cash flows expected to result from use of the asset and its eventual disposition. An impairment loss recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset, and considers year-end the date for its annual impairment testing.
Recently Adopted Accounting Pronouncement
In September 2011, the Financial Accounting Standards Board (“FASB”) amended its authoritative guidance related to testing goodwill for impairment.  Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before performing Step 1 of the goodwill impairment test.  If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying amount, the two-step impairment test would be required.  This guidance became effective in the beginning of the Company’s fiscal 2012, and did not have a material impact on the Company’s consolidated financial statements.
In June 2011, the FASB amended its authoritative guidance related to the presentation of comprehensive income, requiring entities to present items of net income and other comprehensive income either in one continuous statement or in two separate consecutive statements.  This guidance also required entities to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.  In December 2011, the FASB issued an update to this guidance deferring the requirement to present reclassification adjustments on the face of the financial statements.  However, the Company is still required to present reclassification adjustments on either the face of the financial statement where comprehensive income is reported or disclose the reclassification adjustments in the notes to the financial statements.  This guidance, including the deferral, becomes effective for the Company’s fiscal 2013 first quarter, with early adoption permitted and full retrospective application required.  The guidance did not have a material impact on the Company’s consolidated financial statements.
In May 2011, the FASB amended its authoritative guidance related to fair value measurements to provide a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards (“IFRS”).  This guidance clarifies the application of existing fair value measurement and expands the existing disclosure requirements.  This guidance became effective in the beginning of the Company’s fiscal 2012. This guidance did not have an impact on the Company’s results of operations, financial position or cash flows. As a result of the adoption of this guidance, the Company did not change its valuation techniques, but may make additional disclosures as needed.
In December 2010, the FASB amended its authoritative guidance related to business combinations entered into by an entity that are material on an individual or aggregate basis.  These amendments clarify existing guidance that if an entity presents comparative financial statements that include a material business combination, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period.  The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  This guidance became effective prospectively for business combinations for which the acquisition date is on or after the first day of the Company’s fiscal 2012.  This disclosure-only guidance did not have a material impact on the Company’s results of operations, financial position or cash flows.
Recently Issued Accounting Pronouncement
In July 2012, the FASB amended its authoritative guidance related to testing indefinite-lived intangible assets for impairment.  Under the revised guidance, entities testing their indefinite-lived intangible assets for impairment have the option of performing a qualitative assessment before performing further impairment testing.  If entities determine, on the basis of qualitative factors, that it is more-likely-than-not that the asset is impaired, a quantitative test is required.  The guidance becomes effective in the beginning of the Company's fiscal 2014, with early adoption permitted.  The Company is currently evaluating the timing of adopting this guidance which is not expected to have an impact on the Company's consolidated financial statements.
In December 2011, the FASB issued authoritative guidance that creates new disclosure requirements about the nature of an entity’s rights of offset and related arrangements associated with its financial instruments and derivative instruments.  This revised guidance helps reconcile differences in the offsetting requirements under U.S. GAAP and International Financial Reporting Standards (“IFRS”).  These requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement.  This disclosure-only guidance becomes effective for the Company’s fiscal 2013 third quarter, with retrospective application required.  The Company currently does not hold any financial or derivative instruments that are subject to an enforceable master netting arrangement.  However, the Company currently utilizes the right of offset when netting certain negative cash balances in its statement of financial position.  This guidance is not expected to have an impact on the Company’s results of operations, financial position or cash flows, but may require certain additional disclosures if such balances are material or if the Company enters into additional arrangements that fall under the provisions of this guidance.
Other ASU’s that have been issued or proposed by the FASB ASC that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

3_Financial_Condition_Going_Co

(3) Financial Condition, Going Concern Uncertainties and Events of Default	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
(3) Financial Condition, Going Concern Uncertainties and Events of Default	'
	The Company, previously an operating stage company, became a development stage company on April 1, 2012, the date of inception as a development stage company for financial reporting. A development stage company, as defined by ASC-915-10 “Accounting and Reporting by Development Stage Enterprise”, is an entity that devotes substantially all of its efforts to establish a business and either of the following conditions exists: 1) the principal operations have not commenced, or 2) the principal operations have commenced, but there has been no significant revenue therefrom. During the six months ended June 30, 2013, Applied Visual Sciences’ revenue generating activities have not produced sufficient funds for profitable operations and we have incurred operating losses since inception. In view of these matters, realization of certain of the assets in the accompanying consolidated balance sheet is dependent upon continued operations, which in turn is dependent upon our ability to meet our financial requirements, raise additional financing on acceptable terms, and the success of future operations. Our independent registered public accounting firm’s report on the consolidated financial statements included herein, and in our annual report on Form 10-K for the year ended December 31, 2012, contains an explanatory paragraph wherein they expressed an opinion that there is substantial doubt about our ability to continue as a going concern. Accordingly, careful consideration of such opinion should be given in determining whether to continue or become our stockholder.
	As of June 30, 2013, we have outstanding trade and accrued payables of $1,610,339, other accrued liabilities of $108,048, and accrued salaries and related expenses due to our employees and management of $7,634,677. Also, the Company has an outstanding noninterest-bearing loan from its Chief Executive Officer of $80,500, and $695,000 short-term notes from six investors, which has debt discount outstanding of $83.
	The principal amount of our outstanding Series A Debentures of $1,688,205 became due on July 1, 2011, and such amount was not paid. Therefore, the Company may be considered in default. The debentures provide that any default in the payment of principal, which default is not cured within the five trading days of the receipt of notice of such default or ten trading days after the Company becomes aware of such default, will be deemed an event of default and may result in enforcement of the debenture holders’ rights and remedies under the debentures and applicable law. We are in discussions with the debenture holders to re-negotiate the terms of the debentures, including the repayment or repurchase of the debentures and/or seek to extend their maturity date, although we have not reached any agreement with the debenture holders with regard to any such repayment, repurchase or extension. Our ability to repay or repurchase the debentures is contingent upon our ability to raise additional financing, of which there can be no assurance. Also, as a condition to any such extension, debenture holders may seek to amend or modify certain other terms of the debentures. If an event of default occurs under the debentures, the debenture holders may elect to require us to make immediate repayment of the mandatory default amount, which equals the sum of (i) the greater of either (a) 120% of the outstanding principal amount of the debentures, or (b) the outstanding principal amount unpaid divided by the conversion price on the date the mandatory default amount is either (1) demanded or otherwise due or (2) paid in full, whichever has the lower conversion price, multiplied by the variable weighted average price of the common stock on the date the mandatory default amount is either demanded or otherwise due, whichever has the higher variable weighted average price, and (ii) all other amounts, costs, expenses, and liquidated damages due under the debentures. In anticipation of such election by the debenture holders, due to the nonpayment of principal amount on the due date of July 1, 2011, we measured the mandatory default at approximately $337,641 and subsequently on each balance sheet date, which is reflected in the carrying value of the debentures and also recognized as interest expense. We remeasured the mandatory default amount as of June 30, 2013 at approximately $337,641. As of the date of this report, the debenture holders have not made an election requiring immediate repayment of the mandatory amount, although there can be no assurance they will not do so. The Company currently has insufficient funds to repay the outstanding amount in the event the debenture holders make a demand for payment.
	During the six months ended June 30 2013, the Company issued promissory notes to three accredited investors in the aggregate principal amount of $135,000 ($134,775, net of commissions and expenses in the amount of $225), of which $30,000 originally matured on March 31, 2013 and was amended to mature on December 31, 2013, $3,000 matures on January 24, 2014, $2,000 matures on January 28, 2014, and $100,000 matures on September 21, 2014. The short-term notes accrue interest at a rate of 12% per annum. The Company also issued to the note holders an aggregate of 95,000 shares of common stock.
	As of June 30, 2013, we had a cash balance of $9,360. Subsequently and through November 5, 2013, we issued five promissory notes to accredited investors in the aggregate principal amount of $44,500. Three of the notes accrue interest, with one note of $8,500 at a rate of 5.9% per annum, one note of $14,000 at a rate of 10% per annum, and one note of $5,000 at a rate of 12% per annum. The company issued an aggregate of 355,000 shares of common stock to three of the note holders. Management believes these funds to be insufficient to fund our operations for the next twelve months absent any cash flow from operations or funds from the sale of our equity or debt securities. Currently, we are spending or incurring (and accruing) expenses of approximately $190,000 per month on operations and the continued research and development of our 3i technologies and products, including with regard to salaries and consulting fees. Management believes that we will require an aggregate of approximately $2,280,000 to fund our operations for the next 12 months and to repay certain outstanding trade payables and accrued expenses. This assumes that holders of our outstanding debentures convert such debt into shares of our common stock or that we are able to extend the term of the debentures, of which there can be no assurance. In the event we are unable to extend the term of the debentures beyond their new maturity date, the debenture holders do not convert such debt or require payment of principal, partially convert such debt, or effect the buy-in provision related to the warrants and the debentures, we shall be required to raise additional financing. Also, this assumes that we are able to continue to defer the amounts due to our employees for accrued and unpaid salaries and that we are able to continue to extend or defer payment of certain amounts due to our trade creditors, of which there can be no assurance.
	In view of our limited revenues to date, the Company has relied and continues to rely substantially upon equity and debt financing to fund its ongoing operations, including the research and development conducted in connection with its products and conversion of accounts payable for stock. The proceeds from our financings have been and continue to be insufficient to fund our operations, pay our trade payables, repay our unconverted debentures, or accrued and unpaid wages to our employees. Therefore, the debentures holders, our employees, or trade creditors may seek to enforce payment of amounts due to them, and our results of operations and financial condition could be materially and adversely affected and we may be unable to continue our operations. Also, in the event we continue to be unable to pay our employees, we may suffer further employee attrition. There can be no assurances that we will be successful in our efforts to raise any additional financing, any bank borrowing, and research or grant funding. Moreover, in view of the current market price of and limited trading volume in our stock, we may have limited or no access to the capital markets. Furthermore, under the terms of our agreements with the debenture holders, we are subject to restrictions on our ability to engage in any transactions in our securities in which the conversion, exercise or exchange rate or other price of such securities is below the current conversion price or is based upon the trading price of our securities after initial issuance or otherwise subject to re-set. In view of the foregoing, we may be required to curtail operations significantly, or obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies or products.
	During the six months ended June 30, 2013, our total stockholders’ deficit increased by $1,057,623 to $12,292,974, and our consolidated net loss for the period was $1,604,960. Notwithstanding the foregoing discussion of management’s expectations regarding future cash flows, Applied Visual Sciences’ insolvency continues to increase the uncertainties related to its continued existence. Both management and the Board of Directors are carefully monitoring the Company’s cash flows and financial position in consideration of these increasing uncertainties and the needs of both creditors and stockholders.

4_Stockholders_Equity

(4) Stockholders' Equity	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
(4) Stockholders' Equity	'
	Other Common Stock Issued Including Exercises of Warrants and Options
	During the six months ended June 30, 2013, the Company issued promissory notes to three accredited investors in the aggregate principal amount of $135,000 ($134,775, net of commissions and expenses in the amount of $225), of which $30,000 originally matured on March 31, 2013 and was amended to mature on December 31, 2013, $3,000 matures on January 24, 2014, $2,000 matures on January 28, 2014, and $100,000 matures on September 21, 2014. The short-term notes accrue interest at a rate of 12% per annum. The Company also issued to the note holders an aggregate of 95,000 shares of common stock. The relative fair value of the common stock of $2,850 was recorded as a discount to the notes payable and will be amortized over the term of the notes. Common stock was increased by $95 for the par value of the shares, $2,750 was applied to paid-in-capital, and $2,767 was recorded to other expense for the amortization of the debt discount during 2013.
	On March 1, 2013, a company employee converted accrued and unpaid wages for an aggregate of 833,333 shares of common stock. The shares were issued under the 2009 Stock Compensation Plan. Common stock was increased by $834 for the par value of the shares, paid-in capital was increased by $24,167, and accrued wages was reduced by the fair value of the stock of $25,001.
	On January 17, 2013, the Company issued 1,500,000 shares of common stock each to two executives and a consultant/director, in the aggregate amount of 4,500,000. The shares were issued under the 2009 Stock Compensation Plan. Common stock was increased by $4,500 for the par value of the shares, paid-in capital was increased by $130,500, and $135,000 was recorded as deferred stock compensation. During the six months ended June 30, 2013, $146,250 was expensed as stock compensation, and $41,250 was recorded for the revaluation of such shares outstanding at each period end until fully vested.
	On January 17, 2013, the Company agreed to convert $5,150 of outstanding accrued payables and $5,500 other services to a consultant for an aggregate of 280,000 shares of common stock. The average conversion price was $0.04. Common stock was increased in the aggregate of $280 for the par value of the shares, paid-in capital was increased in the aggregate of $10,370, and accrued payables were reduced by the outstanding amount of $5,150 and $5,500 expensed to consulting stock compensation.
	Other Common Stock Purchase Warrants Issued, Expired, or Forfeited
	During the six months ended June 30, 2013, an aggregate of 3,702,850 common stock purchase warrants expired, of which 60,000 were warrants issued to a consultant, and 3,642,850 Class H warrants issued to an investor.
	The Company has issued warrants as compensation to its note holders, placement agents and other consultants, as well as to incentivize investors in each of the Company’s private placement financings. The table below shows by category, the warrants issued and outstanding at June 30, 2013.
	Common Stock Purchase Warrants	Number of Warrants Outstanding and Exercisable	Date Warrants are Exercisable	Exercise Price	Date Warrants Expire
	Note and debenture holders	10,000	Dec-07	$       0.70	Dec-13
		18,293	Feb-09	0.41	Feb-14
		150,000	Jan-10	0.25	Jan-15
		78,750	Sep-10	0.25	Sep-15
		257,043
	Private placement investors	214,285	Mar-08	0.75	Dec-13
		2,682,553	Sept to Dec 2008	0.41	Sept to Dec 2013
		4,358,981	Jan to April 2009	0.41	Jan to April 2014
		800,000	June to July 2009	0.25	June to July 2014
		3,881,973	July to August 2009	0.25	Dec-16
		2,099,007	Oct to Dec 2009	0.25	Oct to Dec 2014
		400,000	Nov-09	0.25	Dec-16
		800,000	March to May 2010	0.25	Dec-16
		2,499,568	March to June 2010	0.25	March to June 2015
		150,752	Aug-10	0.25	Dec-16
		3,731,155	July to Sept 2010	0.25	July to Sept 2015
		5,301,345	Oct to Dec 2010	0.25	Oct to Dec 2015
		400,000	Nov to Dec 2010	0.50	Nov to Dec 2013
		800,000	Feb-11	0.25	Feb-14
		600,000	Feb-11	0.25	Feb-16
		88,000	Oct-11	0.25	Oct-14
		300,000	Mar-12	0.25	Mar-15
		29,107,619
	Placement agents	272,827	Jun-09	0.45	Jun-14
		108,000	Jul-09	0.25	Jul-14
		205,000	Dec-09	0.28	Dec-14
		72,000	Feb-11	0.25	Feb-16
		657,827
	Consultants	200,000	Dec-09	0.25	Dec-14
		63,000	June to August 2009	0.25	June to Aug 2014
		14,000	Aug-10	0.28	Aug-15
		14,000	Sep-10	0.25	Sep-15
		128,000	Dec-10	0.50	Dec-13
		419,000
	Total Warrants Issued/Outstanding	30,441,489
	As of June 30, 2013, approximately 11,296,906 of the above warrants may be exercised pursuant to the cashless exercise provisions of such warrants and, if so exercised, the shares may be subsequently resold under the provisions of Rule 144 under the Securities Act. Increased sales volume of the Company’s common stock could cause the market price of the Company’s common stock to drop.

5_Subsequent_Events

(5) Subsequent Events	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
(5) Subsequent Events	'
	Subsequent events are reported by the Company to disclose events that have occurred after the balance sheet date, but before the financial statements are issued. Such events may be to provide additional information about conditions that existed at the date of the balance sheet, or conditions that did not exist at the balance sheet date. The Company has evaluated subsequent events through the date of this report.
	On October 25, 2013, the Company issued three promissory notes to accredited investors in the aggregate principal amount of $31,000. Two of the notes mature on December 31, 2013, and one matures on October 25, 2014. One note for $8,500 is noninterest bearing, one note for $8,500 accrues interest at a rate of 5.9% per annum, and one note for $14,000 accrues interest at a rate of 10% per annum. Consideration for the noninterest bearing note was adding a cashless exercise provision to 540,000 outstanding warrants. The Company issued to two note holders an aggregate of 350,000 shares of common stock, and the relative fair value of the common stock of $28,000 will be amortized over the term of the notes.
	On August 29, 2013, an abstract, presenting the results of a TBDx™ triple blind study (organism culture, molecular testing, and independent microscopist) that was completed on May 3, 2013 in Johannesburg,, South Africa, was accepted for presentation at the 2013 Late-Breaker session of the 44th World Conference on Lung Health the International Union Against Tuberculosis and Lung Disease (The Union) and the Center for Disease Control and Prevention (CDC) being held in Paris, France. The Late-Breaker session is intended to present the latest findings from new, innovative, and substantial research initiatives. Dr. Nazir Ismail, from the National Institute for Communicable Diseases, will make the presentation on November 3, 2013 of “A novel TB diagnostic algorithm using automated microscopy achieves high sensitivity while reducing the volume of Xpert MTB/RIF testing”.
	During September 24 - 27, 2013, the Company issued two promissory notes to accredited investors in the aggregate principal amount of $13,500. The short-term notes mature on December 31, 2013. $5,000 of the notes accrues interest at a rate of 12% per annum. The Company issued to one note holder an aggregate of 5,000 shares of common stock, and the relative fair value of the common stock of $250.00 will be amortized over the term of the notes.
	On September 18, 2013, a company employee converted accrued and unpaid wages for an aggregate of 500,000 shares of common stock. The shares were issued under the 2009 Stock Compensation Plan. Common stock was increased by $500 for the par value of the shares, paid-in capital was increased by $24,500, and accrued wages was reduced by the fair value of the stock of $25,000.
	On August 6, 2013, a company employee converted accrued and unpaid wages for an aggregate of 500,000 shares of common stock. The shares were issued under the 2009 Stock Compensation Plan. Common stock was increased by $500 for the par value of the shares, paid-in capital was increased by $19,500, and accrued wages was reduced by the fair value of the stock of $20,000.

6_Fair_Value_Measurement

(6) Fair Value Measurement	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
(6) Fair Value Measurement	'
	The Company records its financial assets and liabilities at fair value, in accordance with ASC-820 “Fair Value Measurement”, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities, which principally consists of assets and liabilities acquired through business combinations, goodwill, indefinite-lived intangible assets and long-lived assets for the purpose of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:
	Level 1: Inputs based on quoted markets prices for identical assets or liabilities in active markets at the measurement date.
	Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
	Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.
	The following table presents the Company’s hierarchy for its financial assets and liabilities at fair value on a recurring basis as of June 30, 2013:
		Level 1	Level 2	Level 3	Total
	Nonderivatives:
	Cash and cash equivalents	$          9,360	$                   -	$                   -	$            9,360
	Current debt	80,500	-	-	80,500
	Derivatives:
	Convertible debentures	-	-	2,025,846	2,025,846
	Embedded conversion feature of debentures	-	-	540,226	540,226
	Common stock issued with notes	-	-	694,856	694,856
	The estimated fair value of the Company's financial instruments are as follows:
	Liabilities Measured at Fair Value	Convertible Notes and Debentures, Net of Discount (1)	Embedded Conversion Feature of Debentures (2)	Common Stock Issued with Notes (3)	Total
	Beginning balance as of December 31, 2012	$     2,025,846	$        202,585	$        559,704	$       2,788,135
	Revaluation (gain)/loss in interest expense	-	337,641	-	337,641
	Issuances, net of discount	-	-	132,150	132,150
	Amortization of discount	-	-	3,063	3,063
	Ending balance as of June 30, 2013	$     2,025,846	$        540,226	$        694,917	$       3,260,989
	Total (gain)/loss from revaluation of derivatives and event of default included in earnings for the period and reported as an adjustment to interest	$                    -	$          337,641	$            3,063	$           340,704
	(1) The balance as of June 30, 2013, includes $1,688,205 for the outstanding convertible debentures issued November 8, 2006 and April 12, 2007, and an additional amount of $337,641 for the event of default provision under the debentures October 15, 2010 amendment agreement.
	(2) Represents the conversion feature of outstanding convertible debentures issued November 8, 2006 and April 12, 2007.  The fair value of the conversion feature since May 20, 2009, the final milestone reset date of the debentures, was determined using market quotation.
	(3) The balance as of June 30, 2013, includes $695,000 for outstanding short-term notes payable issued October 2011 through April 2012, less the remaining note discount of $83 for issuance of common stock to note holders as inducement for the notes.  The note discount is being amortized over the life of the notes.

2_Basis_of_Presentation_Polici

(2) Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
Summary of Significant Accounting Policies	'
	The Company, previously an operating stage company, became a development stage company on April 1, 2012, the date of inception as a development stage company for financial reporting. A development stage company, as defined by ASC-915-10 “Accounting and Reporting by Development Stage Enterprise”, is an entity that devotes substantially all of its efforts to establish a business and either of the following conditions exists: 1) the principal operations have not commenced, or 2) the principal operations have commenced, but there has been no significant revenue therefrom.
	As disclosed in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2012, the discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with United States (U.S.) generally accepted accounting principles. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in those financial statements. These judgments can be subjective and complex and, consequently, actual results could differ from those estimates and assumptions. Since December 31, 2012, there have been no significant changes to the assumptions and estimates related to those critical accounting policies. The Company has disclosed in Part I, Item 4. Controls and Procedures of this report that our disclosure controls and procedures were not effective during the period, as a result of the Company filing its December 31, 2012 Form 10-K on May 13, 2013, which was due on March 31, 2013, and the late filing of this report on Form 10-Q, which was due on August 14, 2013.
	The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, RJL Marketing Services, Guardian Technologies International, Inc., Signature Mapping Medical Sciences, Inc., Instasis Imaging, Inc., Guardian Healthcare Systems UK, Ltd., and Wise Systems Ltd., in which it has the controlling interest. Subsidiaries acquired are consolidated from the date of acquisition. All significant intercompany balances and transactions have been eliminated.
	The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and embedded conversion features and detachable warrants approximates fair value based on the liquidity of these financial instruments and their short-term nature.
	The Company reviews the terms of convertible debt and equity securities for indications requiring bifurcation, and separate accounting, for the embedded conversion feature. Under guidelines of ASC 815-40, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” public companies that are required, or that could be required, to deliver shares of common stock as part of a physical settlement or a net-share settlement, under a freestanding financial instrument, are required to initially measure the contract at fair value (or allocate on a fair value basis if issued as part of a debt financing), and report the value in permanent equity. However, in certain circumstances (e.g. the company could not ascertain whether sufficient authorized shares exist to settle the contract), permanent equity classification should be reassessed. The classification of the contract as permanent equity should be reassessed at each balance sheet date and, if necessary, reclassified as a liability on the date of the event causing the reclassification. If a reclassification occurs from permanent equity to a liability, the fair value of the financial instrument should be removed from permanent equity as an adjustment to stockholders’ equity. Any portion of the contract that could be net-share settled as of the balance sheet date would remain classified in permanent equity. Subsequent to the initial reclassification event, changes in fair value of the instrument are charged to expense until the conditions giving rise to the reclassification are resolved. When a company has more than one contract subject to reclassification, it must determine a method of reclassification that is systematic, rational, and consistently applied. The Company adopted a reclassification policy that reclassifies contracts with the latest inception date first. To the extent that changes in fair value of equity instruments relates to financings since November 8, 2006 (the date of first closing under the debenture financing with reset provisions that made the number of potentially issuable shares indeterminable), the increase or decrease in the fair value of the warrants is charged or credited to interest expense. To the extent the equity instruments relate to other transactions (e.g. consulting expense), the increases or decreases are charged or credited based on the nature of the transaction. The number of additional shares potentially issuable under the November 8, 2006, outstanding convertible debentures and related outstanding warrants and other subsequent warrants issued was determinable as of the debentures’ final milestone reset date on May 20, 2008, and, therefore, the outstanding fair value of the warrants issued to the debenture holders, other subsequent warrants issued through May 20, 2008, and the warrants’ related beneficial conversion feature were reclassified as stockholders’ equity in accordance with currently effective generally accepted accounting principles.
Reclassifications	'
	Certain reclassifications of previously reported amounts have been made to conform to the current period presentation. These classifications had no effect on the previously reported net loss.
Segment Data and Related Information	'
	ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information,” establishes standards for the manner in which public companies report information about operating segments in annual and interim financial statements. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The method for determining what information to report is based on the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. The Company’s chief operating decision-maker is considered to be the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an entity level basis accompanied by disaggregated information about revenues by product type and certain information about geographic regions for purposes of making operating decisions and assessing financial performance. The entity level financial information is identical to the information presented in the accompanying consolidated statements of operations.
	The Company has two groups of products and services - Security (PinPoint™) and Healthcare (Signature Mapping™ Medical Computer Aided Detection (“Medical CAD”), and operates in three geographic markets. The Company has determined that as of the balance sheet date, it operates as a single operating unit since the two products make up a slight revenue stream to the Company.
	The Company operates in North America, and Africa and Asia. In general, revenues are attributed to the country in which the contract originates. There were no revenues for the six months ended June 30, 2013. Our product and service categories would include software licenses, research funding, maintenance support, and hardware. The Company continues to focus efforts in developing the Signature Mapping™ imaging technologies, while at the same time pursuing opportunities for our security product/services. The following information represents software license activities. The Company continues to present the segmentation as they continue to develop their services by product and geographic location.
																Cumulative From
			Three Months Ended							Six Months Ended						1-Apr-12
	GEOGRAPHIC DATA		30-Jun							30-Jun						(date of inception)
			2013				2012			2013			2012			To June 30, 2013
	Net revenues
	The Americas		$	—			$	—		$	—		$	—		$	—
	Africa and Asia			—				—			—			—			—
	Total net revenue		$	—			$	—		$	—		$	—		$	—
	Cost of sales
	The Americas		$	—			$	—		$	—		$	—		$	—
	Africa and Asia			—				—			—			—			—
	Total cost of sales		$	—			$	—		$	—		$	—		$	—
	Operating (loss)
	The Americas		$	(631,813	)		$	(404,743	)	$	(1,237,126	)	$	(925,895	)	$	(2,468,228	)
	Africa and Asia			—				—			—			—			—
	Total operating loss		$	(631,813	)		$	(404,743	)	$	(1,237,126	)	$	(925,895	)	$	(2,468,228	)
	Depreciation and amortization
	The Americas		$	18,684			$	24,682		$	37,368		$	49,363		$	104,450
	Africa and Asia			—				—			—			—			—
	Total depreciation and amortiz		$	18,684			$	24,682		$	37,368		$	49,363		$	104,450
	Total assets
	The Americas									$	401,579		$	550,311
	Africa and Asia										—			—
	Total assets									$	401,579		$	550,311
	Long-lived assets, net
	The Americas									$	389,334		$	537,635
	Africa and Asia										—			—
	Total long-lived assets, net									$	389,334		$	537,635
	Long-lived assets, net: consists of software, goodwill, patents, property and equipment, and other noncurrent assets.
Stock-Based Compensation	'
	The Company has two active equity compensation plans which include the Amended and Restated 2003 Stock Incentive Plan and the 2009 Stock Compensation Plan (collectively, the “Plans”). A total of 50,000,000 shares have been reserved for issuance under these Plans in the form of stock-based awards to employees, non-employee directors and outside consultants of the Company, of which 4,871,353 shares remain available for issuance thereunder as of June 30, 2013. The grant of awards under the Plans require approval by the Compensation Committee of the Board of Directors of the Company (or the Board of Directors, in the absence of such a committee) (the “Committee”), and the Committee is authorized under the Plans to take all actions that it determines to be necessary or appropriate in connection with the administration of the Plans.
	The Company adopted the provisions of ASC 718-10, “Share-Based Payment” to account for its share-based payments. ASC 718-10 requires all share-based payments to employees, or to non-employee directors as compensation for service on the Board of Directors, to be recognized as compensation expense in the consolidated financial statements based on the estimated fair values of such options as calculated using the Black-Scholes model, and the related expense is recognized on a straight-line basis over the service period to vesting for each grant, net of estimated forfeitures. The Company’s estimated forfeiture rates are based on its historical experience within separate groups of employees. In accordance with ASC 718-10, the Company recognized total stock-based compensation expense for employees and non-employee members of the Board of Directors for the six months ended June 30, 2013 of $508,837 and $0 for the same period during 2012.
	The Company accounts for stock options granted to non-employees in accordance with ASC 718-10 and ASC 505-50, “Accounting For Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In Conjunction With Selling, Goods Or Services.” ASC 505-50 establishes the measurement principles for transactions in which equity instruments are issued in exchange for the receipt of goods or services. The Company has relied upon the guidance provided under ASC 505-50 to determine the measurement date and the fair value re-measurement principles to be applied, and recognizes as an expense the estimated fair value of such options as calculated using the Black-Scholes model. The fair value is remeasured during the service period at each balance sheet date, and is amortized over the remaining service period to vesting for each option or the remaining term of the recipient’s contractual arrangement, whichever is shorter. The Company recognizes compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate. Total stock-based compensation expense for consultants during the six months ended June 30, 2013 and the same period in 2012 were $5,500 and $11,125, respectively.
	The Black-Scholes Merton option valuation model (Black-Scholes model) was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are not transferable. The fair value of each option granted was estimated using the Black-Scholes model with the following weighted-average assumptions:
	Black-Scholes Model Assumptions		2013				2012
	Risk-free interest rate (1)			0.99	%		2.27	%
	Expected volatility (2)			163.6	%		136.7	%
	Dividend yield (3)			0	%		0	%
	Expected life (4)		5.4 years				6.5 years
	(1)	The risk-free interest rate is based on US Treasury debt securities with maturities similar to the expected term of the option.
	(2)	Expected volatility is based on historical volatility of the Company’s stock factoring in daily share price observations.
	(3)	No cash dividends have been declared on the Company’s common stock since the Company’s inception, and the Company currently does not anticipate paying cash dividends over the expected term of the option.
	(4)	The expected term of stock option awards granted is derived from historical exercise experience under the Company’s stock option plan and represents the period of time that stock option awards granted are expected to be outstanding. The expected term assumption incorporates the contractual term of an option grant, which is usually ten years, as well as the vesting period of an award, which is generally pro rata vesting over two years.
	The Amended and Restated 2003 Stock Incentive Plan
	The Board of Directors adopted the 2003 Stock Incentive Plan on August 29, 2003. The plan may be modified or terminated at any time, and any such amendment or termination will not affect outstanding options without the consent of the optionee. The Board of Directors amended and restated the plan on December 2, 2003. The Amended and Restated 2003 Stock Incentive Plan (“2003 Plan”) was approved by the shareholders on February 13, 2004, pursuant to which it grants stock-based compensation in the form of options, which will result in the issuance of up to an aggregate of 30,000,000 shares of the Company’s common stock. The 2003 Stock Incentive Plan terminates on August 29, 2013. The aggregate number of shares and the number of shares in an award (as well as the option price) may be adjusted if the outstanding shares of the Company are increased, decreased or exchanged through merger or other stock transaction. The Plan provides for options which qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986, as well as the issuance of Non-Qualified Options, which do not so qualify. Pursuant to the terms of the 2003 Plan, the Company, as determined by the Board of Directors or a committee appointed by the Board, may grant Non-Qualified Stock Options (“NQSOs”) to its executive officers, non-employee directors, or consultants of the Company and its subsidiaries at any time, and from time to time. The 2003 Plan also provides for Incentive Stock Options (“ISOs”) to be granted to any officer or other employee of the Company or its subsidiaries at any time, and from time to time, as determined by the Compensation Committee. Such stock options granted allow a grantee to purchase a fixed number of shares of the Company’s common stock at a fixed exercise price not be less than the quoted market price (or 110% thereof for Incentive Stock Options issued to a holder of 10% or greater beneficial ownership) of the shares on the date granted. The options may vest on a single date or over a period of time, but normally they do not vest unless the grantee is still employed by, or a director of, the Company on the vesting date. Generally for all employees, the options vest 50% after the first year from the date of grant and the remaining 50% after the second year from the date of grant. Stock options granted to independent board of directors vest 100% after the service period, which generally is one year from the date of grant.
	Factors considered in granting stock options included: (i) the general policy during the past five, and in the foreseeable future, of not increasing base salaries of all employees, (ii) the performance of employees, (iii) the employees’ increasing responsibilities in a dynamic, and shrinking organization, and (iv) the accomplishments achieved by the Company during the prior year. The 2003 Plan has been the principal method for our employees and executive officers to acquire equity interests in the Company. We believe that the annual aggregate value of these awards should be set near competitive median levels for comparable companies. We may provide a greater portion of total compensation to our executives and employees through stock options given the general policy of not increasing base salaries in the foreseeable future. Our Compensation Committee administers the 2003 Plan based on the above factors, and the Committee approved the grant of stock options to all current employees, including its named executives, during 2007 through 2009 as an incentive for continued contributions in moving our product development efforts forward. Stock options were not granted to employees, including its named executives, during 2012 and 2011, as the Company did not achieve the desired results during 2010 and 2011. Also, the Compensation Committee, based on management’s recommendation and discussions with the Committee, may grant stock options to new employees. There were no stock options granted to new employees during the first six months of 2013, since there were no new employees hired during this period.
	Options granted under the Plan must be evidenced by a stock option agreement in a form consistent with the provisions of the 2003 Plan. Each option shall expire on the earliest of (a) ten (10) years from the date it is granted, (b) sixty (60) days after the optionee dies or becomes disabled, (c) immediately upon the optionee's termination of employment or service or cessation of Board service, whichever is applicable, or (d) such date as the Committee shall determine, as set forth in the relevant option agreement; provided, however, that no ISO which is granted to an optionee who, at the time such option is granted, owns stock possessing more than ten (10) percent of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, shall be exercisable after the expiration of five (5) years from the date such option is granted.
	To exercise an option, the 2003 Plan participant, in accordance with the relevant option agreement, must provide the Company a written notice setting forth the number of options being exercised and their underlying shares, and tender an amount equal to the total exercise value of the options being exercised. The right to purchase shares is cumulative so that once the right to purchase any shares has vested; those shares or any portion of those shares may be purchased at any time thereafter until the expiration or termination of the option. ISOs and NQSOs that are not exercised in accordance with the terms and provisions of the stock option agreement, or as amended, will expire as to any then unexercised portion. Stock options that expire, are cancelled, or forfeited will again become available for issuance under the 2003 Plan as described below. The aggregate number of shares and the number of shares in an award (as well as the option price) may be adjusted if the outstanding shares of the Company are increased, decreased or exchanged through merger or other stock transaction. The shares issued by the Company under the 2003 Plan may be either treasury shares or authorized but unissued shares as the Company’s board of directors or the Compensation Committee may determine from time to time. Except as specifically provided in an option agreement, options granted under the 2003 Plan may not be sold, pledged, transferred or assigned in any way, except by will or by the laws of descent and distribution, and during the lifetime of a participant to whom the ISOs is granted, and the ISOs may only be exercised by the participant.
	The Board of Directors granted 14,650,000 stock options to all employees, including its named executives, under the 2003 Plan during the six months ended June 30, 2013, and the fair value of the options is $439,500, of which $402,875 was recognized as stock-based compensation expense during the six months ended June 30, 2013. The stock options were granted in consideration for the continued deferral of salaries during 2012 and 2013 to-date, as well as for the incentive for ongoing contributions in moving our product development efforts forward. The Company has reserved under the plan 24,159,347 shares to be issued upon exercise of outstanding options, and 3,536,353 remain available for future awards. Compensation expense for stock options granted is recognized over the requisite service period, which is typically the period over which the stock-based compensation awards vest.
	Stock Options Exercised under the 2003 Plan
	There were no stock options exercised during the first six months of 2013, and during the same period in 2012.
	Summary of stock option activity under the 2003 Plan for the six months ended June 30, 2013 issued to employees, non-employee members of the Board of Directors and consultants is as follows:
			Weighted-
			Average
	Fiscal Year and Activity		Exercise Price				Number of Options
	Outstanding December 31, 2012		$	0.32				9,509,347
	Fiscal 2013 activity
	Granted			0.03				14,650,000
	Exercised			-				-
	Cancelled			-				-
	Outstanding June 30, 2013			0.15				24,159,347
	Reserved for future issuance at June 30, 2013							3,536,353
	The following table summarizes additional information about the 2003 Plan stock options outstanding at June 30, 2013:
	Issued and Outstanding															Exercisable
										Weighted-
										Average			Weighted-
										Remaining			Average						Weighted-
							Number of			Contractual			Exercise			Number of			Average
	Type of Option and Range of Exercise Prices						Options			Life (Yrs)			Price			Options			Price
	Nonqualified Stock Options		$	0.3	(1) (5)			850,000			0.5		$	0.3			850,000		$	0.3
	Nonqualified Stock Options		$	0.3	(2) (5)			44,000			1.6			0.3			44,000			0.3
	Incentive Stock Options		$	0.15 - $4.05	-3			649,300			4.3			0.98			649,300			0.98
	Incentive Stock Options		$	0.03 - $0.30	(4) (5)			22,616,047			7.7			0.12			15,291,049			0.29
	Total							24,159,347			7.4		$	0.15			16,834,349		$	0.34
	(1)	Initially issued to employees below fair value during the period of July 2003 through February 2004.
	(2)	Initially issued to directors below fair value during the period of February 2004 through September 2005.
	(3)	Issued to consultants at fair value.
	(4)	Issued to directors and employees at fair value, or above fair value for those individuals with greater than 10% beneficial ownership.
	(5)	The exercise price reflects the repricing of stock options as approved by the Compensation Committee on April 24, 2010.
	The 2009 Stock Compensation Plan
	On June 4, 2009, the Board of Directors adopted the 2009 Stock Compensation Plan (“2009 Plan) which provides for the grant or issuance of up to an aggregate of 20,000,000 shares of the Company’s common stock pursuant to non-qualified stock options (“NQSOs”), restricted stock awards (“RSAs”), restricted stock rights (“RSRs”), or common stock awards (“Common Stock Awards”) (a NQSO, RSA, RSR or Common Stock Award, individually, an “Award;” collectively, “Awards”). Our Board of Directors has delegated its authority to administer the 2009 Plan to the Compensation Committee.
	The purpose of the 2009 Plan is to foster our success and the success of our subsidiaries and affiliates by providing incentives to employees, directors, officers and consultants to promote our long-term financial success. The Plan complements our 2003 Amended and Restated Stock Incentive Plan (the “2003 Plan”) and provides greater flexibility to us in that it permits us to compensate and award employees, directors, officers and consultants through the issuance of certain options, RSAs, RSRs, and stock awards in addition, or as an alternative, to the incentive and non-qualified stock options that may be awarded under the 2003 Plan. The 2009 Plan terminates on June 4, 2019, and no award may be made after that date, however, awards made before that date may extend beyond that date. If an award under the 2009 Plan is cancelled, expires, forfeited, settled in cash or otherwise terminates without being exercised in full, the shares of common stock not acquired pursuant to the award will again become available for issuance under the 2009 Plan. The Board may amend, terminate, or modify the 2009 Plan at any time, without shareholder approval, unless required by the Internal Revenue Code of 1986, pursuant to Section 16 under the Securities Exchange Act of 1934, as amended, or by any national securities exchange or system on which our common stock is then listed or reported, or by any regulatory body.
	Subject to the provisions of the 2009 Plan, the Compensation Committee has the power to:
		·	Prescribe, amend, and rescind rules and regulations relating to the 2009 Plan and to define terms not otherwise defined therein;
		·	Determine which persons are eligible to participate, to which of such participants, if any, awards shall be granted, and the timing of any such awards;
		·	Grant awards to participants and determine the terms and conditions thereof, including the number of shares subject to awards and the exercise or purchase price of such shares and the circumstances under which awards become exercisable or vested or are forfeited or expire;
		·	Establish any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any award;
		·	Prescribe and amend the terms of the agreements or other communications evidencing awards made under the 2009 Plan (which need not be identical) and the terms or form of any document or notice required to be delivered to us by participants under the 2009 Plan;
		·	Determine the appropriate adjustment, if any, required as a result of any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off or dividend (other than regular, quarterly cash dividends), or other changes in the number or kind of outstanding shares or any stock or other securities into which such shares shall have been exchanged;
		·	Interpret and construe the 2009 Plan, any rules and regulations under the 2009 Plan and the terms and conditions of any award granted thereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and
		·	Make all other determinations deemed necessary or advisable for the administration of the 2009 Plan.
	Unless the Board expressly provides otherwise prior to a change of control or in an award agreement, in the event of a change of control of the Company, all outstanding options under the 2009 Plan vest and become exercisable on the date immediately before the change of control and all restrictions under RSAs and RSRs shall lapse or be deemed satisfied on the date immediately prior to the change of control. A change of control is deemed to have occurred upon the occurrence of one of the following events: (i) any person or group of persons becomes the beneficial owner of shares of the Company to which 50% or more of the total number of votes for the election of directors may be cast; (ii) as a result of a cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, persons who were directors immediately prior to the event cease to constitute a majority of the board; (iii) stockholders approve an agreement providing either that the Company will cease to be an independent publicly owned corporation or for sale or other disposition of all or substantially all the assets of the Company; or (iv) a tender offer or exchange offer is made for shares of our common stock (other than one made by us) and shares of common stock are acquired.
	The Compensation Committee determines all awards to non-employee directors and such awards are not subject to management’s discretion. From time to time, the committee will set the amount and the type of award that will be granted to non-employee directors on a periodic, nondiscriminatory basis, including pursuant to any plan adopted by the Compensation Committee or Board for the compensation of non-employee directors. The committee may set additional awards to be granted to non-employee directors also on a periodic, nondiscriminatory basis based on one or more of the following criteria: (i) service as the chair of a Board committee; (ii) service as chairman of the Board; (iii) the number or type of Board committees on which a director serves; or (iv) the first selection or appointment of an individual to the Board.
Non-qualified stock options may be granted pursuant to non-qualified stock option award agreements and certificates adopted by the Board, as amended by the Compensation Committee. The Compensation Committee determines the terms of each stock option granted under the 2009 Plan, including the number of shares covered by an option, exercise price and means of payment, the vesting and exercisability of the option, and restrictions on transfer and the term. The exercise price of an option granted under the Plan may not be less than the fair market value on the date of option grant and may only be exercised at such times as may be specified by the Committee and provided for in an award agreement. The options expire on the earliest of ten years after the date of grant, 90 days after the death or disability of the recipient, immediately upon termination of employment or service other than by death or disability, or such date as the Compensation Committee determines. The Compensation Committee, in its sole discretion, may change by agreement the post-termination rights of a recipient, including accelerating the date or dates on which the option becomes vested and is exercisable following termination of employment or service, or extend the period. Options granted under the plan may be exercised by delivering cash, a cashless exercise, or by delivering to us the proceeds of shares of our common stock issuable under an option. Compensation expense for non-qualified stock options is recognized over the period they vest.
An award of restricted stock consists of a specified number of shares of our common stock that are, or may be, subject to restrictions, forfeiture conditions, and any other terms and conditions for periods determined by the Committee. The Compensation Committee has discretion to determine the terms of any award of restricted stock, including the number of shares subject to the award, and the minimum period over which the award may vest, and the acceleration of any vesting in the event of death, disability or change of control. RSAs are not transferable or assignable unless provided otherwise by the Compensation Committee with respect to certain specified family-related transfers. Unless the Committee determines otherwise, once the restricted stock vests, the shares of common stock specified in the Award will be free of restriction, subject to any applicable lock up period. Prior to the termination of the restrictions under a RSA, a participant may vote and receive dividends on the restricted stock unless the Committee determines otherwise, but may not sell or otherwise transfer the shares until such time as the restrictions of the award have been satisfied. Compensation expense for restricted stock awards is recognized over the period they vest.
An award of restricted stock rights entitles a participant to receive a specified number of shares of our common stock that are, or may be, subject to restrictions, forfeiture conditions, and any other terms and conditions for periods determined by the Committee. It may also include the right to dividend equivalents if and as so determined by the committee. The Compensation Committee has discretion to determine the terms of any award of restricted stock or RSRs, including the number of shares subject to the award, and the minimum period over which the award may vest, and the acceleration of any vesting in the event of death, disability or change of control. RSRs are not transferable or assignable unless provided otherwise by the Compensation Committee with respect to certain specified family-related transfers. Unless the committee determines otherwise, once a RSR vests, the shares of common stock specified in the award will be issued to the participant. A participant who has been awarded RSRs may not vote the shares of common stock subject to the rights until the shares are issued. Until the vesting period applicable to a RSRs award expires and the shares are issued, the participant also may not transfer or encumber any interest in the RSRs or in any related dividend equivalents. Compensation expense for restricted stock rights is recognized over the period they vest.
The Compensation Committee may also make stock awards of common stock without restrictions, except that if the award is in lieu of salary, service fee, cash bonus or other cash compensation, the number of shares covered by an award shall be based on the fair market value of such shares on the date of grant. Common Stock Awards under the plan may be issued free of restriction and may vest immediately; however, the Committee may impose vesting and other restrictions related to the grant of such common stock awards. Compensation expense for common stock awards is recognized over the period they vest, although generally the awards vest immediately.
The following is a summary of the number and type of awards granted to, or exercised or forfeited by, employees, non-employee members of the Board of Directors and consultants pursuant to the Company’s 2009 Stock Compensation Plan for the six months ended June 30, 2013:
	Weighted-Average
	Grant or Exercise
Fiscal Year and Activity		Price Per Share				Number of Shares
Reserved for future issuance as of December 31, 2012							6,668,333
Fiscal 2013 activity:
Common stock awards		$	0.03				5,333,333
Restricted stock awards			-				-
Restricted stock rights			-				-
Non-qualified stock options			-				-
Issued during 2013			0.03				5,333,333
Reserved for future issuance as of June 30, 2013							1,335,000
Stock options or restricted stock rights outstanding							-
Stock Issued under the 2009 Plan
In March 2013, an employee converted $25,001 of accrued wages for 833,333 shares of common stock. The shares were issued under the 2009 Stock Compensation Plan. Common stock was increased by $834 for the par value of the shares, and paid-in capital was increased by $24,167.
In January 2013, the Company issued 4,500,000 shares of common stock to three of its named executives, which vest 50% three months from the date of issuance and 50% upon six months from date of issuance. The shares were issued under the 2009 Stock Compensation Plan in consideration for the continued deferral of salaries during 2012 and 2013 to-date, as well as for the incentive for ongoing contributions in moving our product development efforts forward. Our Compensation Committee, under the direction of the Board of Directors, administers the 2009 Plan based on the above factors, and the Board approved the grant of stock options to all current employees, including its named executives. Common stock was increased by $4,500 for the par value of the shares, paid-in capital was increased by $130,500, and $135,000 was recorded as deferred stock compensation. During the six months ended June 30, 2013, $146,250 was expensed as stock compensation, and an aggregate of $41,250 was recorded for the revaluation of such shares outstanding at each period end until fully vested.
Property and Equipment	'
	Property and equipment are carried at cost less accumulated depreciation. For financial statement purposes, depreciation is provided on the straight-line method over the estimated useful life of the asset ranging from 3 to 10 years.
		(Unaudited)
	Asset (Useful Life)	30-Jun-13		31-Dec-12
	Software (3 years)	$                   84,224		$            84,224
	Computer equipment (3 to 5 years)	329,861		329,861
	Furniture and fixtures (7 to 10 years)	231,033		323,639
	Equipment (7 to 10 years)	80,727		80,727
		725,845		818,451
	Less accumulated depreciation	651,219		702,316
	Equipment, net	$                  74,626		$          116,135
	Depreciation expense for property and equipment was $20,913 and $32,907 in the six months ended June 30, 2013 and 2012, respectively, and is reflected in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company sold furniture in March 2013 for $28,934, which had a net book value of $20,596 and resulted in a gain from the sale of fixed assets of $8,338.
Goodwill and Other Intangible Assets	'
	Intangible Assets – Intangible assets consist of acquired software and patents. Under ASC 350, “Goodwill and Other Intangible Assets,” such assets acquired including software technology is considered to have a finite life. Management has estimated the useful life of acquired software technology to be 5 years and amortized such costs on a straight-line basis over this period. In addition, ASC 985-20, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,” requires the Company to consider whether or not the software technology is impaired using a net realizable value analysis based on projected discounted cash flows. The Company prepared this analysis as of June 30, 2013, and concluded that the intangible assets are not impaired. Patent acquisition costs pertaining to the Company’s 3i technology that covers its PinPoint™ and Signature Mapping™ intellectual property (technology not acquired through acquisition), have been capitalized as of the date incurred, and are being amortized over the 20-year legal life of the patents. The Company has been granted by the United States Patent & Trademark Office (“USPTO”) six patents related to its 3i technology. The Company evaluates the periods of amortization continually to determine whether later events or circumstances require revised estimates of useful lives. The Company’s intangible acquired software technology was fully amortized as of December 31, 2009. Therefore, there was no amortization costs associated with acquired software during the six months ended June 30, 2013 and 2012, respectively. Amortization expense for patent acquisition costs was $16,455 and $16,456 during the six months ended June 30, 2013 and 2012, respectively, and is reflected in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company anticipates incurring additional patent acquisition costs during 2013.
		Six Months Ended June 30, 2013
		Beginning Period Cost						Net Book Value
				Additions		Reductions
	Intangibles with finite lives:
	Patent acquisition costs	$     331,163		$                    0		$           16,455		$       314,708
	Excess of Purchase Price over Net Assets Acquired (Goodwill) – The Company follows the provisions of ASC 805-10, “Business Combinations” and ASC 350-10, “Goodwill and Other Intangible Assets.” These statements establish financial accounting and reporting standards for acquired goodwill. Specifically, the standards address how acquired intangible assets should be accounted for both at the time of acquisition and after they have been recognized in the financial statements. Effective January 1, 2002, with the adoption of ASC 350-10, goodwill must be evaluated for impairment and is no longer amortized. Excess of purchase price over net assets acquired (“goodwill”) represents the excess of acquisition purchase price over the fair value of the net assets acquired. To the extent possible, a portion of the excess purchase price is assigned to identifiable intangible assets. There was no goodwill on the consolidated balance sheet of the Company during Fiscal 2012 and the six months ended June 30, 2013, as a net realizable value analysis was made for goodwill in prior years and such asset was considered fully impaired during those prior years. Therefore, there was no amortization expense of goodwill during the six months ended June 30, 2013, or during the same period in 2012.
	Impairment of Excess Purchase Price over Net Assets Acquired – The Company follows the provisions of ASC 350-10 “Goodwill and Other Intangible Assets” for the impairment of goodwill. The Company determines impairment by comparing the fair value of the goodwill, using the undiscounted cash flow method, with the carrying amount of that goodwill. Impairment is tested annually or whenever indicators of impairment arise. There was no goodwill on the consolidated balance sheet of the Company during Fiscal 2012 and the six months ended June 30, 2013, as a net realizable value analysis was made for goodwill in prior years and such asset was considered fully impaired during those prior years.
	Impairment of Long-Lived Assets – The Company evaluates the carrying value of long-lived assets for impairment, whenever events or changes in circumstances indicate that the carrying value of an asset within the scope of ASC 360-10, “Accounting of the Impairment or Disposal of Long-Lived Assets” may not be recoverable. The Company’s assessment for impairment of assets involves estimating the undiscounted cash flows expected to result from use of the asset and its eventual disposition. An impairment loss recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset, and considers year-end the date for its annual impairment testing.
Recently Adopted Accounting Pronouncement	'
	In September 2011, the Financial Accounting Standards Board (“FASB”) amended its authoritative guidance related to testing goodwill for impairment.  Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before performing Step 1 of the goodwill impairment test.  If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying amount, the two-step impairment test would be required.  This guidance became effective in the beginning of the Company’s fiscal 2012, and did not have a material impact on the Company’s consolidated financial statements.
	In June 2011, the FASB amended its authoritative guidance related to the presentation of comprehensive income, requiring entities to present items of net income and other comprehensive income either in one continuous statement or in two separate consecutive statements.  This guidance also required entities to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements.  In December 2011, the FASB issued an update to this guidance deferring the requirement to present reclassification adjustments on the face of the financial statements.  However, the Company is still required to present reclassification adjustments on either the face of the financial statement where comprehensive income is reported or disclose the reclassification adjustments in the notes to the financial statements.  This guidance, including the deferral, becomes effective for the Company’s fiscal 2013 first quarter, with early adoption permitted and full retrospective application required.  The guidance did not have a material impact on the Company’s consolidated financial statements.
	In May 2011, the FASB amended its authoritative guidance related to fair value measurements to provide a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards (“IFRS”).  This guidance clarifies the application of existing fair value measurement and expands the existing disclosure requirements.  This guidance became effective in the beginning of the Company’s fiscal 2012. This guidance did not have an impact on the Company’s results of operations, financial position or cash flows. As a result of the adoption of this guidance, the Company did not change its valuation techniques, but may make additional disclosures as needed.
	In December 2010, the FASB amended its authoritative guidance related to business combinations entered into by an entity that are material on an individual or aggregate basis.  These amendments clarify existing guidance that if an entity presents comparative financial statements that include a material business combination, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period.  The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  This guidance became effective prospectively for business combinations for which the acquisition date is on or after the first day of the Company’s fiscal 2012.  This disclosure-only guidance did not have a material impact on the Company’s results of operations, financial position or cash flows.
Recently Issued Accounting Pronouncement	'
	In July 2012, the FASB amended its authoritative guidance related to testing indefinite-lived intangible assets for impairment.  Under the revised guidance, entities testing their indefinite-lived intangible assets for impairment have the option of performing a qualitative assessment before performing further impairment testing.  If entities determine, on the basis of qualitative factors, that it is more-likely-than-not that the asset is impaired, a quantitative test is required.  The guidance becomes effective in the beginning of the Company's fiscal 2014, with early adoption permitted.  The Company is currently evaluating the timing of adopting this guidance which is not expected to have an impact on the Company's consolidated financial statements.
	In December 2011, the FASB issued authoritative guidance that creates new disclosure requirements about the nature of an entity’s rights of offset and related arrangements associated with its financial instruments and derivative instruments.  This revised guidance helps reconcile differences in the offsetting requirements under U.S. GAAP and International Financial Reporting Standards (“IFRS”).  These requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement.  This disclosure-only guidance becomes effective for the Company’s fiscal 2013 third quarter, with retrospective application required.  The Company currently does not hold any financial or derivative instruments that are subject to an enforceable master netting arrangement.  However, the Company currently utilizes the right of offset when netting certain negative cash balances in its statement of financial position.  This guidance is not expected to have an impact on the Company’s results of operations, financial position or cash flows, but may require certain additional disclosures if such balances are material or if the Company enters into additional arrangements that fall under the provisions of this guidance.
	Other ASU’s that have been issued or proposed by the FASB ASC that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

2_Basis_of_Presentation_Tables

(2) Basis of Presentation (Tables)	6 Months Ended
	Jun. 30, 2013
Basis Of Presentation Tables	'
Schedule of Segment Reporting Information	'
	Segment Data and Related Information
															Cumulative From
			Three Months Ended						Six Months Ended						1-Apr-12
	GEOGRAPHIC DATA		30-Jun						30-Jun						(date of inception)
			2013			2012			2013			2012			To June 30, 2013
	Net revenues
	The Americas		$	-		$	-		$	-		$	-		$	-
	Africa and Asia			-			-			-			-			-
	Total net revenue		$	-		$	-		$	-		$	-		$	-
	Cost of sales
	The Americas		$	-		$	-		$	-		$	-		$	-
	Africa and Asia			-			-			-			-			-
	Total cost of sales		$	-		$	-		$	-		$	-		$	-
	Operating (loss)
	The Americas		$	(631,813	)	$	(404,743	)	$	(1,237,126	)	$	(925,895	)	$	(2,468,228	)
	Africa and Asia			-			-			-			-			-
	Total operating loss		$	(631,813	)	$	(404,743	)	$	(1,237,126	)	$	(925,895	)	$	(2,468,228	)
	Depreciation and amortization
	The Americas		$	18,684		$	24,682		$	37,368		$	49,363		$	104,450
	Africa and Asia			-			-			-			-			-
	Total depreciation and amortiz		$	18,684		$	24,682		$	37,368		$	49,363		$	104,450
	Total assets
	The Americas								$	401,579		$	550,311
	Africa and Asia									-			-
	Total assets								$	401,579		$	550,311
	Long-lived assets, net
	The Americas								$	389,334		$	537,635
	Africa and Asia									-			-
	Total long-lived assets, net								$	389,334		$	537,635
Schedule of Stock Options, Valuation Assumptions	'
	Black-Scholes Model Assumptions		2013			2012
	Risk-free interest rate (1)			0.99	%	2.27	%
	Expected volatility (2)			163.6	%	136.7	%
	Dividend yield (3)			0	%	0	%
	Expected life (4)		5.4 years			6.5 years
	(1)	The risk-free interest rate is based on US Treasury debt securities with maturities similar to the expected term of the option.
	(2)	Expected volatility is based on historical volatility of the Company’s stock factoring in daily share price observations.
	(3)	No cash dividends have been declared on the Company’s common stock since the Company’s inception, and the Company currently does not anticipate paying cash dividends over the expected term of the option.
	(4)	The expected term of stock option awards granted is derived from historical exercise experience under the Company’s stock option plan and represents the period of time that stock option awards granted are expected to be outstanding. The expected term assumption incorporates the contractual term of an option grant, which is usually ten years, as well as the vesting period of an award, which is generally pro rata vesting over two years.
Summary of stock option activity	'
			Weighted-
			Average
	Fiscal Year and Activity		Exercise Price			Number of Options
	Outstanding December 31, 2012		$	0.32			9,509,347
	Fiscal 2013 activity
	Granted			0.03			14,650,000
	Exercised			-			-
	Cancelled			-			-
	Outstanding June 30, 2013			0.15			24,159,347
	Reserved for future issuance at June 30, 2013						3,536,353
Summary of 2003 Plan stock options outstanding	'
	The following table summarizes additional information about the 2003 Plan stock options outstanding at June 30, 2013:
	Issued and Outstanding														Exercisable
									Weighted-
									Average			Weighted-
									Remaining			Average						Weighted-
						Number of			Contractual			Exercise			Number of			Average
	Type of Option and Range of Exercise Prices					Options			Life (Yrs)			Price			Options			Price
	Nonqualified Stock Options		$	0.3	(1) (5)		850,000			0.5		$	0.3			850,000		$	0.3
	Nonqualified Stock Options		$	0.3	(2) (5)		44,000			1.6			0.3			44,000			0.3
	Incentive Stock Options		$	0.15 - $4.05	-3		649,300			4.3			0.98			649,300			0.98
	Incentive Stock Options		$	0.03 - $0.30	(4) (5)		22,616,047			7.7			0.12			15,291,049			0.29
	Total						24,159,347			7.4		$	0.15			16,834,349		$	0.34
	(1)	Initially issued to employees below fair value during the period of July 2003 through February 2004.
	(2)	Initially issued to directors below fair value during the period of February 2004 through September 2005.
	(3)	Issued to consultants at fair value.
	(4)	Issued to directors and employees at fair value, or above fair value for those individuals with greater than 10% beneficial ownership.
	(5)	The exercise price reflects the repricing of stock options as approved by the Compensation Committee on April 24, 2010.
Summary of 2009 Stock Compensation Plan	'
		Weighted-Average
		Grant or Exercise
	Fiscal Year and Activity		Price Per Share			Number of Shares
	Reserved for future issuance as of December 31, 2012						6,668,333
	Fiscal 2013 activity:
	Common stock awards		$	0.03			5,333,333
	Restricted stock awards			-			-
	Restricted stock rights			-			-
	Non-qualified stock options			-			-
	Issued during 2013			0.03			5,333,333
	Reserved for future issuance as of June 30, 2013						1,335,000
	Stock options or restricted stock rights outstanding						-
Schedule of Property and Equipment	'
	Property and equipment are carried at cost less accumulated depreciation. For financial statement purposes, depreciation is provided on the straight-line method over the estimated useful life of the asset ranging from 3 to 10 years.
			(Unaudited)
	Asset (Useful Life)		30-Jun-13			31-Dec-12
	Software (3 years)		$	84,224		$	84,224
	Computer equipment (3 to 5 years)			329,861			329,861
	Furniture and fixtures (7 to 10 years)			231,033			323,639
	Equipment (7 to 10 years)			80,727			80,727
				725,845			818,451
	Less accumulated depreciation			651,219			702,316
	Equipment, net		$	74,626		$	116,135
Schedule of Intangible assets	'
			Six Months Ended June 30, 2013
			Beginning Period Cost									Net Book Value
						Additions			Reductions
	Intangibles with finite lives:
	Patent acquisition costs		$	331,163		$	0		$	16,455		$	314,708

4_Stockholders_Equity_Tables

(4) Stockholders' Equity (Tables)	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
Schedule of Warrants issued and outstanding	'
	The table below shows by category, the warrants issued and outstanding at June 30, 2013.
	Common Stock Purchase Warrants	Number of Warrants Outstanding and Exercisable	Date Warrants are Exercisable	Exercise Price	Date Warrants Expire
	Note and debenture holders	10,000	Dec-07	$       0.70	Dec-13
		18,293	Feb-09	0.41	Feb-14
		150,000	Jan-10	0.25	Jan-15
		78,750	Sep-10	0.25	Sep-15
		257,043
	Private placement investors	214,285	Mar-08	0.75	Dec-13
		2,682,553	Sept to Dec 2008	0.41	Sept to Dec 2013
		4,358,981	Jan to April 2009	0.41	Jan to April 2014
		800,000	June to July 2009	0.25	June to July 2014
		3,881,973	July to August 2009	0.25	Dec-16
		2,099,007	Oct to Dec 2009	0.25	Oct to Dec 2014
		400,000	Nov-09	0.25	Dec-16
		800,000	March to May 2010	0.25	Dec-16
		2,499,568	March to June 2010	0.25	March to June 2015
		150,752	Aug-10	0.25	Dec-16
		3,731,155	July to Sept 2010	0.25	July to Sept 2015
		5,301,345	Oct to Dec 2010	0.25	Oct to Dec 2015
		400,000	Nov to Dec 2010	0.50	Nov to Dec 2013
		800,000	Feb-11	0.25	Feb-14
		600,000	Feb-11	0.25	Feb-16
		88,000	Oct-11	0.25	Oct-14
		300,000	Mar-12	0.25	Mar-15
		29,107,619
	Placement agents	272,827	Jun-09	0.45	Jun-14
		108,000	Jul-09	0.25	Jul-14
		205,000	Dec-09	0.28	Dec-14
		72,000	Feb-11	0.25	Feb-16
		657,827
	Consultants	200,000	Dec-09	0.25	Dec-14
		63,000	June to August 2009	0.25	June to Aug 2014
		14,000	Aug-10	0.28	Aug-15
		14,000	Sep-10	0.25	Sep-15
		128,000	Dec-10	0.50	Dec-13
		419,000
	Total Warrants Issued/Outstanding	30,441,489

6_Fair_Value_Measurement_Table

(6) Fair Value Measurement (Tables)	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
Fair Value of assets and liabilities measured on recurring basis	'
	The following table presents the Company’s hierarchy for its financial assets and liabilities at fair value on a recurring basis as of June 30, 2013:
		Level 1			Level 2			Level 3		Total
	Nonderivatives:
	Cash and cash equivalents	$	9,360		$	—		$	—	$	9,360
	Current debt		80,500			—			—		80,500
	Derivatives:
	Convertible debentures		—			—			2,025,846		2,025,846
	Embedded conversion feature of debentures		—			—			540,226		540,226
	Common stock issued with notes		—			—			694,856		694,856
Estimated fair values of financial instruments	'
	The estimated fair value of the Company's financial instruments are as follows:
	Liabilities Measured at Fair Value	Convertible Notes and Debentures, Net of Discount (1)		Embedded Conversion Feature of Debentures (2)	Common Stock Issued with Notes (3)		Total
	Beginning balance as of December 31, 2012	$     2,025,846		$        202,585	$        559,704		$       2,788,135
	Revaluation (gain)/loss in interest expense	-		337,641	-		337,641
	Issuances, net of discount	-		-	132,150		132,150
	Amortization of discount	-		-	3,063		3,063
	Ending balance as of June 30, 2013	$     2,025,846		$        540,226	$        694,917		$       3,260,989
	Total (gain)/loss from revaluation of derivatives and event of default included in earnings for the period and reported as an adjustment to interest	$                    -		$          337,641	$            3,063		$           340,704

2_Basis_of_Presentation_Detail

(2) Basis of Presentation (Details) (USD $)	3 Months Ended		6 Months Ended		15 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Dec. 31, 2012
Net revenues	'	'	'	'	'	'
Cost of sales	'	'	'	'	'	'
Operating (loss)	-631,813	-404,743	-1,237,126	-925,895	-2,468,228	'
Depreciation and amortization	18,684	24,682	37,368	49,363	104,450	'
Total assets	401,579	550,311	401,579	550,311	401,579	462,980
Long-lived assets, net	389,334	537,635	389,334	537,635	389,334	'
The Americas [Member]	'	'	'	'	'	'
Net revenues	'	'	'	'	'	'
Cost of sales	'	'	'	'	'	'
Operating (loss)	-631,813	-404,743	-1,237,126	-925,895	-2,468,228	'
Depreciation and amortization	18,684	24,682	37,368	49,363	104,450	'
Total assets	401,579	550,311	401,579	550,311	401,579	'
Long-lived assets, net	389,334	537,635	389,334	537,635	389,334	'
Africa and Asia [Member]	'	'	'	'	'	'
Net revenues	'	'	'	'	'	'
Cost of sales	'	'	'	'	'	'
Operating (loss)	'	'	'	'	'	'
Depreciation and amortization	'	'	'	'	'	'
Total assets	'	'	'	'	'	'
Long-lived assets, net	'	'	'	'	'	'

2_Basis_of_Presentation_Detail1

(2) Basis of Presentation (Details 1)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Notes to Financial Statements	'	'
Risk-free interest rate (1)	0.99%	2.27%
Expected volatility (2)	163.20%	136.70%
Dividend yield (3)	0.00%	0.00%
Expected life (4)	'5 years 4 months 24 days	'6 years 6 months

2_Basis_of_Presentation_Detail2

(2) Basis of Presentation (Details 2) (USD $)	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
Number of Options Outstanding, Beginning	9,509,347
Number of Options Granted	14,650,000
Number of Options Exercised	'
Number of Options Cancelled	'
Number of Options Outstanding, Ending	24,159,347
Weighted Average Exercise Price Outstanding, Beginning	$0.32
Weighted Average Exercise Price, Options Granted	$0.03
Weighted Average Exercise Price, Options Exercised	'
Weighted Average Exercise Price, Options Cancelled	'
Weighted Average Exercise Price Outstanding, Ending	$0.15

2_Basis_of_Presentation_Detail3

(2) Basis of Presentation (Details 3) (USD $)	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Number of Options Issued and Outstanding	24,159,347	9,509,347
Weighted-Average Remaining Contractual Life (Yrs)	'7 years 4 months 24 days	'
Weighted-Average Exercise Price	$0.15	'
Number of Options Exercisable	16,834,349	'
Weighted-Average Price, Option Exercisable	$0.34	'
Nonqualified Stock Options1 $0.30 [Member]	'	'
Number of Options Issued and Outstanding	850,000	'
Weighted-Average Remaining Contractual Life (Yrs)	'6 months	'
Weighted-Average Exercise Price	$0.30	'
Number of Options Exercisable	850,000	'
Weighted-Average Price, Option Exercisable	$0.30	'
Nonqualified Stock Options2 $0.30 [Member]	'	'
Number of Options Issued and Outstanding	44,000	'
Weighted-Average Remaining Contractual Life (Yrs)	'1 year 7 months 6 days	'
Weighted-Average Exercise Price	$0.30	'
Number of Options Exercisable	44,000	'
Weighted-Average Price, Option Exercisable	$0.30	'
Incentive Stock Options1 $0.15 to 4.05 [Member]	'	'
Number of Options Issued and Outstanding	649,300	'
Weighted-Average Remaining Contractual Life (Yrs)	'4 years 3 months 18 days	'
Weighted-Average Exercise Price	$0.98	'
Number of Options Exercisable	649,300	'
Weighted-Average Price, Option Exercisable	$0.98	'
Incentive Stock Options2 $0.03 to $0.30 [Member]	'	'
Number of Options Issued and Outstanding	22,616,047	'
Weighted-Average Remaining Contractual Life (Yrs)	'7 years 8 months 12 days	'
Weighted-Average Exercise Price	$0.12	'
Number of Options Exercisable	15,291,049	'
Weighted-Average Price, Option Exercisable	$0.29	'

2_Basis_of_Presentation_Detail4

(2) Basis of Presentation (Details 4) (USD $)	6 Months Ended
	Jun. 30, 2013
Notes to Financial Statements	'
Reserved for future issuance as of December 31, 2012	6,668,333
Common stock awards	5,333,333
Restricted stock awards	'
Restricted stock rights	'
Non-qualified stock options	'
Issued during 2013	5,333,333
Reserved for future issuance as of June 30, 2013	1,335,000
Common stock awards, Weighted-Average Grant or Exercise Price Per Share	$0.03
Issued during 2012, Weighted-Average Grant or Exercise Price Per Share	$0.03

2_Basis_of_Presentation_Detail5

(2) Basis of Presentation (Details 5) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Notes to Financial Statements	'	'
Software (3 years)	$84,224	$84,224
Computer equipment (3 to 5 years)	329,861	329,861
Furniture and fixtures (7 to 10 years)	231,033	323,639
Equipment (7 to 10 years)	80,727	80,727
Equipment, gross	725,845	818,451
Less accumulated depreciation	651,219	702,316
Equipment, net	$74,626	$116,135

2_Basis_of_Presentation_Detail6

(2) Basis of Presentation (Details 6) (USD $)	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Patent acquisition costs	'	'
Beginning Period Cost	$331,163	'
Additions	0	'
Reductions	16,455	'
Net Book Value	$314,708	$331,163

2_Basis_of_Presentation_Detail7

(2) Basis of Presentation (Details Narrative) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Shares reserved for issuance under plans	50,000,000	'
Stock based compensation-shares available for issuance	4,871,353	'
Stock based compensation expense for employees and non-employee members of the Board of Directors	$508,837	$0
Stock based compensation expense for consultants	5,500	11,125
Board of Directors granted to employees during the period	14,650,000	'
Stock compensation expense	508,837	'
Revaluation of shares outstanding	41,250	'
Depreciation expense-Property and Equipment	20,913	32,907
Amortization expense-Patent acquisition costs	16,455	16,456
2003 Stock Incentive Plan	'	'
Shares reserved for issuance under plans	30,000,000	'
Shares available for issuance under plan	3,536,353	'
2009 Stock Compensation Plan	'	'
Shares reserved for issuance under plans	20,000,000	'
Employees and non-employee members of the Board of Directors	'	'
Stock compensation expense	508,837	0
Consultants	'	'
Stock compensation expense	5,500	11,125
Employees and named executives under the 2003 Plan	'	'
Stock compensation expense	$439,500	$402,875

3_Financial_Condition_Going_Co1

(3) Financial Condition, Going Concern Uncertainties and Events of Default (Details Narrative) (USD $)	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Trade and Accrued payables	$1,610,339	'
Accrued liabilities	108,048	'
Accrued salaries and related expenses	7,634,677	'
Noninterest-bearing loan from its Chief Executive Officer	80,500	'
Short-term notes	695,000	'
Debt discount	83	'
Mandatory default amount	337,641	'
Cash balance	9,360	'
Increase in stockholders' deficit	1,057,623	'
Stockholders' deficit	12,292,974	11,235,351
Consolidated net loss	1,604,960	'
Promissory notes	135,000	'
Commissions and expenses	225	'
Promissory notes, net	134,775	'
Short-term notes accrue interest rate	12.00%	'
Common stock issued to note holder	95,000	'
On December 31, 2013 [Member]	'	'
Promissory notes matures	30,000	'
In January 2014 [Member]	'	'
Promissory notes matures	5,000	'
On September 21, 2014 [Member]	'	'
Promissory note maturing next year	$100,000	'

4_Stockholders_Equity_Details

(4) Stockholders' Equity (Details) (USD $)	Jun. 30, 2013
Number of Warrants Outstanding and Exercisable	30,441,489
Warrant [Member] | Note and debenture holders [Member]	'
Number of Warrants Outstanding and Exercisable	10,000
Date Warrants are Exercisable	'December 2007
Exercise Price	0.7
Date Warrants Expire	'December 2013
Warrant [Member] | Note and debenture holders 1 [Member]	'
Number of Warrants Outstanding and Exercisable	18,293
Date Warrants are Exercisable	'February 2009
Exercise Price	0.41
Date Warrants Expire	'February 2014
Warrant [Member] | Note and debenture holders 2 [Member]	'
Number of Warrants Outstanding and Exercisable	150,000
Date Warrants are Exercisable	'January 2010
Exercise Price	0.25
Date Warrants Expire	'January 2015
Warrant [Member] | Note and debenture holders 3 [Member]	'
Number of Warrants Outstanding and Exercisable	78,750
Date Warrants are Exercisable	'September 2010
Exercise Price	0.25
Date Warrants Expire	'September 2015
Warrant [Member] | Note and debenture holders total [Member]	'
Number of Warrants Outstanding and Exercisable	257,043
Warrant [Member] | Private placement investors [Member]	'
Number of Warrants Outstanding and Exercisable	214,285
Date Warrants are Exercisable	'March 2008
Exercise Price	0.75
Date Warrants Expire	'December 2013
Warrant [Member] | Private placement investors 2 [Member]	'
Number of Warrants Outstanding and Exercisable	2,682,553
Date Warrants are Exercisable	'Sept to Dec 2008
Exercise Price	0.41
Date Warrants Expire	'Sept to Dec 2013
Warrant [Member] | Private placement investors 3 [Member]	'
Number of Warrants Outstanding and Exercisable	4,358,981
Date Warrants are Exercisable	'Jan to April 2009
Exercise Price	0.41
Date Warrants Expire	'Jan to April 2014
Warrant [Member] | Private placement investors 4 [Member]	'
Number of Warrants Outstanding and Exercisable	800,000
Date Warrants are Exercisable	'June to July 2009
Exercise Price	0.25
Date Warrants Expire	'June to July 2014
Warrant [Member] | Private placement investors 5 [Member]	'
Number of Warrants Outstanding and Exercisable	3,881,973
Date Warrants are Exercisable	'July to August 2009
Exercise Price	0.25
Date Warrants Expire	'December 2016
Warrant [Member] | Private placement investors 6 [Member]	'
Number of Warrants Outstanding and Exercisable	2,099,007
Date Warrants are Exercisable	'Oct to Dec 2009
Exercise Price	0.25
Date Warrants Expire	'Oct to Dec 2014
Warrant [Member] | Private placement investors 7 [Member]	'
Number of Warrants Outstanding and Exercisable	400,000
Date Warrants are Exercisable	'November 2009
Exercise Price	0.25
Date Warrants Expire	'December 2016
Warrant [Member] | Private placement investors 8 [Member]	'
Number of Warrants Outstanding and Exercisable	800,000
Date Warrants are Exercisable	'March to May 2010
Exercise Price	0.25
Date Warrants Expire	'December 2016
Warrant [Member] | Private placement investors 9 [Member]	'
Number of Warrants Outstanding and Exercisable	2,499,568
Date Warrants are Exercisable	'March to June 2010
Exercise Price	0.25
Date Warrants Expire	'March to June 2015
Warrant [Member] | Private placement investors 10 [Member]	'
Number of Warrants Outstanding and Exercisable	150,752
Date Warrants are Exercisable	'August 2010
Exercise Price	0.25
Date Warrants Expire	'December 2016
Warrant [Member] | Private placement investors 11 [Member]	'
Number of Warrants Outstanding and Exercisable	3,731,155
Date Warrants are Exercisable	'July to Sept 2010
Exercise Price	0.25
Date Warrants Expire	'July to Sept 2015
Warrant [Member] | Private placement investors 12 [Member]	'
Number of Warrants Outstanding and Exercisable	5,301,345
Date Warrants are Exercisable	'Oct to Dec 2010
Exercise Price	0.25
Date Warrants Expire	'Oct to Dec 2015
Warrant [Member] | Private placement investors 13 [Member]	'
Number of Warrants Outstanding and Exercisable	400,000
Date Warrants are Exercisable	'Nov to Dec 2010
Exercise Price	0.5
Date Warrants Expire	'Nov to Dec 2013
Warrant [Member] | Private placement investors 14 [Member]	'
Number of Warrants Outstanding and Exercisable	800,000
Date Warrants are Exercisable	'February 2011
Exercise Price	0.25
Date Warrants Expire	'February 2014
Warrant [Member] | Private placement investors 15 [Member]	'
Number of Warrants Outstanding and Exercisable	600,000
Date Warrants are Exercisable	'February 2011
Exercise Price	0.25
Date Warrants Expire	'February 2016
Warrant [Member] | Private placement investors 16 [Member]	'
Number of Warrants Outstanding and Exercisable	88,000
Date Warrants are Exercisable	'October 2011
Exercise Price	0.25
Date Warrants Expire	'October 2014
Warrant [Member] | Private placement investors 17 [Member]	'
Number of Warrants Outstanding and Exercisable	300,000
Date Warrants are Exercisable	'March 2012
Exercise Price	0.25
Date Warrants Expire	'March 2015
Warrant [Member] | Private placement investors total [Member]	'
Number of Warrants Outstanding and Exercisable	29,107,619
Warrant [Member] | Placement agents [Member]	'
Number of Warrants Outstanding and Exercisable	272,827
Date Warrants are Exercisable	'June 2009
Exercise Price	0.45
Date Warrants Expire	'June 2014
Warrant [Member] | Placement agents 1 [Member]	'
Number of Warrants Outstanding and Exercisable	108,000
Date Warrants are Exercisable	'July 2009
Exercise Price	0.25
Date Warrants Expire	'July 2014
Warrant [Member] | Placement agents 2 [Member]	'
Number of Warrants Outstanding and Exercisable	205,000
Date Warrants are Exercisable	'December 2009
Exercise Price	0.28
Date Warrants Expire	'December 2014
Warrant [Member] | Placement agents 3 [Member]	'
Number of Warrants Outstanding and Exercisable	72,000
Date Warrants are Exercisable	'February 2011
Exercise Price	0.25
Date Warrants Expire	'February 2016
Warrant [Member] | Placement agents total [Member]	'
Number of Warrants Outstanding and Exercisable	657,827
Warrant [Member] | Consultants [Member]	'
Number of Warrants Outstanding and Exercisable	200,000
Date Warrants are Exercisable	'December 2009
Exercise Price	0.25
Date Warrants Expire	'December 2014
Warrant [Member] | Consultants 1 [Member]	'
Number of Warrants Outstanding and Exercisable	63,000
Date Warrants are Exercisable	'June to August 2009
Exercise Price	0.25
Date Warrants Expire	'June to Aug 2014
Warrant [Member] | Consultants 2 [Member]	'
Number of Warrants Outstanding and Exercisable	14,000
Date Warrants are Exercisable	'August 2010
Exercise Price	0.28
Date Warrants Expire	'August 2015
Warrant [Member] | Consultants 3 [Member]	'
Number of Warrants Outstanding and Exercisable	14,000
Date Warrants are Exercisable	'September 2010
Exercise Price	0.25
Date Warrants Expire	'September 2015
Warrant [Member] | Consultants 4 [Member]	'
Number of Warrants Outstanding and Exercisable	128,000
Date Warrants are Exercisable	'December 2010
Exercise Price	0.5
Date Warrants Expire	'December 2013
Warrant [Member] | Consultants total [Member]	'
Number of Warrants Outstanding and Exercisable	419,000

4_Stockholders_Equity_Details_

(4) Stockholders' Equity (Details Narrative) (USD $)	6 Months Ended
	Jun. 30, 2013
Promissory notes-issued	$135,000
Commissions and expenses	225
Promissory notes-issued net	134,775
Other expense for the amortization of the debt discount	2,767
Stock compensation expenses	508,837
Revaluation of share issued for compensation	41,250
Converted accrued and upaid wages-Shares of common stock	833,333
Common stock purchase warrants expired during period	3,702,850
Warrants exercisable with cashless exercise provision	11,296,906
Consultant [Member]	'
Common stock purchase warrants expired during period	60,000
Investor [Member]	'
Common stock purchase warrants expired during period	3,642,850
On December 31, 2013 [Member]	'
Promissory notes matures	30,000
In January 2014 [Member]	'
Promissory notes matures	5,000
On September 21, 2014 [Member]	'
Promissory note maturing next year	$100,000

6_Fair_Value_Measurement_Detai

(6) Fair Value Measurement (Details) (USD $)	Jun. 30, 2013
Nonderivatives:	'
Cash and cash equivalents	$9,360
Current debt	80,500
Derivatives:	'
Convertible debentures	2,025,846
Embedded conversion feature of debentures	540,226
Common stock issued with notes	694,856
Level 1 [Member]	'
Nonderivatives:	'
Cash and cash equivalents	9,360
Current debt	80,500
Derivatives:	'
Convertible debentures	'
Embedded conversion feature of debentures	'
Level 2 [Member]	'
Nonderivatives:	'
Cash and cash equivalents	'
Current debt	'
Derivatives:	'
Convertible debentures	'
Embedded conversion feature of debentures	'
Common stock issued with notes	'
Level 3 [Member]	'
Nonderivatives:	'
Cash and cash equivalents	'
Current debt	'
Derivatives:	'
Convertible debentures	2,025,846
Embedded conversion feature of debentures	540,226
Common stock issued with notes	$694,856

6_Fair_Value_Measurement_Detai1

(6) Fair Value Measurement (Details 1) (USD $)	6 Months Ended
	Jun. 30, 2013
Beginning balance as of December 31, 2012	$2,788,135
Revaluation (gain)/loss in interest expense	337,641
Issuances, net of discount	132,150
Amortization of discount	3,063
Ending balance as of June 30, 2013	3,260,989
Total loss from revaluation of derivatives and event of default included in earnings for the period and reported as an adjustment to interest	340,704
Convertible Notes and Debentures [Member]	'
Beginning balance as of December 31, 2012	2,025,846
Revaluation (gain)/loss in interest expense	'
Issuances, net of discount	'
Amortization of discount	'
Ending balance as of June 30, 2013	2,025,846
Total loss from revaluation of derivatives and event of default included in earnings for the period and reported as an adjustment to interest	'
Embedded Conversion Feature of Debentures [Member]	'
Beginning balance as of December 31, 2012	202,585
Revaluation (gain)/loss in interest expense	337,641
Issuances, net of discount	'
Amortization of discount	'
Ending balance as of June 30, 2013	540,226
Total loss from revaluation of derivatives and event of default included in earnings for the period and reported as an adjustment to interest	337,641
Common Stock Issued with Notes [Member]	'
Beginning balance as of December 31, 2012	559,704
Issuances, net of discount	132,150
Amortization of discount	3,063
Ending balance as of June 30, 2013	694,917
Total loss from revaluation of derivatives and event of default included in earnings for the period and reported as an adjustment to interest	$3,063

6_Fair_Value_Measurement_Detai2

(6) Fair Value Measurement (Details Narrative) (USD $)	Jun. 30, 2013
Notes to Financial Statements	'
Outstanding convertible debentures	1,688,205
Debentures issued date	'November 8, 2006 and April 12, 2007
Default provision under debentures	$337,641
Short-term notes payable	695,000
Notes Payable Issuance date	'October 2011 through April 2012
Discount on issuance of common stock	$83