UNIVERSAL DETECTION TECHNOLOGY - FORM 10-K

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EXCEL - IDEA: XBRL DOCUMENT - UNIVERSAL DETECTION TECHNOLOGY	Financial_Report.xls
EX-23.1 - CONSENT OF ACCOUNTING FIRM - UNIVERSAL DETECTION TECHNOLOGY	udt_10kex23-1.htm
EX-31.1 - CONSENT - UNIVERSAL DETECTION TECHNOLOGY	udt_10kex31-1.htm
EX-3.2 - BYLAWS - UNIVERSAL DETECTION TECHNOLOGY	udt_10k-ex302.txt
EX-32.1 - CONSENT - UNIVERSAL DETECTION TECHNOLOGY	udt_10kex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-K

(Mark One):

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 001-09327

UNIVERSAL DETECTION TECHNOLOGY

(Exact name of registrant as specified in its charter)

California		95-2746949
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

340 North Camden Drive, Beverly Hills, CA		90210
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (310) 248-3655

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value of the common stock held by non-affiliates as of June 30, 2011 was $2,786,783. As of May 8, 2012, there were 18,259,372,299 shares of the registrant’s common stock outstanding.

PART 1

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this annual report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management's beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this annual report. Factors that can cause or contribute to these differences include those described under the headings "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this annual report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You should specifically consider the factors identified in this annual report which would cause actual results to differ before making an investment decision. We are under no duty to update any of the forward-looking statements after the date of this annual report or to conform these statements to actual results.

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

Universal Detection Technology (the "Company," “UDT” or "We") is engaged in the marketing and resale of detection devices for chemical, biological, radiological, nuclear, and explosive (CBRNE) threats. Through agreements with various third parties we supply bioterrorism detection kits capable of detecting anthrax, ricin, botulinum, plague, and SEBs, mold detection kits, chemical detection equipment, radiation detection systems, and counter-terrorism training references.

We have entered into supply and distribution agreements with various parties enabling us to supply a host of products and services for detection of hazardous materials and training references. By combining our in-house experience and knowledge and outside expertise offered by various consultants and third parties, we have added threat evaluation and consulting services, and training courses to our services. We sell and market security and counter-terrorism products including bioterrorism detection kits, chemical detectors, radiation detection systems, and training references. Some of the products and services we offer have not been sold to date and there is no guarantee that any of them will be demanded and sold in the market in the future. We plan to continue expanding our product base and intend to sell products to more users inside and outside the U.S. Our strategy is to generate sales by enhancing our web presence and marketing the Company as a supplier of complete CBRNE detection equipment. We plan to attend various industry trade shows and to offer products in certain training scenarios so that first responders can become more familiar with our products. Our target customer markets primarily consist of first responders with some emphasis on the bioterror and military defense market. Our geographical customer focus is on the U.S., Europe, and Asia. There is no guarantee that we will succeed in implementing this strategy or if implemented, that this strategy will be successful.

Subsequent to the March 11, 2011 earthquake and tsunami in Japan, we saw an increased demand in our radiation detection equipment. In response we formed new alliances with manufacturers of dosimeters and survey meters to supply the Japanese market. We witnessed increased sales of these systems and have shipped several units to Japanese customers since the disaster.

In late 2011 we started research and development on a new line of radiation detectors that can monitor the environment and surfaces for radiation and communicate the results with a smartphone enabling the user to save and share the test results instantaneously. In December 2011 we announced entering into an agreement with Honeywell India (a unit of Honeywell International) to develop a radiation detector which would display radiation data collected via Bluetooth to a smartphone. The product is designed to detect radiation levels on surfaces and food and to automatically send the collected data to a smartphone. According to the agreement with Honeywell, any and all intellectual property including any patents which may be filed will be the sole property of Universal Detection Technology.

We named this product RadSmart and we expect to bring it to the market in 2012. In March 2012, we applied for a Federal Trademark for RadSmart with the US Patent and Trademark Office (USPTO). We have received confirmation that the USPTO has received our application and has subsequently assigned a serial number to our submission. In March 2012, the USPTO informed us that in approximately 3 months, an examining attorney will review our application to determine if all legal requirements are met. Currently our mark is not registered and is considered a “pending” application. The overall process from the time of initial filing to registration or final refusal can take 13-18 months or even longer.

RadSmart utilizes a Hamamatsu Cesium Iodide (CsI) scintillator for the detection of Gamma rays. Cs(I) scintillators are the most sensitive detection mechanisms for detecting Gamma radiation. The instrument will be sensitive enough to measure normal radiation levels to 100 to 200 times that intensity. With the planned detection range of 0.001 to 9.999 uSv/h the device is expected to be capable of detecting traces of radiation on surfaces, clothing and in particular food contamination, which has become an increasing concern globally after the Fukushima disaster in Japan.

In 2011 we realized revenues of $245,109 from sales. We have incurred losses for the fiscal years ended December 31, 2011 and 2010 in the approximate amounts of $2.5 and$2.2 million, respectively, and have an accumulated deficit of $48.0 million as of December 31, 2011. At December 31, 2011, we were in default on certain debt obligations totaling approximately $443,500 in addition to accumulated interest of approximately $745,100. We require approximately $1.2 million in the next 12 months to repay debt obligations. We do not anticipate that our cash on hand is adequate to meet our operating expenses over the next 12 months. In addition, we do not have adequate capital to repay all of our debt currently due and becoming due in the next 12 months. We principally expect to raise funds through the sale of equity or debt securities. During the past 12 months, management spent the substantial majority of its time on sales and marketing of the Company’s products and services. These activities diverted management from capital raising activities. We will actively continue to pursue additional equity or debt financing in the coming months, but cannot provide any assurances that it will be successful or on terms that are acceptable to us. If we are unable to pay our debts as they become due and are unable to obtain financing on terms acceptable to us, or at all, we will not be able to accomplish any or all of our initiatives and will be forced to consider other alternatives including suspending our business operations.

INDUSTRY BACKGROUND

The tragic events of September 11, 2001 redefined a new age of public safety and security, not only for the United States, but also for the entire world. In the wake of the tragedy, the world was shocked to learn of another nontraditional, deadly asymmetric weapon that was being deployed: lethal bioagents. A week after 9/11, envelopes containing anthrax, delivered by the U.S. Postal Service, were sent to five news media outlets, and on October 9th, two U.S. Senate offices.

By November 2001, 22 people in four states and the District of Columbia contracted anthrax, many of them through the tainting of letters via the postal sorting machines. In all, the bioterrorism attacks claimed six lives.

The Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism, led by an independent U.S. congressional committee, asserts that a large scale biological attack, expected to hit somewhere in the world by the end of 2013, has yet to be seen.

Along with the grave predictions in the December 2008 report, World at Risk, the Commission listed recommendations on how the government can reduce the risk of a biological attack. In January 2010, the commission issued a report card following up on those recommendations. For its efforts to “enhance the nation’s capabilities for rapid response to prevent biological attacks from inflicting mass casualties,” the government received an “F” letter grade.

The United States Department of Homeland Security was formed to consolidate the federal government's efforts to secure the U.S. homeland, with the primary goal being an America that is stronger, safer, and more secure. The private sector also has responded to the need for preparedness against bioterrorism by developing numerous anti-terror products and services. As a result a market for anti-terror products and counter-attack products in the bioagent, nuclear, physical and radiological spheres has developed and continues to expand.

In 2011 a tragedy took place in Japan that changed the dynamic, size, and requirements of the market for equipment used to detect radiation and identify radioactive isotopes. On March 11, 2011 an earthquake sent a tsunami barreling into the coast, sparking a nuclear crisis at Fukushima, Japan. The tsunami caused massive damage to nuclear reactors causing unsafe levels of radioactive material to be spread over residential areas, agricultural land, and other surroundings. The people of Japan have since conducted widespread detection and decontamination efforts to repair the damages caused by the disaster. The tragedy, however, has opened the eyes of the public and experts alike to the hazards of radiation dissemination. The market for radiation detection systems has changed drastically. Not only the size of the market has increased but also there is a need for smarter, more accurate, smaller, and more user friendly systems.

OUR SOLUTIONS

Universal Detection Technology is a supplier of equipment and services used for detection of:

·	Chemical threats

·	Biological threats

·	Radiological and Nuclear threats

·	Explosives

Mold

The chemical detection kits offered by Universal Detection Technology serve to equip first responders and military personnel with tools that rapidly identify the presence of a chemical agent threat, such as extreme levels of acidity or basicity, chlorine/fluoride, hydrogen sulfide and sulfur dioxide. Designed for use in the field for first responders or military personnel, the "Chameleon" detection system offers hands-free detection for harmful chemical agents and eliminates the need for a liquid sample. Users wear a portable chemical detection kit on their forearm. Each armband has a cassette holder containing up to ten (10) small cassettes, each of which can detect a unique chemical agent and identify its presence through a clear color-changing indicator. The Chameleon armband is fully functioning in extreme temperatures (-30 C to 50 C or -22 F to 122 F), and can operate while fully immersed in water. The Chameleon armband is a handheld chemical detection device which we market and sell to first responders. We purchase and distribute the Chameleon device from Morphix Technologies under an open-ended supply and distribution agreement. To date, we have sold a nominal number of such units resulting in insignificant revenue amounts. We have no exclusive rights under the distribution agreement and the agreement may be terminated upon 30 days prior notice by either party, or immediately upon a breach of the agreement. Under the terms of the Agreement, we are permitted to sell these products within the United States only.

The Company also supplies a handheld gas and vapor detector called ChemPro100i used for detection and classification of toxic industrial chemicals (TICs) and chemical warfare agents (CWAs). ChemPro100i’s multi-sensor detection array has 10 sensing channels, with a unique open-loop Ion Mobility Spectroscopy (IMS) sensor at its heart, to provide CWA sensitivity below military action levels, quick response and industry-leading false alarm rejection even to low vapor pressure threats like VX. We purchase and distribute the ChemPro100i device from Environics under an open-ended supply and distribution agreement. To date, we have not sold any ChemPro100i units resulting in no revenue. We have no exclusive rights under the distribution agreement and the agreement may be terminated upon 30 days prior notice by either party, or immediately upon a breach of the agreement. Under the terms of the Agreement, we are permitted to sell these products within the United States only.

The Company’s biological detection equipment gives first responders the ability to immediately identify the presence of deadly agents in a sample. These biological detection kits are handheld assays capable of detecting anthrax, ricin toxin, botulinum, plague, SEBs, and tularemia. The Company is in the process of adding more biological agents to the list of the threats that these handheld kits can identify. The detection kits are sold as TS-10-5, TS-10-T-5, ANT-12, RIC-12, BOT-12, PLA-12, SEB-12, TUL-12. We purchase and distribute these kits from Advnt Biotechnologies, LLC under a one year VAR and distribution agreement, which has expired recently and we are seeking to renew. We have no exclusive rights under the distribution agreement. The agreement may be terminated by either party upon 60 days prior notice by either party or immediately upon a breach of the agreement. Under the terms of the agreement, we are permitted to sell these products throughout the world with no geographic restrictions.

In February 2011, the Company entered into a reseller agreement with Mirion Technologies Inc. Through the agreement, the Company offered nuclear detection and monitoring devices created and made by Mirion that include electronic dosimetry and teledosimetry devices. We had no exclusive rights under the distribution agreement. Under the terms of the original agreement, we were permitted to sell these products in the United States only. However, we amended the agreement via various items of correspondence with Mirion such that we could also sell these products in Japan. In April 2011, Mirion Technologies informed us that we could no longer purchase products directly from them to fill our orders and sales to Japan and the US. Through their referral and our own efforts, we have found several alternative suppliers of Mirion Technologies’ products, from whom we have been able to procure inventory and meet the demand of our customers thus far. As of April 2011, we no longer consider Mirion Technologies a supplier and do not rely on direct purchase of products from them.

In 2011 we initiated research and development efforts to design and produce a unique scintillator based radiation detection survey meter that would communicate its readings with a smartphone wirelessly via a Bluetooth module. We believe that using the computing power of the smartphone and new detection technologies will allow us to produce a much smaller and more accurate unit that will be more capable in terms of mapping, saving, and sharing the results over secured communication networks. We expect to unveil the first prototype of this device in 2012.

UDT’s Mold detection kit utilizes a highly accurate testing technology called immunochromatographic assay, also known as a rapid test or Hand-Held Assay (HHA). These devices have been used for over 30 years in the medical field for detecting disease, fertility, drugs of abuse and respiratory disorders. Designed to rapidly detect the presence of specific substances in field-collected samples, HHA’s have proven to be an indispensable tool for saving countless lives while reducing the time it takes to acquire results. Unlike the ATP test which detects any and all living cells, regardless of what those cells are, UDT’s kits detect only specific species of Aspergillus, Penicillium and Stachybotrys such as Stachybotrys chlorohalonata, Stachybotrys microspora, Stachybotrys echinata and Stachybotrys chartarum, in addition to certain Aspergillus and Penicillium sub-species. Each kit is individually packaged and includes everything necessary to run the test. No additional collection kits, readers or electronics are required. The Mold detection kit is sold as the MDK-2. We purchase and distribute MDK-2 from Advnt Biotechnologies LLC under the agreement described above. During 2011, we sold a nominal number of MDK-2 units.

Universal Detection Technology has also situated itself to provide various counter-terrorism services. Such services include training courses for first responders, event security, threat evaluation & consulting, and DVDs aimed at providing information and training regarding combating terrorism and managing emergency situations. Through a reseller agreement with Detrick Lawrence Corporation and its division, the Emergency Film Group, we market and sell a series of DVD’s related to combating terrorism and handling emergency situations and first response. To date, we have sold only a nominal amount of these services and products and the resulting revenue for 2011 was insignificant.

MARKETING AND SALES

Our sales and marketing plan includes strategic partnership agreements and retention of our in-house staff and outside consultants. The Company has retained the services of consultants to market its products in the United States and internationally. In the United States, we plan to continue presenting our technologies at industry events and trade shows. We also retain domestic distributors and consultants to arrange meetings with and presentations to building owners and operators, government officials in charge of decisions for safety and security of government and private venues and buildings, homeland security officials, and security companies. In 2011 we continued to aggressively use the internet to market and promote Universal Detection Technology and its products and services to the public. This strategy includes creation of an interactive and informational presence through our website and use of various third parties to bring traffic to our website. We have hired an outside consultant to help expedite the changes and enhancements to our website. We have been successful in generating traffic to the Universal Detection website. We intend to do more internet marketing and search engine optimization activities in 2012.

We also plan to develop brand recognition for our Company and for our products through attendance at national and international defense related exhibitions, use of print and video promotional materials, and by granting interviews to national and international news media.

We currently sell and plan to sell our products through a combination of unsolicited telephone orders, electronically generated sales via our website and in follow up to customer meetings or tradeshows.

MANUFACTURING

Currently, we do not have any manufacturing capabilities. In the past we have used original equipment manufacturers to manufacture our products. In addition to our own brands we also market third party brands that are related to our field of business. We are not obligated to continue to work with any of our current suppliers. As such, we may choose to work with other suppliers in the future. Should any of our supply and distribution agreements be terminated, we believe we can source adequate replacement supply parties and products without causing any material disruption to our business.

EMPLOYEES

As of December 31, 2011, we had a total of four employees. We also employ outside consultants from time to time to provide various services. None of our employees are represented by a labor union. We consider our employee relations to be good.

COMPETITION

We face intense competition from a number of companies that offer products in our targeted application areas. Our competitors may offer or be developing products superior to ours. Our competitors may be significantly better financed than us. There are various technological approaches available to our competitors and us that may be applicable to the detection of pathogens in the air or on surfaces, and the feasibility and effectiveness of these techniques has yet to be fully evaluated or demonstrated.

Several companies provide or are in the process of developing instruments for detection of bioterrorism agents. Such technologies include a diverse range of products from PCR and DNA analyzers to handheld immunoassay technologies. For example, Northrup Grumman supplies a system called the BDS, which is a large machine that collects air samples from areas that are being monitored and after performing DNA amplification tests for the DNA of the anthrax bacteria. The biodetection kits we sell, on the other hand, are small handheld assays that work based on sandwich immunoassay technology. We also expect to encounter intense competition from a number of new development-stage companies that continue to enter the bioterrorism detection device market. Our competitors may succeed in developing or marketing technologies and products that are more effective or commercially attractive than our potential products or that render our technologies and potential products obsolete. As these companies develop their technologies, they may develop proprietary positions that prevent us from successfully commercializing our products.

There are many multinational and established manufacturers of radiation detection equipment. We will face intense competition from these manufacturers for marketing and selling our radiation detectors. Such competition will limit our ability to achieve market share and can affect our sales and revenues.

INTELLECTUAL PROPERTY

The Company does not own any intellectual property rights with respect to the products it markets and sells. As such, the Company may be at a competitive disadvantage with respect to protecting its ability to continue to market and sell any particular device, even if such a device is in high demand. In contrast, many of the Company's competitors develop proprietary technologies and devices which compete with the products marketed by and sold by the Company. As such, such competitors can control the marketing, sales and further development of their product offerings in a manner that the Company cannot. Because the Company is a re-seller of products developed by other parties, it cannot control its product offerings as well as its competitors may be able to.

In December 2011 we announced entering into an agreement with Honeywell India (a unit of Honeywell International) to develop a radiation detector which would display radiation data collected via Bluetooth to a smartphone. We named this product RadSmart and we expect to bring it to the market in 2012. In March 2012, we applied for a Federal Trademark for RadSmart with the US Patent and Trademark Office (USPTO). We have received confirmation that the USPTO has received our application and has subsequently assigned a serial number to our submission. In March 2012, the USPTO has informed us that in approximately 3 months, an examining attorney will review our application to determine if all legal requirements are met. Currently our mark is not registered and is considered a “pending” application. The overall process from the time of initial filing to registration or final refusal can take 13-18 months or even longer.

We plan to file for patent protection for RadSmart but there can be no assurances that we will qualify for such a protection or that we will have the resources to secure it.

GENERAL

The Company was formed on December 24, 1971 in the State of California under the name Pollution Research and Control Corporation. It has operated continuously since that date. In August, 2003 the Company changed its name to Universal Detection Technology.

ITEM 1A. RISK FACTORS

YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS ANNUAL REPORT. SOME OF THE INFORMATION CONTAINED IN THIS DISCUSSION AND ANALYSIS OR SET FORTH ELSEWHERE IN THIS ANNUAL REPORT, INCLUDING INFORMATION WITH RESPECT TO OUR PLANS AND STRATEGIES FOR OUR BUSINESS, INCLUDES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. YOU SHOULD REVIEW THE "RISK FACTORS" SECTION OF THIS REPORT FOR A DISCUSSION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE RESULTS DESCRIBED IN OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD SUFFER.

OUR INDEPENDENT AUDITORS' REPORT EXPRESSES DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Our independent auditors' report, dated May 8, 2012 includes an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern, due to our working capital deficit at December 31, 2011. We have experienced operating losses since the date of the auditors' report. Our auditor's opinion may impede our ability to raise additional capital on terms acceptable to us. If we are unable to obtain financing on terms acceptable to us, or at all, we will not be able to accomplish any or all of our initiatives and will be forced to consider steps that would protect our assets against our creditors. If we are unable to continue as a going concern, your entire investment in us could be lost.

WE ARE IN DEFAULT OF A SUBSTANTIAL PORTION OF OUR DEBT AND DO NOT HAVE ADEQUATE CASH TO FUND OUR WORKING CAPITAL NEEDS. OUR FAILURE TIMELY TO PAY OUR INDEBTEDNESS MAY REQUIRE US TO CONSIDER STEPS THAT WOULD PROTECT OUR ASSETS AGAINST OUR CREDITORS.

If we cannot raise additional capital, we will not be able to repay our debt or pursue our business strategies as scheduled, or at all, and we may cease operations. We have been unable to pay all of our creditors and certain other obligations in accordance with their terms, and as a result, at December 31, 2011 we are in default on a portion of our debt totaling approximately $443,500 excluding accumulated interest of approximately $745,100 In the aggregate, as of December 31, 2011, we have approximately $2.0 million in debt obligations, including interest, owing within the next 12 months. We cannot assure you that any of these note-holders will agree to extend payment of these debt obligations or ultimately agree to revise the terms of this debt to allow us to make scheduled payments over an extended period of time.

We have nominal cash on hand and short-term investments and we do not expect to generate material cash from operations within the next 12 months. We have attempted to raise additional capital through debt or equity financings and to date have had limited success. The downtrend in the financial markets has made it extremely difficult for us to raise additional capital. If we are unable to raise capital successfully, or reduce our debt through other means, we may be unable to continue operations.

THE COMPANY DOES NOT OWN ANY PROPRIETARY OR INTELLECTUAL PROPERTY RIGHTS IN THE PRODUCTS IT MARKETS AND SELLS

The Company does not own any intellectual property rights with respect to the products it markets and sells. The Company is a "reseller" of products available to it under supply and distribution agreements. As such, the Company may be at a competitive disadvantage with respect to protecting its ability to continue to market and sell any particular device, even if such device is in high demand. The Company cannot assure the availability of the products it sells or any improvements on such products. In addition, should such products become the subject of infringement claims by third parties, the Company may be unable to continue selling such products while such claims are unresolved. The Company would be forced to rely on the efforts of the owners of the products and underlying technologies to defend such suits should they arise. Such legal challenges, should they arise, would be detrimental to our operations. The Company believes it could source other suppliers of products should any of its suppliers become unable to sell product for any reason, however there can be no assurance that such replacement suppliers can be found timely or upon terms acceptable to the Company, if at all.

WE HAVE NO ABILITY TO FINANCE SIGNFICANT ORDERS OF OUR PRODUCTS OR TO PREPAY FOR ORDERS THAT MAY REQUIRE SUCH PAYMENT; WE MAY BE UNABLE TO TIMELY FULFILL ORDERS, IF AT ALL

The Company is a "reseller" of products available to it under supply and distribution agreements. When we obtain products for resale to our customers, we must be able to finance the purchase of such products. When the quantities and/or unit prices are low or nominal, we can finance that acquisition through existing cash, or require pre-payment from our customers, or request that the supply invoices be payable at a point in the future subsequent to the collection of the purchase price from our customers. The products we offer vary in price from several hundred dollars per unit to several thousand dollars per unit. >From time to time, our management has made loans to the Company the proceeds of which are used for general operations including the acquisition of limited amount of product for demonstration and resale. Currently, we believe that none of our accounts receivable would be attractive to commercial finance lenders or factors as a means to finance product acquisition. Should we be successful in generating significant purchase requests for the products we market and sell, we may be unable to process those orders due to a lack of financing opportunities and a lack of cash on hand. While we may attempt to structure such orders, should they arise, in a way that provides for payment in advance from customers, or payment of invoices after customer collection, or upon a factoring or other finance arrangement, there can be no assurance that we can structure the financing terms in a manner that supports product acquisition in large quantities, if at all. In addition, we have no control over how quickly our suppliers will make product available to us. Even assuming we can finance orders of all sizes, we must rely upon our suppliers to provide product and ship product in a timely manner. However, we cannot control the timing and shipment of the products that we resell. If we are able to generate purchase orders, we may be unable to fulfill them timely and upon financing terms acceptable to us or our suppliers and customers, which would be detrimental to our operations.

WE HAVE A HISTORY OF LOSSES AND WE DO NOT ANTICIPATE THAT WE WILL BE PROFITABLE IN FISCAL 2012.

We do not anticipate generating significant sales. We have not been profitable in the past years and had an accumulated deficit of approximately $48.0 million at December 31, 2011. We have had little revenues from sales of our products since the beginning of fiscal 2002, the commencement of our entry in the counter terrorism market. During the fiscal years ended December 31, 2011 and 2010, we had losses of $2.6 and$2.2 million, respectively. During fiscal 2011, we had gross revenues of $245,109. Achieving profitability depends upon numerous factors, including our ability to develop, market, and sell commercially accepted products timely and cost-efficiently. We do not anticipate that we will be profitable in fiscal 2012.

IF WE OBTAIN FINANCING, EXISTING SHAREHOLDER INTERESTS MAY BE DILUTED.

If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our shareholders will be diluted. In addition, any convertible securities issued may not contain a minimum conversion price, which may make it more difficult for us to raise financing and may cause the market price of our common stock to decline because of the indeterminable overhang that is created by the discount to market conversion feature. In addition, any new securities could have rights, preferences and privileges senior to those of our common stock. Furthermore, we cannot assure you that additional financing will be available when and to the extent we require or that, if available, it will be on acceptable terms.

MANAGEMENT HAS LIMITED EXPERIENCE IN SALES AND DISTRIBUTION. WE MAY NOT BE ABLE TO MARKET AND DISTRIBUTE PRODUCTS EFFECTIVELY, WHICH COULD HARM OUR FUTURE PROSPECTS.

If we are unable to establish a successful sales, marketing, and distribution operation, we will not be able to generate sufficient revenue in order to maintain operations. We have limited experience in marketing or distributing new products. We have limited experience in developing, training, or managing a sales force. If we choose to establish a direct sales force, we will incur substantial additional expense. We may not be able to build a sales force on a cost effective basis or at all. Any direct or internet marketing and sales efforts may prove to be unsuccessful. In addition, our marketing and sales efforts may be unable to compete with the extensive and well-funded marketing and sales operations of some of our competitors. We also may be unable to engage qualified distributors. Even if engaged, they may fail to satisfy financial or contractual obligations to us, or adequately market our products.

OUR PRODUCTS MAY NOT BE COMMERCIALLY ACCEPTED WHICH WILL ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY.

Our ability to enter into the CBRN detection device market, establish brand recognition and compete effectively depends upon many factors, including broad commercial acceptance of our products. If our products are not commercially accepted, we will not recognize meaningful revenue and may not continue to operate. The success of our products will depend in large part on the breadth of information these products capture and the timeliness of delivery of that information. The commercial success of our products also depends upon the quality and acceptance of other competing products, general economic and political conditions and other factors, all of which can change and cannot be predicted with certainty. We cannot assure you that our new products will achieve market acceptance or will generate significant revenue.

EXISTING AND DEVELOPING TECHNOLOGIES MAY ADVERSELY AFFECT THE DEMAND FOR OUR PRODUCTS.

Our industry is subject to rapid and substantial technological change. Developments by others may render our technologies and planned products noncompetitive or obsolete, or we may be unable to keep pace with technological developments or other market factors. Competition from other companies, universities, governmental research organizations and others diversifying into our field is intense and is expected to increase.

SHARES ISSUED UPON THE EXERCISE OF OUR OUTSTANDING OPTIONS AND WARRANTS, OR UPON THE CONVERSION OF PROMISSORY NOTES, MAY DILUTE YOUR STOCK HOLDINGS AND ADVERSELY AFFECT OUR STOCK PRICE.

If exercised, our outstanding options and warrants will cause immediate and substantial dilution to our stockholders. We have issued options and warrants to acquire our common stock to our employees, consultants, and investors at various prices, some of which are or may in the future be below the market price of our stock. As of December 31, 2011, we had outstanding options and warrants to purchase a total of 34,000 shares of common stock. Of these options and warrants, all have exercise prices at or above the recent market price of $0.0001 per share (as of May 8, 2012) and none have exercise prices at or below this price. In addition, because of our financial condition and substantial indebtedness and our need to raise capital, from time to time we have converted outstanding debt obligations into common stock. During 2011, we converted debt at conversion prices ranging from $.00004 to $.0007 per share. Our conversion of outstanding debt obligations to common stock, as well as the exercise of outstanding options and warrants to purchase common stock, which the Board of Directors may authorize and undertake from time to time, may dilute the stockholdings of current shareholders.

THE LOSS OF OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER WOULD DISRUPT OUR BUSINESS.

Our success depends in substantial part upon the services of Jacques Tizabi, our President, Chief Executive Officer and Chairman of the Board of Directors. The loss of or the failure to retain the services of Mr. Tizabi would adversely affect the development of our business and our ability to realize profitable operations. We do not maintain key-man life insurance on Mr. Tizabi and have no present plans to obtain this insurance.

WE MAY BE SUED BY THIRD PARTIES WHO CLAIM THE PRODUCTS WE SELL INFRINGE ON THEIR INTELLECTUAL PROPERTY RIGHTS. DEFENDING AN INFRINGEMENT LAWSUIT IS COSTLY AND WE MAY NOT HAVE ADEQUATE RESOURCES TO DEFEND OURSELVES.

We may be exposed to future litigation by third parties based on claims that the products we sell infringe on the intellectual property rights of others or that we have misappropriated the trade secrets of others. This may be true even if we do not own the technologies embedded in the products we sell. This risk is compounded by the fact that the validity and breadth of claims covered in technology patents in general and the breadth and scope of trade secret protection involves complex legal and factual questions for which important legal principles are unresolved. Any litigation or claims against us, whether or not valid, could result in substantial costs, could place a significant strain on our financial and managerial resources, and could harm our reputation.

CURRENCY RISK

Most of our sales come from sales in Japan and that leaves us open to the risk associated with the valuation of the Japanese Yen. If the Japanese Yen becomes less valuable our products will be relatively more expensive and can therefore lose their competitive advantage. Our margins as a reseller are very thin and a currency devaluation in Japan can diminish our ability to compete or sell in that market.

HEAVY RELIANCE ON THE JAPANESE MARKET

Our sales are predominantly in Japan and have peaked since the March 11, 2011 disaster in Fukushima that resulted in damage to nuclear reactors and release of radioactive material in the ground and in the atmosphere. There is no assurance that the demand for radiation detection equipment will remain high in Japan and if such demand fades, we will recognize lower revenues.

RISKS ASSOCIATED WITH PRODUCT DEVELOPMENT

We are spending resources on research and development related to a smartphone compatible radiation detector, RadSmart. Development of new products is inherently risky and there is no assurance that RadSmart will perform as well as it is designed to perform. Furthermore, the market for RadSmart might shrink in size or cease to exist by the time the product is ready and available for purchase. The market might not accept RadSmart as a reliable detection device and as such, our sales of RadSmart might be zero or very limited.

WE HAVE NOT PAID ANY CASH DIVIDENDS AND NO CASH DIVIDENDS WILL BE PAID IN THE FORESEEABLE FUTURE.

We do not anticipate paying cash dividends on our common stock in the foreseeable future, and we cannot assure an investor that funds will be legally available to pay a dividend or that even if the funds are legally available, that a dividend will be paid.

THE APPLICATION OF THE “PENNY STOCK” RULES COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK AND INCREASE YOUR TRANSACTION COSTS TO SELL THOSE STOCK.

As long as the trading price of our common stock is below $5 per share, the open-market trading of our common stock will be subject to the “penny stock” rules. The “penny stock” rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common stock, and may result in decreased liquidity for our common stock and increased transaction costs for sales and purchases of our common stock as compared to other securities.

A DTC “CHILL” ON ELECTRONIC CLEARING OF TRADES IN OUR COMMON STOCK MAY AFFECT THE LIQUIDITY OF OUR STOCK AND OUR ABILITY TO RAISE CAPITAL.

In September 2011, The Depositary Trust Company (DTCC) placed a "chill" on the electronic clearing of trades in our shares which has led to some firms being unwilling to accept certificates of our stock and also some will not accept trades in our shares altogether. The Company has sought advice from third parties on removal of the DTC chill but has not embarked on any strategy thus far. The DTC chill affects the liquidity in our shares which may make it difficult to purchase or sell shares. It also will have an adverse effect on our ability to raise capital.

OUR STOCK PRICE IS VOLATILE.

The trading price of our common stock fluctuates widely and in the future may be subject to similar fluctuations in response to quarter-to-quarter variations in our operating results, announcements of technological innovations or new products by us or our competitors, general conditions in the terrorism detection device industry in which we compete and other events or factors. In addition, in recent years, broad stock market indices, in general, and the securities of technology companies, in particular, have experienced substantial price fluctuations. These broad market fluctuations also may adversely affect the future trading price of our common stock.

OUR STOCK HISTORICALLY FLUCTUATES WIDELY IN TRADING VOLUME AND PRICE. THEREFORE, SHAREHOLDERS MAY NOT BE ABLE TO SELL THEIR SHARES FREELY OR AT PRICES AND AT TIMES THAT THEY DESIRE TO SELL SHARES.

The volume of trading in our common stock historically has fluctuated and a limited market presently exists for the shares. We have no analyst coverage of our securities. The lack of analyst reports about our stock may make it difficult for potential investors to make decisions about whether to purchase our stock and may make it less likely that investors will purchase our stock. Our stock trades in a wide fluctuation of volume that we cannot predict or control. We cannot assure you that our trading volume will increase, or that our historically light trading volume or any trading volume whatsoever will be sustained in the future. Therefore, we cannot assure you that our shareholders will be able to sell their shares of our common stock at the time or at the price that they desire, or at all.

POTENTIAL ANTI-TAKEOVER TACTICS AND RIGHTS AND PREFERENCES GRANTED THROUGH THE ISSUANCE OF PREFERRED STOCK RIGHTS MAY BE DETRIMENTAL TO COMMON SHAREHOLDERS.

We are authorized to issue up to 20,000,000 shares of preferred stock. The issuance of preferred stock does not require approval by the shareholders of our common stock. Our Board of Directors, in its sole discretion, has the power to issue preferred stock in one or more series and establish the dividend rates and preferences, liquidation preferences, voting rights, redemption and conversion terms and conditions and any other relative rights and preferences with respect to any series of preferred stock. Holders of preferred stock may have the right to receive dividends, certain preferences in liquidation and conversion and other rights, any of which rights and preferences may operate to the detriment of the shareholders of our common stock. Further, the issuance of any preferred stock having rights superior to those of our common stock may result in a decrease in the market price of the common stock and, additionally, could be used by our Board of Directors as an anti-takeover measure or device to prevent a change in our control.

WE ARE SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Management, including our Chief Executive Officer ("CEO"), who is also our acting Chief Financial Officer ("CFO"), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of a date as of the end of the reporting period covered by the Company's Annual Report on Form 10-K, December 31, 2011. The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management performed such an evaluation and based on such evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

* Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

* Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

* Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

As of December 31, 2011 Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, as of the end of the period covered by this report, such internal controls over financial reporting were not effective to control deficiencies that constituted material weaknesses. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.

Our failure to maintain adequate disclosure controls and procedures and internal control over financial reporting may mean that prospective investors and partners will lack confidence in our financial statements, which could cause us to lose financing opportunities or business opportunities, each of which could have a material adverse effect on our business and on our stock price and trading. While our management is working to remedy the material weaknesses there can be no assurance that such actions will be successfully implemented or that we will be able to fully overcome such material weaknesses.

OUR ISSUANCE OF ADDITIONAL COMMON STOCK, OR OPTIONS TO PURCHASE OUR STOCK, WOULD DILUTE YOUR PROPORTIONATE OWNERSHIP AND VOTING RIGHTS.

We are entitled under our articles of incorporation to issue up to 20,020,000,000 shares of capital stock which includes 20,000,000,000 shares of common stock, 20,000,000 shares of Preferred Stock. Our Preferred Stock may be designated in a senior position to our common stock. After taking into consideration our outstanding common stock at May 8, 2012 of 18,259,372,299 shares, we will be entitled to issue up to 1,760,627,701 additional shares of common stock and 20,000,000 of Preferred Stock. Our board of directors may generally issue stock, or options or warrants to purchase those shares, without further approval by our stockholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital to further our development or convert outstanding indebtedness to equity. It is also likely that we will be required to issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans. We cannot give you any assurance that we will not issue additional common stock, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.

Item 1B. UNRESOLVED STAFF COMMENTS

Not applicable for Smaller Reporting Companies.

ITEM 2. DESCRIPTION OF PROPERTY

We currently do not own any real property. As of June 2009, we moved our corporate headquarters to 340 N. Camden Drive, Suite 302, Beverly Hills, CA 90210, USA. Our offices are still at this address. Our lease for these premises expires on June 1, 2012. The base monthly rent is $6,896. We believe this operating space is adequate for the Company's needs for the foreseeable future.

We are currently in discussions to renew our lease for 6 months and to subsequently assess our various options.

ITEM 3. LEGAL PROCEEDINGS

On May 15, 2002, Walt Disney World Co. commenced action in the Los Angeles Superior Court against the Company and a former wholly-owned subsidiary (WALT DISNEY WORLD CO. V. POLLUTION RESEARCH AND CONTROL CORP. AND DASIBI ENVIRONMENTAL CORP. (Case No. BC 274013 Los Angeles Superior Court) for amounts due in connection with unpaid rent. A judgment was entered for $411,500. No amounts have been paid in connection with the judgment. As of December 31, 2011, $411,500 has been accrued.

On or about April 16, 2004, Plaintiffs A. Sean Rose, Claire F. Rose, and Mark Rose commenced an action in the Los Angeles Superior Court against the Company (A. SEAN ROSE, CLAIRE F. ROSE AND MARK ROSE V. UNIVERSAL DETECTION TECHNOLOGY, FKA POLLUTION RESEARCH AND CONTROL CORPORATION) for amounts allegedly due pursuant to four unpaid promissory notes. On August 2, 2004, the parties executed a Confidential Settlement Agreement and Mutual Releases (the “Agreement”). On December 30, 2005, Plaintiffs commenced an action against the Company, alleging the Company breached the Agreement and sought approximately $205,000 in damages. A judgment was entered on April 11, 2006 for $209,277.58. The Company has previously accrued for this settlement. As of December 31, 2011, we have accrued $610,621 for this settlement including principal and interest.

On June 2, 2006, Plaintiff Trilogy Capital Partners instituted an action in the Los Angeles Superior Court (TRILOGY CAPITAL PARTNERS V. UNIVERSAL DETECTION TECHNOLOGY, ET. AL., Case No. SC089929) against the Company. Plaintiff's Complaint alleged damages against UDT for breach of an engagement letter in the amount of $93,448.54. Also, Plaintiff alleged that UDT had failed to issue warrants to it pursuant to a written agreement. After completing the initial stages of litigation and conducting extensive mediation, Plaintiff and UDT reached a settlement wherein commencing December 15, 2006, UDT would make monthly payments to Plaintiff of $2,000 until a debt of $90,000 plus accrued interest at six percent per annum was fully paid. In exchange, Plaintiff would release all of its claims against UDT. UDT has not been current on all of its agreed payments to Plaintiff. As of December 31 2011, $28,098 was due under the agreement.

On November 15, 2006, Plaintiff NBGI, Inc. instituted an action in the Los Angeles Superior Court (NBGI, Inc. v. Universal Detection Technology, et. al., Case No. BC361979) against UDT. NBGI, Inc.'s Complaint alleged breach of contract, and requested damages in the amount of $111,014.34 plus interest at the legal rate and for costs of suit. A Motion for Summary Judgment was set for September 11, 2007. The Summary Judgment was granted in NBGI’s favor and judgment has been entered. No payments have been made on this judgment and no actions to enforce the judgment have been taken against UDT.

On November 1, 2010 the accounting firm of A.J. Robbins, P.C. filed a lawsuit in the District Court, City and County of Denver, Colorado, seeking recovery of fees allegedly owed for accounting services performed during 2004 to 2008. The claims have been asserted against the Company, a second corporate defendant, and our CEO, as a result of a personal guarantee. On December 15, 2010, Defendants filed an Answer which asserted several defenses. The parties exchanged initial disclosures, and the matter was set for trial commencing on December 5, 2011. On August 3, 2011 the parties entered into a settlement agreement whereby the Defendants in the case will jointly pay $85,000 to the plaintiffs and the Company will issue $45,000 of the Company’s stock to the plaintiffs. The Company was responsible to pay 50% of the cash payments, the other 50% of which was the responsibility of a second defendant. The cash payments were scheduled to be made in equal monthly payments over 7 months commencing on August 31, 2011. In consideration of the settlement, the parties have executed a mutual release and have agreed to withdraw the lawsuit. The releases and withdrawal are contingent upon the Company's full performance of the settlement agreement terms. The Company issued stock with a fair market value of $36,000 on the date of the agreement in full payment of the stock portion of the settlement agreement. As of May 8, 2012, out of the $42,500 cash payments that the Company was responsible for under the settlement agreement, it has paid $25,979.18 and owes $16,520.82. This balance due is for the February 28, 2012 and part of the January 31, 2012 payments. Plaintiff has the right to get a judgment for $175,000 minus the payments that were made, if we fail to perform under the terms of the settlement agreement and if they serve us with a notice of default, which they have not.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable to the Company’s business.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the OTC Bulletin Board under the symbol “UNDT.” The following table sets forth the high and low bid information of our common stock on the OTC Bulletin Board for each quarter during the last two fiscal years, as reported by the OTC Bulletin Board. This information reflects inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Year	Period
		High Bid	Low Bid
2010	First Quarter	0.0035	0.0022
	Second Quarter	0.0048	0.0017
	Third Quarter	0.0038	0.0005
	Fourth Quarter	0.0011	0.0003

2011	First Quarter	0.0026	0.0003
	Second Quarter	0.0016	0.0004
	Third Quarter	0.0006	0.0002
	Fourth Quarter	0.0003	0.0001

HOLDERS OF RECORD

As of May 8, 2012, we had 1,346 shareholders of record of our common stock. Our Transfer Agent is Worldwide Stock Transfer, LLC located at 433 Hackensack Avenue, Level L, Hackensack, NJ 07601. Worldwide Stock Transfer’s phone number is (201) 820-2010.

DIVIDEND POLICY

We do not currently pay any dividends on our common stock, and we currently intend to retain any future earnings for use in our business. Any future determination as to the payment of dividends on our common stock will be at the discretion of our Board of Directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our Board of Directors including the General Corporation Law of the State of California, which provides that dividends are only payable out of retained earnings or if certain minimum ratios of assets to liabilities are satisfied. The declaration of dividends on our common stock also may be restricted by the provisions of credit agreements that we may enter into from time to time.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Set forth in the table below is information regarding awards made through equity compensation plans through December 31, 2011.

Plan Category	Number of securities to be issued upon exercises of outstanding options, warrants, and rights (a)	Weighted-average exercise price of outstanding options, warrants, and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	N/A	N/A	N/A

Equity compensation plans not approved by security holders (1)
2006 Stock Compensation Plan	37,500 (2)	N/A	0
2006 Consultant Stock Plan	125,000 (2)	N/A	0
2006-II Consultant Stock Plan	187,500 (2)	N/A	0
2007 Consultant Stock Plan	375,000	N/A	0
2007 Equity Incentive Plan II&III	295,000 (2)(3)	N/A	0
2007 Equity Incentive Plan IV	450,000	N/A	31
2007 Equity Incentive Plan V & VI	1,350,000(4)	N/A	16,109
2008 Equity Incentive Plan	1,500,000	N/A	45
2008 Equity Incentive Plan II	1,650,000	N/A	15,730
2008 Equity Incentive Plan III	2,500,000	N/A	0
2008 Equity Incentive Plan IV	3,800,000	N/A	0
2009 Equity Incentive Plan	10,000,000	N/A	0
2009 Equity Incentive Plan II	60,000,000	N/A	394,588
2009 Equity Incentive Plan III	200,000,000	N/A	0
2011 Equity Incentive Plan	600,000,000	N/A	0
2011 Equity Incentive Plan II	1,200,000,000	N/A	225,000,000

_____________________

(1)

The Company has individual compensation arrangements with Messrs. Amir Ettehadieh and Nima Montazeri. Under these arrangements Messrs. Ettehadieh and Montazeri help the company with matters related to research, business development, and administration. For their services, Messrs. Ettehadieh and Montazeri receive the equivalent of $10,000 worth of common shares of the Company per month, which shares are issued under the then-current equity incentive plan, including those plans listed above.

(2)	Represents total number of shares of common stock originally authorized for stock grants. Stock option grants were not authorized.

(3)	Consists of the second and third plans.

(4)	Consists of the fifth and sixth plans.

On February 13, 2006, our Board of Directors adopted the 2006 Stock Compensation Plan (the "Plan"). The Plan authorizes common stock grants to our non-executive employees, professional advisors and consultants. We reserved 7,500,000 shares of our common stock for awards to be made under the Plan. The Plan is to be administered by our Board of Directors, or by any committee to which such duties are delegated by the Board.

On June 29, 2006, our Board of Directors adopted the 2006 Consultant Stock Plan (the "2006 Plan"). The 2006 Plan authorizes common stock grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. We reserved 25,000,000 shares of our common stock for awards to be made under the 2006 Plan. The 2006 Plan is to be administered by a committee of one or more members of our Board of Directors.

On November 22, 2006, our Board of Directors adopted the 2006-II Consultant Stock Plan (the "2006-II Plan"). The 2006-II Plan authorizes common stock grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. We reserved 37,500,000 shares of our common stock for awards to be made under the 2006-II Plan. The 2006-II Plan is to be administered by a committee of two or more members of our Board of Directors.

On April 17, 2007, the Board of Directors adopted the 2007 Consultant Stock Plan (the “2007 Plan”). The 2007 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. We reserved 375,000 shares of our common stock for awards to be made under the 2007 Plan. The 2007 Plan is to be administered by a committee of two or more members of our Board of Directors.

On June 5, 2007, the Board of Directors adopted the 2007 Equity Incentive Plan (the “2007-II Plan”). The 2007-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 150,000 shares of its common stock for awards to be made under the 2007-II Plan. The 2007-II Plan is to be administered by a committee of two or members of the Board of Directors.

On June 27, 2007, the Board of Directors adopted the 2007 Equity Incentive Plan (the “2007-III Plan”). The 2007-III Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 145,000 shares of its common stock for awards to be made under the 2007-III Plan. The 2007-III Plan is to be administered by a committee of two or members of the Board of Directors.

On July 13, 2007, the Board of Directors adopted the 2007-2 Equity Incentive Plan (the “2007-IV Plan”). The 2007-IV Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 450,000 shares of our common stock for awards to be made under the 2007-IV Plan. The 2007-IV Plan is to be administered by a committee of two or more members of the Board of Directors.

On October 10, 2007, the Board of Directors adopted the 2007-3 Equity Incentive Plan (the “2007-V Plan”). The 2007-V Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 600,000 shares of common stock for awards to be made under the 2007-V Plan. The 2007-V Plan is to be administered by a committee of two or more members of our Board of Directors.

On November 1, 2007, the Board of Directors adopted the 2007-4 Equity Incentive Plan (the “2007-VI Plan”). The 2007-VI Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 750,000 shares of common stock for awards to be made under the 2007-VI Plan. The 2007-VI Plan is to be administered by a committee of two or more members of our Board of Directors.

On February 11, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan (the “2008 Plan”). The 2008 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 1,500,000 shares of common stock for awards to be made under the 2008 Plan. The 2008 Plan is to be administered by a committee of two or more members of our Board of Directors.

On April 29, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan II (the “2008-II Plan”). The 2008-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 1,650,000 shares of common stock for awards to be made under the 2008-III Plan. The 2008-II Plan is to be administered by a committee of two or more members of our Board of Directors.

On July 1, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan III (the “2008-III Plan”). The 2008-III Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 2,500,000 shares of common stock for awards to be made under the 2008-III Plan. The 2008-III Plan is to be administered by a committee of two or more members of our Board of Directors.

On September 2, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan IV (the “2008-IV Plan”). The 2008-IV Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 3,800,000 shares of common stock for awards to be made under the 2008-IV Plan. The 2008-IV Plan is to be administered by a committee of two or more members of our Board of Directors.

On February 22, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan (the “2009 Plan”). The 2009 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 10,000,000 shares of common stock for awards to be made under the 2009 Plan. The 2009 Plan is to be administered by a committee of two or more members of our Board of Directors.

On May 14, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan II (the “2009-II Plan”). The 2009-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 60,000,000 shares of common stock for awards to be made under the 2009-II Plan. The 2009-II Plan is to be administered by a committee of two or more members of our Board of Directors.

On November 5, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan III (the “2009-III Plan”). The 2009-III Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 200,000,000 shares of common stock for awards to be made under the 2009-III Plan. The 2009-III Plan is to be administered by a committee of two or more members of our Board of Directors.

On May 6, 2011, the Board of Directors adopted the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 600,000,000 shares of common stock for awards to be made under the 2011 Plan. The 2011 Plan is to be administered by a committee of two or more members of our Board of Directors.

On October 27, 2011, the Board of Directors adopted the 2011 Equity Incentive Plan II (the “2011-II Plan”). The 2011-II Plan grants to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 1,200,000,000 shares of common stock for awards to be made under the 2011-II Plan. The 2011-II Plan is to be administered by a committee of two or more members of our Board of Directors.

With respect to each of the above Plans, and subject to the provisions of each Plan, the Board and/or committee shall have authority to (a) grant, in its discretion, stock awards; (b) determine in good faith the fair market value of the stock covered by any grant; (c) determine which eligible persons shall receive grants and the number of shares, restrictions, terms and conditions to be included in such grants; (d) construe and interpret the Plans; (e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies in the Plans or any grants; (f) consistent with the Plans and with the consent of the participant, amend any outstanding grant; and (g) make all other determinations necessary or advisable for the Plans’ administration. The interpretation and construction by the Board of any provisions of the Plans shall be conclusive and final.

SALES OF UNREGISTERED SECURITIES

During fiscal 2011, we issued the following securities which were not registered under the Securities Act. We did not employ any form of general solicitation or advertising in connection with the issuance of the securities described below. In addition, we believe the purchasers and recipients of the securities are “Accredited Investors” for the purpose of Rule 501 of the Securities Act. For these reasons, among others, the offer and sale of the following securities were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act or Regulation D promulgated by the SEC under the Securities Act:

·	During 2011, we issued 3,995,995,423 shares of common stock to various note holders to convert outstanding debt obligations valued at approximately $1,934,644 as follows:

On January.06, 2011, we issued 110,000,000 shares of common stock to convert outstanding debt obligations valued at $44,000.

On January.12, 2011, we issued 110,000,000 shares of common stock to convert outstanding debt obligations valued at $44,000.

On January.31, 2011, we issued 110,000,000 shares of common stock to convert outstanding debt obligations valued at $55,000.

On February.15, 2011, we issued 130,925,925 shares of common stock to convert outstanding debt obligations valued at $91,648.

On February.23, 2011, we issued 42,909,090 shares of common stock to convert outstanding debt obligations valued at $21,455.

On February.23, 2011, we issued 85,818,181 shares of common stock to convert outstanding debt obligations valued at $42,909.

On February.23, 2011, we issued 128,058,823 shares of common stock to convert outstanding debt obligations valued at $64,029.

On March.9, 2011, we issued 130,000,000 shares of common stock to convert outstanding debt obligations valued at $65,000.

On March.9, 2011, we issued 136,868,076 shares of common stock to convert outstanding debt obligations valued at $68,434.

On March.9, 2011, we issued 130,000,000 shares of common stock to convert outstanding debt obligations valued at $65,000.

On April.20, 2011, we issued 169,811,320 shares of common stock to convert outstanding debt obligations valued at $186,792.

On April.20, 2011, we issued 170,000,000 shares of common stock to convert outstanding debt obligations valued at $187,000.

On June.2, 2011, we issued 115,584,555 shares of common stock to convert outstanding debt obligations valued at $57,792.

On June.2, 2011, we issued 85,000,000 shares of common stock to convert outstanding debt obligations valued at $42,500.

On June.2, 2011, we issued 183,750,000 shares of common stock to convert outstanding debt obligations valued at $91,875.

On June.2, 2011, we issued 144,642,857 shares of common stock to convert outstanding debt obligations valued at $72,321.

On June.28, 2011, we issued 200,000,000 shares of common stock to convert outstanding debt obligations valued at $120,000.

On July.25, 2011, we issued 180,000,000 shares of common stock to convert outstanding debt obligations valued at $72,000.

On July.25, 2011, we issued 69,411,764 shares of common stock to convert outstanding debt obligations valued at $27,765.

On July.25, 2011, we issued 249,902,914 shares of common stock to convert outstanding debt obligations valued at $99,961.

On September.1, 2011, we issued 278,181,818 shares of common stock to convert outstanding debt obligations valued at $111,273.

On October 7, 2011, we issued 308,630,100 shares of common stock to convert outstanding debt obligations valued at $92,589.

On December.14, 2011, we issued 250,000,000 shares of common stock to convert outstanding debt obligations valued at $50,000.

On December.28, 2011, we issued 256,500,000 shares of common stock to convert outstanding debt obligations valued at $51,300.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable for Smaller Reporting Companies.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements provided in this annual report on Form 10-K. Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed more fully herein.

The forward-looking information set forth in this annual report is as of the date of this filing, and we undertake no duty to update this information. More information about potential factors that could affect our business and financial results is included in the section of this annual report entitled "Risk Factors."

OVERVIEW

Our business operations are more fully described under "Description Business" in Item 1 of Part I of this Report.

Results of Operations

The following discussion is included to describe our consolidated financial position and results of operations. The audited consolidated financial statements and notes thereto contain detailed information that should be referred to in conjunction with this discussion.

Revenue – Total revenue for the year ended December 31, 2011 was $245,109 as compared to $5,368 the prior fiscal year, an increase of $239,741. The increase is primarily due to increased demand for radiation detectors in Japan after the nuclear disaster in Fukushima.

Operating Expenses –Total operating expenses for the year ended December 31, 2011 were $1,161,524. Total operating expenses for the year ended December 31, 2010 were $1,289,287 representing a decrease of $127,763 (11%). The decrease is primarily attributable to a decrease in marketing and administrative expense current year.

Other income(expense). Other income (expense) amounted to ($1,472,305) for the year ended December 31, 2011 as compared to ($907,740) for the year ended December 31, 2010 The change is principally related to the loss recognized on the settlement of shares issued for debt.

Net loss. Net loss for the year ended December 31, 2011 was $2,613,866, as compared to a net loss of $2,196,195 for the same period in the prior fiscal year, representing an increased loss of $417,671. The primary reason for this is an increase in loss recognized on settlement of shares issued for debt.

PLAN OF OPERATION

In 2011 we have continued to diversify our activities. We plan to engage more in value added services to complement our bioterrorism detection technologies. We supply chemical, biological, radiological, nuclear, explosive (CBRNE), and mold detection equipment.

We plan to continue expanding our product base and to sell our products to more users inside and outside the U.S. There is no guarantee that we will succeed in implementing this strategy or if implemented, that this strategy will be successful.

LIQUIDITY AND CAPITAL RESOURCES

We require approximately $4.5 million in the next 12 months to repay debt obligations and execute our business plan. We do not anticipate that our cash on hand is adequate to meet our operating expenses over the next 12 months. Also, we do not believe we have adequate capital to repay all of our debt currently due and becoming due in the next 12 months. We anticipate that our uses of capital during the next 12 months principally will be for:

·	administrative expenses, including salaries of officers and other employees we plan to hire;

·	repayment of debt;

·	sales and marketing;

·	product testing or manufacturing; and

·	expenses of professionals, including accountants and attorneys.

Our working capital deficit at December 31, 2011 was $4,337,067. Our independent auditors' report includes an explanatory paragraph relating to substantial doubt as to our ability to continue as a going concern, due to our working capital deficit at December 31, 2011. We require approximately $1.9 million to repay indebtedness including interest in the next 12 months. The following provides the principal terms of our outstanding debt as of December 31, 2011:

♦ One loan from three unaffiliated parties, each of whom is an unaffiliated party, evidenced by four promissory notes in the aggregate principal amounts of $100,000, $50,000, $50,000, and $100,000, each due June 24, 2001 with interest rates ranging from 11% to 12%. We entered into a settlement agreement in the third quarter of 2004 with each of these parties. Pursuant to this agreement, at June 30, 2005, we were required to pay an additional $80,000 as full payment of our obligations. We did not make this payment and are in default of these notes. As of December 31, 2011, we have $610,721 accrued for including interest relating to this matter.

♦ One loan from an unaffiliated party in the aggregate principal amount of $195,000 with interest at a rate of 12% per annum. Pursuant to a letter agreement dated as of August 10, 2004, we entered into a settlement with this party and agreed to pay a total of $261,000 pursuant to a scheduled payment plan through July 2005. Additionally, the Company, in September 2004, issued 206,250 shares of common stock upon the conversion of unpaid interest in the aggregate amount of $33,000. At December 31, 2011, there was $161,000 principal amount (and $110,658 in interest) remaining on this note. We did not make our scheduled payment under this note in July 2005, and are in default of this note.

♦ One loan from an unaffiliated party in the aggregate principal amount of $98,500, due July 31, 2005, with interest at the rate of 9% per annum. Pursuant to a letter agreement dated August 10, 2004, between us and this third party, we agreed to pay a total of $130,800 pursuant to a scheduled payment plan through July 2005. At December 31, 2011, there was $71,500 principal amount (and $34,709 in interest) remaining on this note. We did not make our scheduled payment under this note in July 2005, and are in default of this note.

♦ One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $100,000 due on March 31, 2006 with an interest rate of 12% per annum. As of December 31, 2011 we owed $70,500 in interest. We did not make our scheduled payment on March 31, 2006. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

♦ One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,500 due on June 27, 2007 with an interest rate of 12.5% per annum. As of December 31, 2011 we owed $859 in interest. We did not make our scheduled payment on June 27, 2007. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

♦ One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $9,940 due on March 31, 2010 with an interest rate of 12% per annum. As of December 31, 2011, we owed $3,280 in interest. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

♦ One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,638 due on March 31,2010 with an interest rate of 12% per annum. As of December 31, 2011, we owed $540 in interest. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

♦ One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $1,420 due on March 31, 2010 with an interest rate of 12% per annum. As of December 31, 2011, we owed $468 in interest. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

♦ One loan from an unaffiliated party evidenced by a promissory note in the aggregate principal amount of $776 due on September 3, 2010 with an interest rate of 12% per annum. As of December 31, 2011, we owed $217 in interest. We have verbally extended the unpaid note and the due date and other terms are being renegotiated so the note is not considered in default.

Management continues to take steps to address the Company's liquidity needs. Management continues to seek extensions with respect to debt past due. Management also may seek additional extensions with respect to these notes and the Company's debt as it becomes due. In addition, management may continue to convert some portion of the principal amount and interest on our debt into shares of common stock. During 2011, the Company issued 3,995,995,423 shares of its common stock for an aggregate value of $1,934,644 to satisfy outstanding debt and accrued interest.

Historically, we have financed operations through private debt and equity financings. In recent years, financial institutions have been unwilling to lend to us and the cost of obtaining working capital from investors has been expensive. We principally expect to raise funds through the sale of equity or debt securities. During the years ended December 31, 2011 and 2010, the Company received gross proceeds of approximately $0.3 million and $0.1 million, respectively, from the sale of equity and debt securities. The Company actively continues to pursue additional equity or debt financings, but cannot provide any assurance that it will be successful. If we are unable to pay our debt as it becomes due and are unable to obtain financing on terms acceptable to us, or at all, we will not be able to accomplish any or all of our initiatives and will be forced to consider steps that would protect our assets against our creditors.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, and that would be considered material to investors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable for Smaller Reporting Companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements and related notes are set forth at pages 26 through 44.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm		25

Consolidated Balance Sheet		26

Consolidated Statements of Operations		27

Consolidated Statements of Changes in Stockholders' Equity (Deficit)		28

Consolidated Statements of Cash Flows		29

Notes to Consolidated Financial Statements		30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Universal Detection Technology

We have audited the accompanying consolidated balance sheets of Universal Detection Technology and Subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of income, shareholders’ equity and cash flows for the years then ended. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Universal Detection Technology at December 31, 2011 and 2010, and the consolidated results of operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s significant operating losses and insufficient capital raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Kabani & Company, Inc.

KABANI & COMPANY, INC.

CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, CA

May 10, 2012

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

AS OF DECEMBER 31, 2011 AND 2010

ASSETS
	As of
	December 31, 2011			December 31, 2010
CURRENT ASSETS:
Cash and cash equivalents	$	2,062		$	987
Accounts Receivable, net		1,099			1,099
Inventory		28,560			936
Prepaid expenses		-			-

Total current assets		31,721			3,022

Deposits		21,300			21,300
Equipment, net		3,374			5,451

Total assets	$	56,395		$	29,773


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable, trade	$	1,165,975		$	1,189,824
Accrued liabilities		632,960			635,761
Unearned Revenue		11,878			-
Accrued payroll - officers		902,481			783,410
Notes payable - related party		466,870			340,074
Notes payable		443,514			874,394
Shares to be Issued		-			-
Accrued interest expense		745,110			725,692

Total current liabilities		4,368,788			4,549,155

Long term notes payable		309,625			-

Total liabilities		4,678,413			4,549,155

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value, 20,000,000 shares authorized, -0- issued and outstanding		-			-
Common stock, no par value, 20,000,000,000 shares authorized, 7,659,024,525 and 2,253,029,102 shares issued and outstanding as of December 31, 2011 and December 31, 2010, respectively		38,112,311			35,601,080
Additional paid-in-capital		5,313,089			5,313,089
Accumulated deficit		(48,047,417	)		(45,433,551	)

Total stockholders' deficit		(4,622,017	)		(4,519,382	)

Total liabilities and stockholders' deficit	$	56,396		$	29,773

See accompanying notes to the consolidated financial statements.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	For the years ended December 31,
	2011			2010

REVENUE, NET	$	245,109		$	5,368
COST OF GOODS SOLD		225,146			4,536

GROSS PROFIT		19,963			832

OPERATING EXPENSES:
Selling, general and administrative		1,112,458			1,138,902
Marketing		45,554			139,447
Depreciation and amortization		3,512			10,938

Total expenses		1,161,524			1,289,287

LOSS FROM OPERATIONS		(1,141,561	)		(1,288,455	)

OTHER INCOME (EXPENSE):
Interest income (expense)		(55,485	)		(154,664	)
Other income		42,500			11,250
Loss on settlement of debt		(1,459,320	)		(764,326	)

Total other expenses		(1,472,305	)		(907,740	)

NET LOSS	$	(2,613,866	)	$	(2,196,195	)

NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED:	$	(0.0005	)	$	(0.0015	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		5,024,930,967			1,461,711,527

Weighted average number of dilutive securities has not been calculated as the effect of dilutive securities would be anti-dilutive

See accompanying notes to the consolidated financial statements.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit

BALANCE, DECEMBER 31, 2009		-	$	-		1,020,051,351	$	33,907,469	$	5,313,089	$	(43,237,356	)	$	(4,016,798	)

Stock issued for conversion of debt		-		-		996,977,751		1,289,370		-		-			1,289,370
Stock issued for services		-		-		236,000,000		404,241		-		-			404,241
Net loss for the year												(2,196,195	)		(2,196,195	)

BALANCE, DECEMBER 31, 2010		-		-		2,253,029,102		35,601,080		5,313,089		(45,433,551	)		(4,519,382	)

Stock issued for conversion of debt		-		-		3,995,995,423		1,934,642		-		-			1,934,642
Stock issued for services		-		-		1,410,000,000		576,589		-		-			576,589
Net loss for the year												(2,613,866	)		(2,613,866	)

BALANCE, DECEMBER 31, 2011		-	$	-		7,659,024,525	$	38,112,311	$	5,313,089	$	(48,047,417	)	$	(4,622,017	)

See accompanying notes to consolidated financial statements.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2011 AND 2010

	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,613,866	)	$	(2,196,195	)
Adjustments to reconcile net loss to net cash used in operations:
Stocks issued for services		576,588			404,241
Loss on settlement of debt		1,459,320			764,326
Depreciation		3,512			10,938
Changes in operating assets and liabilities:
Inventory		(27,624	)		3,181
Accounts receivable		-			2,527
Prepaid expenses		-			7,678
Deposits		-			-
Stock to be issued		-
Unearned Revenue		11,878
Accounts payable and accrued liabilities		147,906			595,935

Net cash used in operating activities		(442,286	)		(407,369	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(1,435	)		(3,013	)
Decrease (increase) in restricted cash		-			-

Net cash (used) provided by investing activities		(1,435	)		(3,013	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable-related party		592,256			318,828
Proceeds from notes payable		318,000			112,000
Payments on notes payable - related party		(465,460	)		(20,826	)

Net cash provided by financing activities		444,796			410,002


NET DECREASE IN CASH AND CASH EQUIVALENTS		1,075			(380	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		987			1,367

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,062		$	987

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income tax	$	3,200		$	-
Interest Paid	$	-		$	526

SUPPLEMENTAL DISCLOSURES FOR NON CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued for settlement of debt and accrued interest	$	1,934,642		$	890,118
Shares issued for prepaid expenses	$	-		$	88,000

See accompanying notes to the consolidated financial statements.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

NOTE 1 - BUSINESS ACTIVITY

Universal Detection Technology, a California corporation, primarily designs, manufactures and markets air pollution monitoring instruments. Beginning in 2002, the Company has focused its research and development efforts in developing a real time biological weapon detection device. To accelerate development of its initial biological weapon detection device, the Company has developed and is implementing a collaborative partnering strategy. Under this strategy, the Company identifies and partners with researchers and developers. The Company has expanded its services to include security related consulting, event security and counterterrorism training.

The Company is a reseller of a range of products, which include rapid anthrax detection test kits, training courses for first responders, event security, threat evaluation and consulting, radiation detection systems, anti-microbial products, and DVDs aimed at providing information and training regarding combating terrorism and managing emergency situations.

GOING CONCERN AND MANAGEMENT'S PLANS

As of December 31, 2011, the Company had a working capital deficit of $4,337,067 During the year ended December 31, 2011, the Company incurred net losses of $2,613,866 and had an accumulated deficit of $48,047,418 as of December 31, 2011. These conditions raise substantial doubt about its ability to continue as a going concern. Its ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and ultimately achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Management has taken certain steps to provide the Company with necessary capital to continue its operations. These steps include: 1) actively seeking additional funding in the form of unsecured indebtedness and 2) seeking to increase revenues from product sales.

During 2010 and 2011, the Company entered into various agreements to sell shares of its common stock to third parties in order to convert its debts to the respective parties. In 2010, 996,977,751 shares were issued in the aggregate amount of $1,289,370. In 2011, 3,995,995,423 shares were issued in the aggregate amount of $1,934,642.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Universal Detection Technology and its wholly-owned subsidiaries Nutek, Inc. (“Nutek”) and Logan Medical Devices, Inc. (“Logan”). The two subsidiaries are currently inactive. All significant intercompany balances and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Service revenue is recognized when services are performed and amounts are due.

INVENTORIES

Inventories, consisting of finished goods, are stated at the lower of cost (first-in first-out) basis or market.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the current year’s presentation, none of which had an impact on total assets, stockholders’ equity (deficit), net loss, or net loss per share.

ADVERTISING EXPENSES

The Company expenses advertising costs as incurred. During the years ended December 31, 2011 and 2010, the Company did not have significant advertising costs.

PROPERTY AND EQUIPMENT AND DEPRECIATION AND AMORTIZATION

Property and equipment, consisting of office furniture and equipment, leasehold improvements and lab testing equipment, is recorded at cost less accumulated amortization and depreciation respectively. Depreciation and amortization is provided for on the straight-line method over the estimated useful lives of the assets, generally three to five years or over the term of the lease.

	2011			2010

Equipment	$	4,448		$	55,012
Furniture		-0-			64,669
Leasehold Improvements		-0-			25,444
		4,448			145,125
Accumulated Depreciation		(1,074	)		(139,674	)
Fixed Assets, Net of Depreciation	$	3,374		$	5,451

Total depreciation expense was $3,512 and $10,938 for the years ended December 31, 2011 and 2010, respectively. During 2011, The Company wrote-off $142,112 in fixed asset no longer in service. The accumulated depreciation on the assets was $142,122 and no gain or loss was recognized on the disposal.

STOCK BASED COMPENSATION TO OTHER THAN EMPLOYEES

Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably determinable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

EARNINGS PER COMMON SHARE

Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted loss per share is similar to the basic loss per share computation except the denominator is increased to include the number of additional shares that would have been outstanding if the dilutive potential common shares had been issued. In addition, the numerator is adjusted for any changes in income or loss that would result from the assumed conversions of those potential shares. However, such presentation is not required if the effect is antidilutive. Accordingly, the diluted per share amounts do not reflect the impact of warrants and options or convertible debt outstanding for -34,000 and 539,750 shares at December 31, 2011 and 2010, respectively, because the effect of each is antidilutive.

CASH EQUIVALENTS

For purposes of reporting cash flows, the Company considers all short term, interest bearing deposits with original maturities of three months or less to be cash equivalents.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

IMPAIRMENT OF PATENTS AND LONG-LIVED ASSETS

Patents and other intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. In accordance with ASC 350 (previously Statement of Financial Accounting Standard No. 142), GOODWILL AND OTHER INTANGIBLE ASSETS ("ASC 350"), the Company periodically evaluates its long-lived assets by measuring the carrying amounts of assets against the estimated undiscounted future cash flows associated with them. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144 (ASC 360). SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

As per the Statement of Financial Accounting Standards (“SFAS”) No. 142 (ASC 350), “Goodwill and Other Intangible Assets (“SFAS 142”) (ASC 350),” the Company assess finite-lived intangible assets and other long-lived assets, excluding goodwill, for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable through the estimated undiscounted future cash flows resulting from the use of the assets. If it is determined that the carrying value of intangible assets or other long-lived assets may not be recoverable, the impairment is measured by using the projected discounted cash-flow method. Based upon the future cash flow, the Company recorded $78,573 in impairment of patent as of December 31, 2009.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash, accounts receivable, notes receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the short maturity of these items.

INCOME TAXES

Deferred income taxes are recorded to reflect the tax consequences in future years of temporary differences between the tax basis of the assets and liabilities and their financial statement amounts at the end of each reporting period. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the current period and the change during the period in deferred tax assets and liabilities. The deferred tax assets and liabilities have been netted to reflect the tax impact of temporary differences. At December 31, 2011, a full valuation allowance has been established for the deferred tax asset as management believes that it is more likely than not that a tax benefit will not be realized.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

CONCENTRATION OF CREDIT RISK

Generally, the Company required no collateral when it extends credit to its customers. The Company's credit losses in the aggregate have not exceeded managements' expectations. The Company maintains all cash in bank accounts, which at times may exceed federally insured limits. The Company has not experienced a loss in such accounts.

SEGMENT REPORTING

ASC 280 (previously SFAS No. 131), Disclosures about segments of an enterprise and related information, which superseded statement of financial accounting standards No. 14, Financial reporting for segments of a business enterprise, establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. In 2011 and 2010, the Company operated in one segment.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2011, the FASB issued guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is less than its carrying amount, the two-step goodwill impairment test is not required. The new guidance will be effective for us beginning July 1, 2012.

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. The new guidance will be effective for us beginning July 1, 2012 and will have financial statement presentation changes only.

In May 2011, the FASB issued guidance to amend the accounting and disclosure requirements on fair value measurements. The new guidance limits the highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. Additionally, the new guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes in unobservable inputs. The new guidance will be effective for us beginning January 1, 2012. Other than requiring additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.

NOTE 3 - ACCRUED LIABILITIES

The accrued liabilities consist of the following at December 31, 2011 and 2010:

	2011		2010
Loan Fees Payable	$	68,600	$	68,600
Deferred Rent		2,827		8,608
Accrued expenses		150,033	$	68,600
Accrued Settlement (Refer to Note 9)		411,500		411,500
TOTAL ACCRUED LIABILITIES	$	632,960	$	635,761

The loan fees payable consists of the following: $68,600 is the value of 300,000 shares payable to third parties in connection with certain loan fees.

NOTE 4 - ACCRUED PAYROLL – OFFICERS

Accrued payroll – officers as of December 31, 2011 and 2010 is comprised of accrued payroll to the officers of the company amounting to $902,481 and $783,410, respectively. This payable is interest free, unsecured and due on demand.

NOTE 5 - NOTES PAYABLE, RELATED PARTY

During the year ended December 31, 2011, the Company borrowed a total of $592,256 from its president and chief executive officer under various written and oral promissory note agreements executed by the Company. The notes had interest rates of 0%. The Company repaid notes totaling $465,460 and interest of $-0-. As of December 31, 2011, $466,869 in principal and $1,392 in interest was due under the above and prior year loans.

During the year ended December 31, 2010, the Company borrowed a total of $318,828 from its president and chief executive officer under promissory notes executed by the Company. The notes had interest rates ranging from 0% to12%. The Company repaid notes totaling $20,826 and interest of $526. As of December 31, 2010, $340,075 in principal and $639 in interest was due.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

NOTE 6 - NOTES PAYABLE

Notes payable consisted of the following at December 31, 2011:

Notes payable to individuals, subject to contingent settlement agreement and summary judgment, interest at 11.67% per annum, principal and interest due January 1, 2006, in default, unsecured	$	95,740

Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due July 2005, in default, unsecured		161,000

Note payable, subject to settlement agreement, interest at 9.17% per annum, principal and interest due July 2005, unsecured		71,500

Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due December 2005, unsecured		100,000

Note payable, interest at 12.5%, due June 2007, verbally extended, unsecured		1,500

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		9,940

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		1,638

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		1,420

Note payable, interest at 12% per annum, due September 2010, verbally extended, unsecured		776

Note payable, interest at 12% per annum, due April 2014, verbally extended, unsecured		14,625

Note payable, interest at 12% per annum, due July 2014, verbally extended, unsecured		50,000

Note payable, interest at 12% per annum, due August 2014, verbally extended, unsecured		40,000

Note payable, interest at 12% per annum, due August 2014, verbally extended, unsecured		35,000

Note payable, interest at 12% per annum, due November 2014, verbally extended, unsecured		60,000

Note payable, interest at 12% per annum, due November 2014, verbally extended, unsecured		60,000

Note payable, interest at 12% per annum, due December 2014, verbally extended, unsecured		50,000

Total Notes Payable	$	753,139

Less: Current Portion:		(443,514	)

Long-Term Notes payable	$	309,625

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Notes payable consisted of the following at December 31, 2010:

Notes payable to individuals, subject to contingent settlement agreement and summary judgment, interest at 11.67% per annum, principal and interest due January 1, 2006, in default, unsecured	$	95,740

Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due July 2005, in default, unsecured		161,000

Note payable, subject to settlement agreement, interest at 9.17% per annum, principal and interest due July 2005, unsecured		71,500

Note payable, subject to settlement agreement, interest at 12% per annum, principal and interest due December 2005, unsecured		100,000

Note payable, interest at 12.5%, due June 2007, verbally extended, unsecured		1,500

Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured		4,000

Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured		8,000

Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured		5,000

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		9,940

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		1,638

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		1,420

Note payable, interest at 12% per annum, due May 2011, unsecured		9,000

Note payable, interest at 12% per annum, due June 2011, unsecured		18,940

Note payable, interest at 12% per annum, due September 2011, unsecured		40,000

Note payable, interest at 12% per annum, due July 2011, unsecured		25,940

Note payable, interest at 12% per annum, due September 2010, verbally extended, unsecured		776

Note payable, interest at 12% per annum, due November 2009 and verbally extended, unsecured		45,000

Note payable, interest at 12% per annum, due October 2010, verbally extended, unsecured		20,000

Note payable, interest at 12% per annum, due November 2009 and verbally extended, unsecured		50,000

Note payable, interest at 12% per annum, due December 2009 and verbally extended, unsecured		90,000

Note payable, interest at 12% per annum, due January 2010, verbally extended, unsecured		25,000

Note payable, interest at 12% per annum, due May 2010, verbally extended, unsecured		23,000

Note payable, interest at 12% per annum, due March 2010, verbally extended, unsecured		30,000

Note payable, late charge at 15%, due May 2010, verbally extended, unsecured		2,000

Note payable, interest at 12% per annum, due May 2011, unsecured		35,000

Total Notes Payable	$	874,394

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

The interest expense for the years ended December 31, 2011 and December 31, 2010 is $55,485 and $154,664, respectively.

The Company entered into a contingent settlement agreement on July 26, 2004 related to $440,765 of notes payable to individuals and related accrued interest. In July 2004, the Company paid a total of $73,333 towards the debt and agreed to pay a total of $298,667, including interest through January 2006 in full payment. The Settlement Agreement provides for an accelerated payment schedule at the Company's option, which would reduce the total payment made by the Company by approximately $12,000. The Company defaulted on the two remaining payments totaling $80,000 at which time the entire remaining balance became due, including default interest and legal fees. The Company currently has accrued $514,881 for interest and legal fees (included in the accrued interest of $754,781 as of December 31, 2011) in addition to the $95,740 principal balance (included in the notes payable of $769,839 as of December 31, 2011).

During August 2004, the Company entered into an agreement to settle a note payable in the amount of $200,000 plus accrued interest. The parties agreed to settle the debt for $261,000 payable as follows: Twelve consecutive payments of $12,500 payable monthly commencing August 31, 2004 and ending July 31, 2005; a lump-sum payment of $95,000 payable on July 31, 2005; and a one-time interest payment of $16,000 on July 31, 2005. This agreement includes an additional $7,500 as inducement to the note holder to enter into the extended agreement, which was amortized as a loan fee over the term of the agreement. Scheduled payments were not made on the note and the company is currently in default. The Company currently has accrued $110,656 for interest (included in the accrued interest of $754,781 as of December 31, 2011) in addition to the $161,000 principal balance (included in the notes payable of $769,839 as of December 31, 2011.

During August 2004, the Company entered into an agreement to settle a note payable in the amount of $100,000 plus accrued interest. The parties agreed to settle the debt for $130,800 payable as follows: Twelve consecutive payments of $6,000 payable monthly commencing August 31, 2004 and ending July 31, 2005; a lump-sum payment of $50,500 payable on July 31, 2005; and a one-time interest payment of $8,300 on July 31, 2005. The Company has recognized a $38,610 gain on forgiveness of accrued interest related to this transaction. Scheduled payments were not made on the note and the company is currently in default. The Company currently has accrued $34,709 for interest (included in the accrued interest of $754,781 as of December 31, 2011) in addition to the $71,500 principal balance (included in the notes payable of $769,839 as of December 31, 2011.

NOTE 7 - EQUITY

PREFERRED STOCK

The Company is authorized to issue up to 20,000,000 shares of preferred stock, $.01 par value per share in series to be designated by the Board of Directors.

COMMON STOCK

CONVERSION OF DEBT

During 2011, the Company entered into various agreements to convert $439,255 of principal and $36,019 of accrued interest into 3,995,995,423 shares of common stock. The fair market value of the stock on the dates of agreement and issuance was $1,934,644. The Company recorded a loss on settlement of debt of $1,459,321.

During 2010, the Company entered into various agreements to convert $474,549 of principal and $50,495 of accrued interest into 996,977,751 shares of common stock. The fair market value of the stock on the dates of agreement and issuance was $1,289,370. The Company recorded a loss on settlement of debt of $764,326.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

STOCK ISSUED FOR SERVICES

During the year ended December 31, 2011, the Company issued an aggregate of 1,149,013,074 shares of its common stock to various employees of the Company as compensation. The shares were valued at a total of $438,678.

During the year ended December 31, 2011, the Company entered into various agreements for strategic business planning, financial advisory, investor relations, and professional and public relations services. As compensation for the services rendered, the Company issued 260,986,926 shares of common stock, valued at $137,912, the fair market value of the stock on the day of issuance.

During the year ended December 31, 2010, the Company issued an aggregate of 145,777,780 shares of its common stock to various employees of the Company as compensation. The shares were valued at a total of $243,266.

During the year ended December 31, 2010, the Company entered into various agreements for strategic business planning, financial advisory, investor relations, professional and public relations services. As compensation for the services rendered, the Company issued 90,222,220 shares of common stock, valued at $160,976, the fair market value of the stock on the day of issuance.

STOCK OPTION PLAN

On February 11, 2008, the Board of Directors adopted the 2008 Equity Incentive Plan (“the Plan”). The Plan provides for the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 3,000,000 shares of common stock for awards to be made under the Plan. 299,991,072 shares reserved under this plan have been issued.

On April 29, 2008, the Board of Directors adopted the 2008-2 Equity Incentive Plan (“the Plan”). The Plan provides for the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 330,000,000 shares of common stock for awards to be made under the Plan. 326,854,165 of the shares reserved under this plan have been issued.

On July 1, 2008, the Board of Directors adopted the 2008-3 Equity Incentive Plan (“the Plan”). The Plan provides for the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 2,500,000 shares of common stock for awards to be made under the Plan. 2,500,000 of the shares reserved under this plan have been issued.

On September 2, 2008, the Board of Directors adopted the 2008-4 Equity Incentive Plan (“the Plan”). The Plan provides for the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital-raising transaction. The Company reserved 3,800,000 shares of common stock for awards to be made under the Plan. 3,800,000 of the shares reserved under this plan have been issued.

On February 15, 2009, the Board of Directors adopted the 2009 Equity Incentive Plan (the “Plan.”) The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are no it connection with the offer and sale of securities in a capital raising transactions. The company initially reserved 10,000,000 shares of its common stock for awards to be made under the Plan. 10,000,000 of the shares reserved under this plan have been issued.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

On May 15, 2009, the Board of Directors adopted the 2009-2 Equity Incentive Plan (The “Plan”.) The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital raising transaction. The Company initially reserved 60,000,000 shares of its common stock for awards to be made under the Plan. 59,605,412 of the shares under this plan have been issued.

On November 6, 2009, the Board of Directors adopted the 2009-3 Equity Incentive Plan (The “Plan”.) The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital raising transaction. The Company initially reserved 200,000,000 shares of its common stock for awards to be made under the Plan. 200,000,000 of the shares under this plan have been issued.

The company granted 44,000 restricted shares during the year ended December 31, 2010 vesting over a six month period. The Company recognized marketing expenses over a straight-line basis over the vesting periods based on the market price of their stock at grant date.

The Company granted 100,800,000 restricted shares during the year ended December 31, 2009. Of the shares granted, 100,000,000 shares vested immediately and 800,000 shares vest over a six-month period. The Company recognized marketing expense on a straight-line basis over the vesting periods based on the market price of their stock on the grant date. The Company recognized $0 and $898,429 in marketing expense during the years ended December 31, 2010 and 2009 respectively, due to the restricted shares.

On May 6, 2011, the Board of Directors adopted the 2011 Equity Incentive Plan (The “Plan”.) The Plan provides for the granting of the nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to their employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital raising transaction. The Company initially reserved 600,000,000 shares of its common stock for awards to be made under the Plan. 600,000,000 of the shares under this plan have been issued.

On October 27, 2011, the Board of Directors adopted the 2011 Equity Incentive Plan II (the “2011-II Plan”). The 2011-II Plan provides for the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (or SARs), Restricted Stock, Performance Units, and Performance Shares, to our employees, officers, directors, consultants, independent contractors, advisors, or other service providers, provided that such services are not in connection with the offer and sale of securities in a capital raising transaction. The Company initially reserved 1,200,000,000 shares of its common stock for awards to be made under the 2011-II Plan. 975,000,000 of the shares under this plan have been issued.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

WARRANTS

There were no warrants granted during 2011 and 2010.

The following table summarizes the activity of options and warrants under all agreements and plans for the two years ended December 31, 2011 and 2010:

						Weighted
						Average		Aggregate
	Number of					Exercise		Intrinsic
	Options			Warrants		Price		Value
Outstanding, December 31,
2009		539,750			-		7

Granted		-			-		-
Exercised		-			-		-
Expired/cancelled		-			-		-

Outstanding, December 31,
2010		539,750			-		7

Granted		-			-		-
Exercised		-			-		-
Expired/cancelled		(505,750	)		-		-

Outstanding, December 31,
2011		34,000			-		2	-

Options:

The Company adopted ASC 718 (previously SFAS No. 123-R) effective July 1, 2006 using the modified prospective method. Under this transition method, stock compensation expense recognized in the year ended December 31, 2011 includes compensation expense for all stock-based compensation awards vested during year ended December 31, 2011 based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R. As there were no options granted or vested since the implementation of ASC 718, no expense has been recorded during the year ended December 31, 2010.

Methods of estimating fair value:

Under ASC 718 (previously SFAS No. 123-R), the fair value of stock options is determined using the Black-Scholes model. The Company’s expected volatility assumption is based on the historical volatility of the Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

The following table summarizes information about stock options and warrants outstanding at December 31, 2011:

OPTIONS AND WARRANTS

OUTSTANDING

EXERCISABLE

WEIGHTED

AVERAGE

WEIGHTED

RANGE OF

REMAINING

AVERAGE

EXERCISE

NUMBER

CONTRACTUAL

EXERCISE

NUMBER

EXERCISE

PRICES

OUTSTANDING

LIFE-YEARS

PRICE

EXERCISABLE

PRICE

34,000

1.63

34,000

1.63

34,000

NOTE 8 - INCOME TAXES

The income tax provision (benefit) for the years ended December 31, 2011 and 2010 differs from the computed expected provision (benefit) at the federal statutory rate for the following reasons:

	2011			2010

Computed expected income tax provision (benefit)	$	851,053		$	(698,838	)
Increase in allowance for doubtful accounts		-			-
Net operating loss carryforward		826,141			793,726
Increased
Accrued liabilities		40,484			(98,398	)
Allowance for doubtful accounts		(17,000	)		-
Non-deductible meals & entertainment		1,428			815
Depreciation		-0-			2,695

Income tax provision (benefit)	$	-		$	-

The components of the deferred tax assets and (liabilities) as of December 31, 2011 and 2010 were as follows:

	2011			2010
Deferred tax assets:
Temporary differences:
Depreciation	$	-0-		$	(2,180	)
Accrued liabilities		(46,757	)		(871	)
Allowance for bad debt		-0-			(21,200	)
Net operating loss carryforward		15,471,495			14,499,564
Valuation allowance		(15,818,252	)		(14,475,313	)

Net long-term deferred tax asset	$	-		$

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

The components of the deferred tax (expense) benefit were as follows for the years ended December 31, 2011 and 2010:

	2011			2010
Deferred tax assets:
Accrued expenses	$	47,628		$	115,762
Allowance for bad debt		21,200			-
Accumulated Depreciation		2,180			3,170

Increase in net operating loss carryforward		971,830			933,795
Change in valuation allowance		(1,042,939	)		(1,052,727	)
	$	-		$	-

As of December 31, 2011, the Company has net operating losses carryforwards of approximately $ 33,600,000 expiring in 2012 through 2026.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

LITIGATION

b)	A. Sean Rose, Claire F. Rose and Mark Rose v. Universal Detection Technology, fka Pollution Research and Control Corporation (Superior Court of the State of California for the County of Los Angeles, North Central District, Case No. EC042040)

On or about April 16, 2004, Plaintiffs commenced an action against the Company (Case No. EC 038824) for amounts allegedly due pursuant to four unpaid promissory notes. On August 2, 2004, the parties executed a Confidential Settlement Agreement and Mutual Releases (the “Agreement”). On December 30, 2005, Plaintiffs commenced the above-referenced action against the Company, alleging the Company breached the Agreement and seeking approximately $205,000 in damages. A judgment was entered on April 11, 2006. The Company has accrued for this settlement. The Company entered into a settlement agreement in the third quarter of 2004 with each of these three parties. Pursuant to this agreement, at June 30, 2005, the Company was required to pay an additional $80,000 as full payment of our obligations. The Company did not make this payment and are in default of these notes. As of December 31, 2011 and 2010, The Company has $610,621 and $559,303 accrued for including interest relating to this matter.

On June 2, 2006, Plaintiff Trilogy Capital Partners instituted an action in the Los Angeles Superior Court (Trilogy Capital Partners v. Universal Detection Technology, et. al., Case No. SC089929) against the Company. Plaintiff’s Complaint alleged damages against UDT for breach of an engagement letter in the amount of $93,449. Also, Plaintiff alleged that UDT had failed to issue warrants to it pursuant to a written agreement. After completing the initial stages of litigation and conducting extensive mediation, Plaintiff and UDT reached a settlement wherein commencing December 15, 2006, UDT would make monthly payments to Plaintiff of $2,000 until a debt of $90,000 plus accrued interest at six percent per annum was fully paid. In exchange, Plaintiff would release all of its claims against UDT. UDT has been current on all of its agreed payments to Plaintiff. As of December 31, 2011, $28,098 was due under the agreement and included in accounts payable in the accompanying balance sheet as of December 31, 2011.

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

On November 15, 2006, Plaintiff NBGI, Inc. instituted an action in the Los Angeles Superior Court (NBGI, Inc. v. Universal Detection Technology, et. al., Case No. BC361979) against the Company. NBGI, Inc.’s Complaint alleged breach of contract, and requested damages in the amount of $111,014 plus interest at the legal rate and for costs of suit. A Summary Judgment was granted in NBGI’s favor and Judgment has been entered. No payments have been made on this judgment and no actions to enforce the judgment have been taken against the Company.

On June 24, 2010, Plaintiff Meyers Associates, L.P. commenced an action in the Supreme Court of the State of New York, New York County, entitled Meyers Associates, L.P. v. Universal Detection Technology ("UDT"), case No. 108321/10. The complaint alleges breach of contract and damages related to performance by Meyers Associates, L.P. ("Meyers") of an investment banking services agreement dated December 22, 2005 and UDT's alleged failure to compensate Meyers for such services under the terms of the agreement. Plaintiff seeks damages in the amount of approximately $116,000 plus an award of court costs and attorneys fees. In October 2010, Plaintiff filed a Notice of Motion for Default Judgment against UDT and filed a Request for Judicial Intervention in connection therewith. The Company has not received any further communication regarding this action and does not know if a default judgment was granted.

On November 1, 2010 the accounting firm of A.J. Robbins, P.C. filed a lawsuit in the District Court, City and County of Denver, Colorado, seeking recovery of fees allegedly owed for accounting services performed during 2004 to 2008. The claims have been asserted against the Company, a second corporate defendant, and our CEO, as a result of a personal guarantee. On December 15, 2010, Defendants filed an Answer which asserted several defenses. The parties have exchanged initial disclosures, and the matter has been set for trial commencing on December 5, 2011. On August 3, 2011 the parties entered into a settlement agreement whereby the Defendants in the case will jointly pay $85,000 to the plaintiffs and the Company will issue $45,000 of the Company’s stock to the plaintiffs. The cash payments will be made in equal monthly payments over 7 months commencing on August 31, 2011. In consideration of the settlement, the parties have executed a mutual release and have agreed to withdraw the lawsuit. The releases and withdrawal are contingent upon the Company's full performance of the settlement agreement terms. The Company issued stock with a fair market value of $36,000 on the date of the agreement in full payment of the stock portion of the settlement agreement. $70,331 is included in the accounts payable in the accompanying balance sheet as of December 31, 2011, for the settlement agreement.

From time to time, the Company is a party to a number of lawsuits arising in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's operations, cash flows or financial position.

EMPLOYMENT AGREEMENTS

In September 2001, the Company entered into an employment agreement with its President and Chief Executive Officer. Under the agreement, base salary is $250,000 to be adjusted on an annual basis. The Company granted options to purchase 5,750 shares of its common stock exercisable at $60 per share.

On August 23, 2004, the Company entered into an amendment of the employment agreement with its President and Chief Executive Officer. The amendment provides that $100,000 of the Officer's annual salary shall be accrued as payable until such time as the Company has the financial resources to pay any or all of the accrued amount. The agreement also provides for salary increases of 5% per year commencing January 1, 2006, and an extension of the term of the agreement until December 31, 2012. In addition, automobile cost is limited to a maximum of $2,500 per month and the Company will reimburse the officer for individual life insurance premiums up to $1,000 per month and for health insurance premiums and related expenses.

The Company is obligated to make certain minimum salary payments as follows:

YEAR ENDING DECEMBER 31,

2012		$	335,024
		$	335,024

UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

LICENSE AGREEMENT

On September 30, 2003, the Company entered into a license agreement with CalTech whereby CalTech granted the Company an exclusive, royalty-bearing license to make, use, and sell all products that incorporate the technology that was developed under the Technology Affiliates Agreement with JPL and is covered by related patents. In addition, the grant includes a nonexclusive, royalty-bearing license to make derivative works of the technology. The Company is required to make quarterly royalty payments to CalTech, ranging from 2% to 4% of net revenues for each licensed product made, sold, licensed, distributed, or used by the Company and 35% of net revenues that the Company receives from sublicensing the licensed products. A minimum annual royalty of $10,000 was due and paid to CalTech on August 1, 2005 and each anniversary thereof. The minimum royalty will be offset by the above mentioned royalty payments, if any.

To maintain its license with Cal Tech, a minimum annual royalty of $10,000 was due Caltech on August 1, 2005, and is due on each anniversary thereof, regardless of product sales. Any royalties paid from product sales for the 12-month period preceding the date of payment of the minimum royalty will be credited against the annual minimum. Pursuant to the terms of the license, the Company must pay four percent royalties on product sales in countries where a patent is issued and two percent royalties on product sales in countries where a patent is not issued, as well as 35 percent of net revenues received from sub-licensees. As of the date of this report the Company has not paid the $10,000 royalty due Caltech on August 1, 2007. The Company and Caltech entered into a second amendment to the Company’s license agreement, dated December 1, 2006, and which provides that the overdue amounts shall be paid to Caltech in ten monthly installments of $8,631,85. To date, the Company has made four of the monthly installments called for in the second amendment to its license agreement with Caltech. On June 23, 2009, Caltech sent a letter to the Company asserting certain breaches by the Company of the License Agreement between Caltech and the Company and attempting to terminate the Agreement. The Company disagrees with the various assertions made by Caltech in the letter and has requested that Caltech submit to arbitration all matters in dispute. To date, no further action has been taken and the Company does not continue to perform under the License Agreement.

OPERATING LEASES

On June 1, 2009, the Company entered into a lease agreement to lease office space commencing June 1, 2009 through May, 31, 2012.

Minimum annual lease payments under this lease are as follows:

2012		34,479

	$	34,479

Rent expense was $79,059 and $87,024 for 2011 and 2010, respectively.

NOTE 10 - SUBSEQUENT EVENTS

During the first quarter of 2012, the Company issued an aggregate of 2,195,000,000 of shares of common stock to its employees and consultants valued at $439,000.

During the first quarter of 2012, the Company issued an aggregate of 7,700,000,000 of share of common stock to its President and CEO valued at $770,000 in connection payment of accrued salary and outstanding debt.

During the first quarter of 2012, the Company issued an aggregate of 705,358,142 shares valued at $106,250 to convert $28,125 of principal and $2,500 of interest per various agreements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Management, including our Chief Executive Officer ("CEO"), who is also our acting Chief Financial Officer ("CFO"), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of a date as of the end of the reporting period covered by the Company's Annual Report on Form 10-K, December 31, 2011. For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on such evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Management’s Report on Internal Control over Financial Reporting

* Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of December 31, 2011 Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, as of the end of the period covered by this report, such internal controls over financial reporting were not effective to control deficiencies that constituted material weaknesses. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affect our internal controls and that may be considered to be a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.

The matters involving internal controls over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board included the lack of a fully functioning audit committee resulting in ineffective oversight in the establishment and monitoring of required internal controls over financial reporting. In addition, our Chief Executive Officer and Acting Chief Financial Officer identified a lack of sufficient internal accounting and book keeping staff and accountability. Because of the Company's severe cash constraints, there are no employees or contractors dedicated solely to the functions of book keeping or accounting. In addition, the Company's current personnel lack sufficient skills, training and experience in the review process in order to ensure the complete and proper application of generally accepted accounting principles. In addition, the Company can only afford to retain its outside accountants to review the books and records of the Company on a quarterly basis and in connection with the annual audit of financial statements, whereas more timely and increased periodic reviews would be beneficial to the Company's internal controls over financial reporting pending development of an internal accounting staff. These material weaknesses were identified by our Chief Executive Officer and Acting Chief Financial Officer in connection with the review of our financial statements as of December 31, 2011.

In addition, Management has identified the following internal control deficiencies:

	●	We did not have formal policies governing accounting transactions and financial reporting processes;
	●	We did not have a consistent process involving the entry of transactions into the Company's financial recordation system by dedicated personnel;
	●	We did not perform adequate oversight by management of certain accounting functions of our employees and maintained inadequate documentation of management review and approval of accounting transactions and financial reporting processes.

Management is in the process of developing and implementing remediation plans to address its material weaknesses. Management has identified specific remedial actions to address the material weaknesses described above:

● Augment existing Company resources with additional consultants or employees to improve the recording of accounting transactions. The Company plans to hire additional personnel once the Company has achieved further commercialization of its products and is generating more revenue, or has raised significant additional working capital;

● Improve oversight by management by creating a system of periodic and monthly reviews of financial transactions and the recordation of transactions into the Company's financial recordation system;

● Adopt an audit committee charter delineating the committee’s duties with respect to the review and oversight of the Company's financial statements, auditors and audit process; and

● Retain the services of the Company's outside accountants for periodic and intermittent review of the Company's financial data outside of the quarterly and annual procedures for the preparation of quarterly and annual reports and financial statements, upon the Company obtaining capital or generating additional revenue.

Changes in Internal Controls over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below are the names, ages, positions and business experience of our directors, executive officers, and key employees as of May 8, 2012:

Name	Age	Position
Jacques Tizabi	40	President, Chief Executive Officer, Acting Chief Financial Officer, Director, and Secretary

Matin Emouna (1)	41	Director

Tom Sepenzis	41	Director

(1) Member of Audit and Compensation Committees.

All directors hold office until the next annual meeting of our shareholders and until their successors have been elected and qualified. Officers serve at the pleasure of the board of directors.

There are no family relationships among any of our directors, executive officers, or persons nominated or chosen as our directors or executive officers.

Business Experience

JACQUES TIZABI has been the Chief Executive Officer, President and Chairman of the Board of Directors of our Company since October 2001, Acting Chief Financial Officer since May 2003 and Secretary since May 2008. Mr. Tizabi spends on average 40-50 hours per week providing services to us. He oversees all material aspects of the Company’s operations.

MATIN EMOUNA has served as a director of our Company since October 2001. Since 1997, Mr. Emouna has maintained his own law practice in New York, where he represents foreign and domestic clients in a broad range of real estate transactions, with emphasis on new constructions, commercial real estate transactions, shopping center development, financing, international business matters, and commercial leasing. He holds B.S. degrees in Business Administration and Spanish from New York State University at Albany and a J.D. from Benjamin N. Cardozo School of Law. His experience in both law and international trade are helpful to the Company.

TOM SEPENZIS became a director of our Company in April of 2009. Mr. Sepenzis worked for over a decade on Wall Street, becoming one of the most highly respected telecommunications analysts, earning the #1 ranking by Forbes magazine one week before his departure. Starting his career as an equities trader at Punk, Ziegel in 1993 he later moved to the firms Soundview Financial (1996), Piper Jaffrey (1998), CIBC World Markets (2000), and Think Equity (2002) as a telecommunications analyst. Switching careers to the entertainment business, he now is the CEO and founder of Ascension Pictures, in which capacity he produces and directs commercials, music videos, documentaries and full length feature films.

Involvement in Certain Legal Proceedings

Except as set forth below, none of the directors or executive officers have, during the past ten years:

●	Had any petition under the federal bankruptcy laws or any state insolvency law filed by or against, or had a receiver, fiscal agent, or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
●	Been convicted in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
●	Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
	(i)	Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
	(ii)	Engaging in any type of business practice; or
	(iii)	Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
●	Been the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described in (i) above, or to be associated with persons engaged in any such activity;
●	Been found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, where the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated ;
●	Been found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, where the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated.
●	Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
	(i)	Any federal or state securities or commodities law or regulation; or
	(ii)	Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
	(iii)	Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
●	Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

In May 2005 and in October 2005, respectively the NASD notified Mr. Tizabi that he was suspended and subsequently permanently barred from registering with a broker-dealer.

In 2004, our CEO, Mr. Jacques Tizabi, was a registered representative and principal in an NASD registered broker-dealer. In November 2004, Mr. Tizabi decided to leave the brokerage business at which time the broker-dealer filed a Form U-5, Uniform Termination Notice for Securities Industry Registration. Contemporaneously therewith, the NASD was conducting its routine examination of the broker-dealer pursuant to which Mr. Tizabi cooperated by responding to the NASD requests for information. Mr. Tizabi and the broker-dealer were never accused of any wrongdoing and after terminating his relationship with the broker-dealer and leaving the brokerage industry, Mr. Tizabi notified the NASD that he no longer would respond to the NASD in a representative capacity of the broker-dealer. Mr. Tizabi was made aware that his actions could be a violation of Rule 8210 and result in a suspension or bar from further registering with a broker dealer. Mr. Tizabi was suspended and barred because he failed to continue to respond to the NASD’s investigation; not because of any substantive securities violation.

COMMITTEES

Our Audit Committee currently consists of Mr. Matin Emouna. Mr. Emouna is independent within the meaning of the applicable NASDAQ listing standards and applicable rules and regulations promulgated by the Securities and Exchange Commission. Our Audit Committee currently does not have a financial expert within the meaning of the applicable SEC rules as management does not believe one is necessary in light of the Company's current stage of product development.

Our Compensation Committee determines matters pertaining to the compensation and expense reporting of certain of our executive officers, and administers our stock option, incentive compensation, and employee stock purchase plans. Our Compensation Committee currently consists of Mr. Matin Emouna.

CODE OF ETHICS

We have adopted a Code of Business Conduct and Ethics which is designed to set the standards of business conduct and ethics and help directors and employees resolve ethical issues. The Code applies to all directors and employees, including the Chief Executive Officer and Chief Financial Officer and other persons performing similar functions. The Code covers topics including, but not limited to, conflicts of interest, confidentiality of information, fair dealing with customers, supplies and competitors, and compliance with applicable laws, rules and regulations. The purpose of the Code is to ensure to the greatest possible extent that our business is conducted in a consistently legal and ethical manner. Upon written request to the Company, we will provide a copy of the Code free of charge. Any such request should be directed to the Company at the address set forth on the cover page of this annual report.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of our common stock, to file with the Securities and Exchange Commission initial reports of ownership, and reports of changes in ownership, of our common stock and other equity securities of ours. Executive officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file. To our knowledge, based solely on our review of copies of the Section 16(a) reports filed for the fiscal year ended December 31, 2011, we believe our executive officers, directors and greater than ten percent shareholders of our common stock complied with all Section 16(a) filing requirements applicable to them except that Mr. Jacques Tizabi did not timely file one report on Form 4 pertaining to a transaction dated July 20, 2011. The relevant report was filed on August 1, 2011.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following executive compensation disclosure reflects all compensation awarded to, earned by, or paid to the executive officers below for the fiscal years ended December 31, 2011 and 2010. The following table summarizes all compensation for fiscal years 2011 and 2010 received by our Chief Executive Officer. No other executive officer earned in excess of $100,000 in fiscal year 2011.

SUMMARY COMPENSATION TABLE
Name and principal position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compen-sation Earnings ($)	All Other Compensation ($)	Total ($)
Jacques Tizabi, President, CEO, Acting CFO	2011	$319,071	--	--	--	--	--	--	$319,071
Jacques Tizabi, President, CEO, Acting CFO	2010	$303,877	--	--	--	--	--	--	$303,877

The salary amounts listed in the table above were not paid, but are accrued. On August 1, 2011, we issued 500,000,000 shares of our common stock to Mr. Tizabi in exchange for the conversion and in-full satisfaction of previously accrued but unpaid salary owed to Mr. Tizabi in the amount of $200,000. On February 13, 2012, we issued 7,700,000,000 shares of our common stock to Mr. Tizabi in exchange for the conversion and in-full satisfaction of (i) previously accrued but unpaid salary owed to Mr. Tizabi in the amount of $450,000 and (ii) $320,000 in principal and interest outstanding under certain notes payable by the Company to Mr. Tizabi.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information regarding outstanding equity awards granted to our CEO.

OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR-END

	Option Awards		Stock Awards
Name	Number of securities underlying unexercised options (#) Exercisable	Number of securities underlying unexercised options (#) Unexercisable	Equity incentive plan awards: number of securities underlying unexercised earned options (#)	Option exercise price ($)	Option expiration date	Number of shares or units of stock that have not vested (#)	Market value of shares or units of stock that have not vested ($)	Equity incentive plan awards: number of unearned shares, units, or other rights that have not vested (#)	Equity incentive plan awards: market or payout value of unearned shares, units, or other rights that have not vested ($)
Jacques Tizabi	34,000	- - -	- - -	$66.00	Aug 2013

All option awards listed above are fully vested as of December 31, 2010.

DIRECTOR COMPENSATION

Director Compensation for Fiscal Year 2011

Name	Fees earned or paid in cash ($)	Stock awards ($)	Option awards ($)	Non-equity incentive plan compensation ($)	Nonqualified deferred compensation earnings ($)	All other compensation ($)	Total ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
Jacques Tizabi (1)
Matin Emouna		$60,000					$60,000
Tom Sepenzis (2)

(1)

All compensation received by Mr. Tizabi in fiscal year 2011 is disclosed in the Summary Compensation Table above. Mr. Tizabi received no compensation as a director in fiscal year 2011.

(2)

Mr. Sepenzis received no compensation as a director in fiscal year 2011.

EMPLOYMENT AGREEMENTS

We have an employment agreement with Jacques Tizabi. Mr. Tizabi's employment agreement, dated as of September 24, 2001, and amended August 23, 2004, provides for Mr. Tizabi to serve as our Chairman of the Board, Chief Executive Officer and President until December 31, 2010, unless otherwise extended. We have agreed to extend Mr. Tizabi’s employment agreement until December 31, 2015. The employment agreement provides for Mr. Tizabi to receive an annual base salary of $250,000, subject to salary increases of 5% per year commencing January 1, 2006. Mr. Tizabi also is entitled to specified perquisites, including participation in any group life, medical, disability and other insurance plans provided by us, use of a luxury automobile approved by the compensation committee (with a maximum cost of $2,500 per month), monthly dues for club memberships not to exceed $1,500 per month, and reimbursement of entertainment expenses provided to our customers, vendors, and strategic partners. To date, Mr. Tizabi has not received any of these specified perquisites.

If Mr. Tizabi's employment is terminated due to his death, the employment agreement provides that we will pay Mr. Tizabi's estate his remaining base salary during the remaining scheduled term of the employment agreement, accelerate the vesting of his options and continue to provide family medical benefits. If Mr. Tizabi's employment is terminated due to his disability, the employment agreement provides that we will pay Mr. Tizabi his remaining base salary during the remaining scheduled term of the employment agreement (reduced by any amounts paid under long-term disability insurance policy maintained by us for the benefit of Mr. Tizabi).

If Mr. Tizabi terminates the employment agreement for cause, if we terminate the employment agreement without cause or in the event of a change of control, in which event the employment of Mr. Tizabi terminates automatically, we will pay Mr. Tizabi his remaining base salary during the remaining scheduled term of the employment agreement and an amount based on his past bonuses and continue to provide specified benefits and perquisites.

If Mr. Tizabi terminates the employment agreement without cause or we terminate the employment agreement for cause, Mr. Tizabi is entitled to receive all accrued and unpaid salary and other compensation and all accrued and unused vacation and sick pay.

If any of the payments due Mr. Tizabi upon termination qualifies as "excess parachute payments" under the Internal Revenue Code, Mr. Tizabi also is entitled to an additional payment to cover the tax consequences associated with these excess parachute payments.

Mr. Tizabi has agreed that he will defer payment of all accrued but unpaid bonus or salary, or other compensation payable to him in excess of $150,000 per year, beginning in 2005 until future years. In 2009, Mr. Tizabi received the following as a reduction of the accrual of his unpaid bonus or salary since 2005: 127,386,666 shares of the Company’s common stock with a fair market value of $392,160 on the date of issuance along with cash payments or payments made by the Company on behalf of Mr. Tizabi totaling $158,257. On August 1, 2011, we issued 500,000,000 shares of our common stock to Mr. Tizabi in exchange for the conversion and in-full satisfaction of previously accrued but unpaid salary owed to Mr. Tizabi in the amount of $200,000. On February 13, 2012, we issued 7,700,000,000 shares of our common stock to Mr. Tizabi in exchange for the conversion and in-full satisfaction of (i) previously accrued but unpaid salary owed to Mr. Tizabi in the amount of $450,000 and (ii) $320,000 in principal and interest outstanding under certain notes payable by the Company to Mr. Tizabi.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

BENEFICIAL OWNERSHIP

The following table sets forth information as of May 8, 2012, relating to the ownership of our common and preferred stock, by (i) each person known by us to be the beneficial owner of more than five percent of the outstanding shares of each class of our capital stock, (ii) each of our directors and nominees, (iii) each of our named executive officers and (iv) all of our executive officers and directors as a group. Except as may be indicated in the footnotes to the table and subject to applicable community property laws, each person has the sole voting and investment power with respect to the shares owned. The address of each person listed is in care of Universal Detection Technology, 340 N. Camden Drive, Suite 302, Beverly Hills, California 90210.

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned (1)	Percent of Class (1)

Jacques Tizabi, President, CEO, Acting CFO, Director	8,327,420,666 (2)	45.61%
Matin Emouna	600,000,000	3.28%
Tom Sepenzis	0	0
All current directors and executive officers as a group (3 members)	8,927,420,666	48.89%

(1)	Under Rule 13d-3 under the Exchange Act, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by that person (and only that person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership with respect to the number of shares of our common stock actually outstanding at May 8, 2012. As of May 8, 2012, we had 18,259,372,299 common shares, no par value, outstanding.

(2)	Includes 34,000 shares that may be acquired upon the exercise of fully vested options.

CHANGE IN CONTROL

We are not aware of any arrangement that might result in a change in control in the future.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS , AND DIRECTOR INDEPENDENCE

Described below are certain transactions or series of transactions since January 1, 2010 between us and our executive officers, directors and the beneficial owners of five percent or more of our common stock, on an as converted basis, and certain persons affiliated with or related to these persons, including family members, in which they had or will have a direct or indirect material interest in an amount that exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, other than compensation arrangements that are otherwise required to be described under “Executive Compensation.”

During the year ended December 31, 2011, the Company borrowed a total of $592,256 from Mr. Tizabi, its president and chief executive officer, under various written and oral promissory note agreements executed by the Company. The notes had interest rates of 0%. The Company repaid notes totaling $465,460 and interest of $-0-. As of December 31, 2011, $466,869 in principal and $1,392 in interest was due.

For the period from January 1, 2012 through May 8, 2011, the Company borrowed a total of $77,082 from its president and chief executive officer under promissory notes executed by the Company. The notes had interest rates ranging from 12% to 12.5%. The Company repaid notes totaling $62,709 and interest of $363. In addition, on February 13, 2012, we issued 7,700,000,000 shares of our common stock to Mr. Tizabi in exchange for the conversion and in-full satisfaction of (i) previously accrued but unpaid salary owed to Mr. Tizabi in the amount of $450,000 and (ii) $320,000 in principal and interest outstanding under certain notes payable by the Company to Mr. Tizabi.

Director Independence

Mr. Matin Emouna and Mr. Tom Sepenzis are independent directors as that term is defined by NYSE Rule 303A.02(a). The Company currently does not have a nominating/corporate governance committee. Of the members of the Company’s board of directors, Messrs. Matin Emouna and Tom Sepenzis meet the NYSE’s independence standards for members of such committees and Mr. Jacques Tizabi does not meet the NYSE’s independence requirements for members of such committees.

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

Prior to engagement, the Audit Committee pre-approves all audit or non-audit services to be performed by our independent auditors. The Audit Committee approved the engagement of Kabani & Company as our independent auditors for $40,000. The Audit Committee also approved an additional $18,000 for audit related services related to our quarterly filings.

AUDIT FEES

Summary of Principal Accounting Fees for Professional Services Rendered

The following table presents the aggregate fees for professional audit services and other services rendered by Kabani & Company, our independent registered public accountants, in the fiscal years ended December 31, 2011 and 2010.

	Year Ended December 31, 2011		Year Ended December 31, 2010

Audit Fees	$	40,000		40,000
Audit-Related Fees (quarterly reports)		18,000		18,000
Tax Fees		-		-
All Other Fees		-		-
	$	58,000		58,000

Audit Fees

The aggregate fees billed by Kabani & Company for the audit and review of our annual financial statements and services that are normally provided by an accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2011 and 2010, were approximately $40,000 and $40,000, respectively.

Audit-Related Fees

The aggregate fees billed by Kabani & Company for assurance and related services rendered by Kabani & Company that are reasonably related to the performance of the audit or review of our financial statements for the fiscal years ended December 31, 2011 and 2019 were $18,000 and $18,000, respectively.

Tax Fees

No fees were billed by Kabani & Company for professional services rendered for tax compliance, tax advice and tax planning for the fiscal years ended December 31, 2011 and 2010.

All Other Fees

No other fees were billed by Kabani & Company for the fiscal years ended December 31, 2011 and 2010.

ITEM 15. EXHIBITS

The following documents are filed as part of this Annual Report on Form 10-K:

(a)	Documents filed as a part of this report:

(1)	Financial Statements

The financial statements of Universal Detection Technology and its subsidiaries for the periods ended December 31, 2011 and 2010 and Kabani & Company’s report dated May 8, 2012.

(2)	Financial Statement Schedules

Not required.

(b) Exhibits:

3.1	Articles of Incorporation of Universal Detection Technology (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 26, 2011).

3.2	Amended and Restated Bylaws of the Registrant*.

4.1	Amended and Restated 2003 Stock Incentive Plan (incorporated by reference to Exhibit 4.2 of the Company's Annual Report on Form 10-KSB for the year ended December 31, 2004, filed on March 31, 2005).

4.2	2006 Stock Compensation Plan (incorporated by reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement (File Number 333-131783) filed on February 13, 2006).

4.3	2006 Consultant Stock Plan (incorporated by reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement (File Number 333-135507) filed on June 30, 2006).

4.4	2006-II Consultant Stock Plan (incorporated by reference to Exhibit 4.1 to the Company's Form S-8 Registration Statement (File Number 333-138923) filed on November 22, 2006).

4.5	2007 Consultant Stock Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-142158) filed on April 17, 2007).

4.6	2007 Equity Incentive Plan (effective May 30, 2007) (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-143530) filed on June 6, 2007).

4.7	2007 Equity Incentive Plan (effective June 21, 2007) (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-144084) filed on June 27, 2007).

4.8	2007-2 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-144583) filed on July 13, 2007).

4.9	2007-3 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-146438) filed on October 2, 2007).

4.10	2007-4 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-147097) filed on November 2, 2007).

4.11	2008 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-149169) filed on February 11, 2008).

4.12	2008 Equity Incentive Plan II (incorporated by reference to the Company’s Post-Effective Amendment No. 1 to Form S-8 Registration Statement (File Number 333-150400) filed on May 27, 2008).

4.13	2008 Equity Incentive Plan III (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-152297) filed on July 11, 2008).

4.14	2008 Equity Incentive Plan IV (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-153371) filed on September 8, 2008).

4.15	2009 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-157461) filed on February 23, 2009).

4.16	2009 Equity Incentive Plan II (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-159289) filed on May 15, 2009).

4.17	2009 Equity Incentive Plan III (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File Number 333-163963) filed on November 6, 2009).

4.18	2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement (File No. 333-174010) filed on May 6, 2011).

4.19	2011 Equity Incentive Plan II (incorporated by reference to Exhibit 4 to the Company’s Form S-8 Registration Statement (File No. 333-177555) filed on October 27, 2011).

10.1	Employment Agreement by and between the Company and Jacques Tizabi dated September 25, 2001 (incorporated by reference to the Company's Quarterly Report on Form 10-QSB for the Quarter Ended March 31, 2002, filed on May 20, 2002).

10.2	Amendment to Employment Agreement of Jacques Tizabi, dated August 23, 2004 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB for the Quarter Ended September 30, 2004, filed on November 22, 2004).

10.3	Letter of Engagement dated August 19, 2005, between Trilogy Capital Partners, Inc. and Universal Detection Technology (incorporated by reference to the Company's Current Report on Form 8-K filed on September 28, 2005).

10.4	Stock Purchase Warrant issued to Trilogy Capital Partners (incorporated by reference to the Company's Registration Statement on Form SB-2 filed on February 14, 2006).

10.5	Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on May 20, 2009)

10.6	Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 14, 2009)

10.7	Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 13, 2009)

10.8	Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K filed on April 15, 2010)

10.9	Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on May 24, 2010)

10.10

Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 23, 2010)

10.11

Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 19, 2010)

10.12

Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011).

10.13

Commercial Property Lease dated June 1, 2009 (incorporated by reference to Exhibit 10.20 of the Company’s Amended Annual Report on form 10-K/A filed on November 17, 2010)

10.14

Agreement with Morphix Technologies dated March 8, 2010 (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011).

10.15

Agreement with Mirion Technologies (MPGI), Inc. dated February 22, 2011 (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011).

10.16

Agreement Advnt Biotechnologies, LLC Value Added Reseller (VAR) Agreement dated September 21, 2010 (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011).

10.17

Agreement with Detrick Lawrence Corporation dated April 7, 2011 (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011).

10.18

Agency Agreement with APP Systems Services PTE LTD dated March 15, 2011 (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011).

10.19

Form of Debt Conversion Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2011, filed on May 20, 2011).

10.20

Form of Note Conversion Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2011).

10.21

Form of Note Conversion Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2011, filed on August 22, 2011).

10.22

Form of Note Conversion Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed on November 16, 2011).

21.1	Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 to the Company's Annual Report on Form 10-KSB for the year ended December 31, 2003, filed March 31, 2004).

23.1	Consent of Independent Registered Public Accounting Firm *.

32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.

101	XBRL Exhibits*

_________________

* Filed herewith

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 10, 2012	UNIVERSAL DETECTION TECHNOLOGY

By:	/s/ Jacques Tizabi
	Jacques Tizabi, President, Chief Executive
	Officer, Acting Chief Financial Officer, and Chairman of the Board of Directors

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jacques Tizabi, his attorney-in-fact, each with the power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming said attorney-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: May 10, 2012	/s/ Jacques Tizabi
	Jacques Tizabi, President, Chief Executive
	Officer, Acting Chief Financial Officer, and Chairman of the Board of Directors


Date: May 10, 2012	/s/ Tom Sepenzis
	Tom Sepenzis, Director


Date: May 10, 2012	/s/ Matin Emouna
	Matin Emouna, Director

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