Liquidity and Capital Resources

As of September 30, 2009, we had a working capital surplus of $20,117,470 and stockholders' equity of $39,181,337.

Through September 30, 2009, we completed a private placement raising total cash proceeds of $2,072,950 through the issuance of 2,697,941 shares of common stock to a number of investors. As part of this placement, one party received 100,000 shares and warrants to purchase 100,000 shares in satisfaction of $66,000 of accounts payable.

In October 2009, the Company sold 6,447,491 shares of its common stock at a price of $1 per share, for aggregate consideration of $6,447,491.  We are also in discussions with other potential investors about investments for the fourth quarter of 2009.  However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to expand or continue our business as desired and operating results may be adversely affected. Debt financing will increase expenses and must be repaid regardless of operating results. Equity financing could result in a substantial dilution to existing stockholders.

We have borrowed funds from time to time in the past from our chief executive officer, Eberhard Schoneburg.  As of September 30, 2009, we owed Mr. Schoneburg an aggregate amount of $981,877, as compared to $737,771 at December 31, 2008.  During the three months ended September 30, 2009, Mr. Schoneburg advanced deferred salary of $111,328 to the Company.  The advanced funds bear interest at a rate of 5% per year and are secured by the assets of the Company.  

We expect that cash flow to be generated from remaining 2009 and 2010 operations and additional financing through various sources will be sufficient to fund the Company’s operations, working capital and commitment needs for the next 12 months.

Economic conditions in the United States and in foreign markets in which we operate could substantially affect our sales and profitability and our cash position and collection of accounts receivable.  Economic activity in the United States and throughout much of the world has undergone a sudden, sharp economic downturn in 2008 and 2009 following the housing downturn and subprime lending collapse in the United States and globally. Global credit and capital markets have experienced unprecedented volatility and disruption. Business credit and liquidity have tightened in much of the world. Some of our suppliers and customers may face credit issues and could experience cash flow problems and other financial hardships. These factors have had a substantial impact on the timeliness of receivable collections from our customers. The Company cannot predict at this point in time how this situation will develop and whether accounts receivable may need to be written off in the coming quarters.